As we prepare to handover a dual occupancy project to a client, my mind has been focussed on the very important Practical Completion (PC) and Handover process.
These are the final stages of the development when all the construction works are coming to an end. It’s the time you really need to work in with your builder to ensure there are no delays. The bulk of the drawdown’s are now in the builder’s bank which means our client is incurring higher interest cost, so it’s our job as their project manager to ensure the properties are checked thoroughly, work is completed quickly, the agents have all they need to start advertising for tenants/sale and we get the keys as quickly as possible so an income can start to be realised.
Our preparation for PC usually starts about four weeks out from the estimated completion date. We will meet with our site managers to check off things still to be done and try and pre-empt any delays with the required paperwork that the certifier will need for their final inspection and a check of the DA conditions and that all have been met.
We’ve recently experienced a delay on one project where road works to the entrance of the development were conditioned in the consent, whilst all were across this and the works started in good time, we didn’t anticipate the delay in the inspections required by council’s engineering consultants. They held up the completion of the works for two weeks, in the meantime, the landscaping had been laid and all other works were done. The delay meant we couldn’t have the private certifier do their final inspection; this then delays the issuing of the Occupation Certificates and the Handover process which ultimately impacts on how quickly we can get the villas tenanted and returning some money for our clients.
We will generally conduct the two final inspections for our clients; however clients are always welcome to attend, in fact we love it when they do as it’s often the first time they’ve physically seen their project. Whilst they had been getting their Weekly Update Report each Friday with lots of photos, there’s nothing like walking through your completed development.
The first inspection involves spending a few hours walking through and around the construction, discussing and pointing out any finishes that we are not happy with or works still needing to be completed. The site manager will make a list and at the end of the inspection we receive a copy. The builder then has one week in which to complete/rectify before we meet again on site for the Handover inspection. This again is a detailed inspection, using our PC list to ensure that all items on the list have been addressed. Once we are happy that the builder has finished the project to our high standards, a phone call is made to our client, letting them know they can now send the builder’s final invoice to their bank for payment.
Before the bank pays the builder, they will usually send out a valuer to check the project is completed and sometimes want to see the Occupation Certificates before they will pay the builder. They will also want to see that building insurance has been raised as once the Handover process is complete, the villas are the responsibility of the owners. Of course there are warranty periods in which the builder must rectify any issue that some time may not crop up until they are lived in.
Whilst we wait for the bank to make payment, we have already had the properties listed on the Net for rent/sale and because of our close relationship with our builder; the agents have also been able to show the properties. Our aim is to have the properties leased by the time the bank pays the final account and we are able to deliver the keys to the real estate agent.
During this period we will also prepare our brief to our Quantity Surveyor so they can work on the depreciation schedules.
There is a lot of work at the end of a development project to manage a quick and smooth transition from the construction phase to the all important income phase. But it’s one of my favourite times, when we all get to step back and see the completed project that started as a vision when we first located the land.
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“I was bitten by the property bug, there was no turning back.”
Jo Chivers proves that women can indeed have it all- a career that you are passionate about and a family. While all of this sounds great, it does require hard work, dedication, perseverance and a bit of risk-taking.
Jo’s love of property development inspired her to leave her corporate career and pursue her true passion. After educating herself in property investing, she started building up her own property portfolio. After purchasing a few blue chip properties in Sydney, she soon realised how negatively geared they were and began researching outside of Sydney. She discovered a more affordable, large region of NSW where she completed her first property development. Soon her friends were asking her to find them sites and manage their developments.
She realised there was a need for an all encompassing project management service and her business Property Bloom™ was born. Ten years down the track, she has developed over 60 properties for clients, creating literally hundreds of thousands of dollars in equity and high end yields.