In the early years of property development a high-level feasibility study was often a matter of intuition and generalised rates. Developers would accept a rough opinion on the timeline and experience the shock realisation well into a tender process that their 18-month program in reality was going to take 28-months.
In this edition of 5 Minutes with an Expert, Adam and Claudio discuss the evolution of risk management within the development space, focusing on the transition from "gut-feel" feasibility to evidence-backed risk and time modelling.
Their conversation unpacks on these important factors within the modern development environment:
- Early-stage sophistication: Claudio notes a significant shift in how developers approach early-stage planning today. Historically, developers relied on generalised costing from Quantity Surveyors and project timelines were largely opinion-based rather than output-based.
- The unique risk profile of property development: Unlike the stock market, where an investor can exit a position quickly, real estate capital is "locked in" for the duration of the program, however long it may take. With typical returns ranging from 12% to 16%, a 12-month program blowout doesn't just delay profit; it can completely erase it.
- Using programming as a strategic tool: Adam highlights that Zancon's services are increasingly consulted during the conceptual and due diligence phases. Rather than treating a project schedule as a static document, they use it as a risk map to identify where delays might occur and apportion that risk before the project begins.
The consensus is that sophistication is the new baseline. High-level developers are no longer willing to wait for a builder’s quote to understand their timeline; they are integrating expert programming advice at the very beginning to protect their capital and ensure their feasibility models reflect reality.
Connect with Adam and Claudio on LinkedIn.
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