Here I sit again, reading yet another article in a builder magazine that is explaining how companies are going to have to re-visit the well and trim their staffs of excess land acquisition and development people. Since many builders group their acquisition and development people into one department, when the axe falls, it’s not unusual for entire swaths of “land” people to be laid off. “Adios, not needed, when things pick up - call us from the beach.”

Bear in mind that I am acutely aware that these are tough times for our industry. I also understand that at times HR (human resource department) has to do what HR has to do. Still, as I write this piece, many builders and developers are wasting time and human resources when they could be capitalizing on the clock to get a much better handle on their next development property. What’s at stake? Only time and money. Project schedule, costs, and net margin can always be improved with smart planning and this is the time to do just that. And guess what, somebody is going to have to carry out the work; like your land people.

I’ll explain. Consider a 300-acre project. Not too big and not too small. Now, let’s assume your seven miles of road (65 foot right-of-way), including curb and gutter, sidewalks, occasional lighting, and planter strips, will provide access to five units per net acre (or 975 lots), and the job will require a gross mass-graded cut to fill volume of 800,000 bank cubic yards. Yes, I know that most projects contain many more components than this, but roads, utilities, and grading typically comprise the lion’s share of most construction costs in land development.

Begin by having your planner and/ or your civil engineer run varying road & lot layouts on your property. Start with at least three designs. Be creative. Be audacious. Push the envelope in trying to build less road and increase lot count. Analyze your initial road and lot layout alternatives. Compare costs and quantities. Can you run two more alternatives for a total of five road and lot schemes? How do road lengths and lot counts differ? What about grading? On a 300-acre piece of property, it’s not uncommon for roads to vary as much as 2,000 linear feet and for mass grading to fluctuate 15 percent or more with each alternative. On a subdivision or land bay as small as 40 net acres, I’ve been able to pick up as many as six or more lots with less roads and that makes sense because every square foot that you can remove from roads theoretically can go to lot area. At the very least, you may be able to improve the shape, size, and orientation of some lots and in doing so, increase overall lot value.

Taking the above numbers, if you can lose 2,000 linear feet of roadway (5 percent on seven miles of road), the road savings, at $700 per constructed linear foot, could equate to $1.4 million. At an assumed cost of $7 per truck cubic yard for onsite cut to fill, a ten percent reduction in grading could equate to a savings of 112,000 tcy at $7 per tcy or $784,000. (Note: I converted 10 percent of 800,000 BCY to TCY by multiplying 80,000 by a hypothetical swell factor of 1.4 because after dirt is cut and removed from the earth, swelling, waste, and weight limits affect final fill volumes.) Now, let’s assume that the 2,000 lf of less roadway can be converted to lots. Net lot gain would be nearly three acres or 15 lots. Not bad. If they are valued at say, $40,000 per lot, the net gain could be $600,000.

Totaling the above, $1.4 million in roadway savings plus $784,000 in grading plus $600,000 in additional lot value equals $2,968,000 in net gain or, $14,133 per net developable acre (figuring that you’ll lose 30 percent of your beginning acreage to greenways, roads, a community center, walls, and utility areas such as reservoirs, storm ponds, etc.)

So then, what type of investment cost-wise, could it take to get you to this point? Let’s assume soft costs and follow-up meetings as follows: geotechnical exploration and soils studies - $20,000, site planning lot and project visuals - $30,000, civil engineering, lot layout, utility checks, earthwork volume calculations, and costs estimating - $35,000. Take the total and add 25% for good measure for a grand total of $106,250.

Remember that this is all happening under pre-final design planning. We are talking “paper fixes.” In simple terms, your return would approximate $28 dollars for every dollar spent in soft costs. Depending on project size and team ability, it takes site management personnel to shepard this process through. Capable team members can perform estimating, they may provide creative road and lot layout possibilities, and any work that they accomplish should help to lower costs.

But much more can be done. For example, site development personnel can also analyze or manage consultants to help:
• Optimize pavement design. Investigate thinner or cheaper asphalt and crushed rocks sections.
• Layout and perform additional road centerline potholing in order to better understand depth of rock, presence of water, and soil type.
• Review all pipe and manhole/ catch basin material with the goal of using the least expansive materials per code that will perform.
• Investigate whether or not utility piping can be installed shallower and in shorter lengths than as designed.
• Better plan cut to fill schemes that align with season, orderly development, and that support least-expensive road grading requirements. In other words, what can you build for free?

Of course, there are other benefits to using site development personnel now to perform detailed pre-construction project planning. Here are a few:
• Planning leads to more efficient work and more efficient work leads to improved design and construction schedules.
• Engaging staff helps to improve moral.
• Depending on the property, smart value engineering can led to savings that may eventually compensate for the cost of maintaining existing land options or for keeping existing real estate inventory in your company’s portfolio.
• Land that is well thought out will be ready to go when markets improve.

Today, your regulatory agency may be more eager to issue permits than at any time in recent memory. This may lead to quick turnaround time and perhaps more forgiving requirements.

The result - easier permitting may be reason enough to keep your land development people active and running while giving them less time to update their resumes. SLDT