Covid-19: How to protect your property investment when facing building site closures
This week’s announcement from the UK Government has imposed stricter rules of isolation, leaving many in the construction industry feeling confused and concerned about the future of their sites.
Despite this, many have made the right decision and we are seeing a number of contractors and sites taking the necessary steps and closing in a bid to protect the NHS and the more vulnerable throughout the Covid-19 pandemic.
But where does this leave investors, particularly those away from London and away from their projects?
If you’re an investor, understandably you’ll want to make sure that:
You are covering the basics to protect your current investment
When construction re-starts, your site has been left in the best possible condition
You are in a position to restart the project as early and efficiently as possible
To help you through this stage, we have outlined 5 key areas which need to be considered:
Secure your Site
Consider extra precautions and measures given that it won’t be monitored daily while it’s completely closed
Before the site is closed, all fire safety measures must be in place to avoid any issues. Test your fire alarm and confirm the procedure should it be activated
Clear all possible sources of ignition, being careful to include waste, materials and dangerous products
Ensure that your electrical installation and your main incoming water are isolated
If possible, monitor your site using CCTV surveillance and ensure that your site is visited on a regular basis during this period.
Take a photographic record of the site at the time of closure, including materials.
Contact your insurance company
Please make sure you have liaised with your insurance company before closing the site
Even if the site is still under the contractor’s responsibility your insurer may have specific requirements during this period to which you need to comply. These may include heightened security measures, frequency of visits and specific controls being carried out.
Protect your materials that are off-site
Another issue to consider is materials or goods that you already procured which are currently off-site
Due to restriction of transportation and a large number of boarders currently closed, your goods might be held for a long period
To protect your initial payment on materials or other items, it’s important that you have a vesting certificate in place
As an example, if you have procured a marble slab in Italy and paid for it, each slab will be marked and photographed as part of the certificate to confirm ownership of the materials.
Works partially completed
For completed works you must maintain a certain temperature and humidity level on site, and this is particularly important for joinery and timber floors
If you don’t you might have issues at handover when removing the protection as the company might not accept certain defects that were out of their control
Any protection must be breathable and approved by the installers or manufacturers.
Complete a status report
Before you close your site, we would strongly recommend that you order an independent status report.
The intention is to provide a clear vision and record of the work carried out today and to test the progress and projection against the original plan. This report should include:
Review of the works progress on site on each trade and outline any concerns over workmanship
Review of pre-construction programme and activities including design, technical coordination and procurement. All information should be up to date with a register of current issues and decisions required by the client
Review of the financial cost plan. It should include the latest valuation, the projected cash flow and expenditure
A risk register should also be in place to understand the likelihood and impact of each risk in terms of cost/time/quality. At this stage, we would expect the impact of the site closure to be accounted for into the cost plan with different risks depending on the duration
Assessment as to whether the remaining time allocation and cost plan allocated to complete the works is adequate.
Use this time as an opportunity
A site closure will always be disruptive and have an impact on the bottom line of a property investment. For example, you will still be paying interest on any finance you have on the development and that will continue to be payable for as long as the site is closed. There may be an opportunity to check in with your lender to see if they have anything which will help (like a payment holiday). They will be as keen as you that the development is completed as quickly as possible and within budget.
The current circumstances may present an opportunity for project managers and investors to use the time to complete off-site tasks such as design, technical coordination and value engineering.
It could also be a good time to review your procurement strategy and consider any additional risks. This could help you minimise further loss of time in the future, helping your project run smoothly once your site can reopen.
Ask for advice
If you need any specific advice on your project, please get in touch with Rive Gauche London Ltd:
Thank you to Nicolas Roux from Rive Gauche London for this post. Please contact nicolas@rivegauchelondon.com for any further information.