To thrive in today’s competitive and highly regulated environment, residential and commercial property developers have had to become more agile, dynamic and responsive. Matt Ling, Director of Business Development at Leep Utilities, explores how modern approaches to utilities can create close partnerships that support this.
Whether operating in residential or commercial markets, these are challenging times for developers. Land is at a premium, planning constraints continue to create bottlenecks, and supply-chain unpredictability is causing delays – all of which threaten quality, reputation, and profitability. Requirements for sustainable and affordable development are tighter than ever, and have to be achieved while also meeting national, local and project-specific planning requirements.
As a result, developers are having to get smarter. Project management, cost-control and efficiency have always been key to project milestones: getting investment, completing on time, and driving profitability forward. But increasingly, developers are exploring more innovative solutions. Data-driven decision-making helps identify emerging locations and forecast demand. Denser designs allow better returns from a parcel of land, while approaches such as modern methods of construction (MMC) help accelerate build times, lowering cost and risk.
However, new approaches must be mirrored by others throughout the construction supply chain if they’re to succeed. Architects, planners, suppliers and contractors must all be able to support more flexible and agile ways of working. It’s why, increasingly, we see developers looking to strategic partnerships to help secure investment, pool expertise, and lower the costs and risks.
Partnerships as a means to unlock value
Nowhere is a partnership-based approach more important than in the utilities sector. A development’s utilities infrastructure contributes significantly to the cost and complexity of a project, particularly in modern, denser developments which may have to include onsite renewable energy, water reduction technologies, or low-carbon heat. Developers need to find pathways to higher standards without the associated increase in costs.
Traditionally, developers and utilities businesses have had transactional relationships that focus mainly on price, with incumbent utilities operators contracted to supply gas, electricity or water connections to their own specification. These incumbents tend to have a rigid, specific way of doing things, often as a result of the formal legislation and frameworks under which they have to operate. But the impact for developers is that it can be slow to resolve issues, which can hold up work and impact project profitability.
That’s changing now, though. The utilities industry is experiencing a fundamental transformation, away from transactional relationships and towards strategic partnerships built on shared values. Within water, the new appointments and variations (NAVs) model allows more innovative, agile firms to provide water and sewerage services to new developments. In electricity, independent network distribution operators (IDNOs) can work with developers to create infrastructure fit for modern demands. In addition, heat network partners can provide new solutions to the environmental and cost challenges posed by space and water heating.
Like traditional incumbents, modern utility businesses do this through network adoption – where the utility provider takes over the ownership of the developer’s water, electricity or heat assets. But developers get far more proactive support working with a modern utility company, with a partnership that works throughout the development project to streamline the development process and maximise the value of the end network assets.
With the utility company involved in the conception, planning and delivery of sites from day one, the developer benefits from a solution-led approach, with services designed to meet the specific needs of the development – and ultimately those of the people who will use or live in the buildings. This joint approach ensures that issues are spotted early and help keep the project on track – for example, by being flexible on equipment specification or the commercial elements of a project.
It’s also a closer working model that supports longer-term, strategic partnerships in which developers and utilities providers can deliver values-based results over multiple projects. By working with a known and trusted partner, who can deliver agility and innovation in complex operating conditions, developers don’t have to start from scratch every time, or repeatedly set out their expectations and needs – they have a strategic partner, already fully onboard.
And because this type of partnership approach maximises the end value of the utility assets, it delivers the project a cashflow boost at the point of adoption, while also removing the burden of ongoing utilities management and servicing for the developer.
Multi-utility – a simple solution to complex problems
Developers know only too well the complexity of working with multiple contractors to deliver a project’s power, water and heat demands. Coordinating and managing stand-alone utilities takes time and resources, and come with multiple crews, competing interests, and plans that don’t always align.
Partnering with a multi-utility removes this burden and brings multiple other advantages. Involved from day one, a single trusted partner can provide an integrated service better able to match the true needs of the development. There are time and cost savings – for example through better planned, coordinated ground works – and a concentration of cross-utility experience.
This helps to navigate the processes of an individual incumbent provider, but also gives developers an expert overview of how their interaction might affect planning and build decisions. And with deep industry connections, multi-utilities can advise on processes, and act as trusted intermediaries between, the developer and incumbents such as distribution network operators (DNOs) or water suppliers.
Reducing risk, hitting milestones
Building utilities infrastructure is a complex part of any development, and profitability depends on successfully navigating time and financial pressures. Delays, planning failures and oversights can all impact build schedules, with risks to cashflow, profitability – and even business survival.
Having trusted partners enables you to work with others who share your vision and are committed to the same delivery goals as your business. It provides a framework for better project management, smoother planning and delivery, and a pooling of expertise and experience that supports better outcomes. Risks and blockers are identified early and dealt with by invested experts, so development projects remain on track. More than that, you’ll benefit from networks that are better designed, better built, and serve to strengthen everybody’s reputation.
Find out more on our Developer webpage Developers – Leep Utilities – Network adoptions done right or get in touch via [email protected]