Cost & commercial management
Procurement strategy in a changing market
Procurement is a commercial decision about risk allocation, not an administrative step between planning and site start.
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Development advisory · 4 min read
Testing development viability early
The cost of testing a scheme properly is small. The cost of discovering that it never worked is not.
Most development risk is priced in long before the first tender return. Early appraisal work decides whether a scheme is worth pursuing at all.
Viability is set at the earliest decisions
By the time a design team is appointed and a planning strategy is agreed, the majority of a scheme's commercial outcome is already determined. Site price, density, unit mix, specification and programme assumptions all lock in value and cost long before any contractor prices the work.
An early appraisal is not a formality to satisfy a funder. It is the point at which the developer decides what the scheme has to achieve, and whether the site can realistically deliver it.
Build the appraisal around what is uncertain
A residual appraisal is only as good as the assumptions beneath it. Sales values, build cost rates, planning contributions, finance terms and programme duration should each be stated explicitly, with a source and a level of confidence attached.
Sensitivity testing matters more than the headline residual figure. Move sales values down five per cent, move build cost up seven and a half per cent, and add six months to the programme. If the scheme only works in the central case, it does not work.
Test options, not a single scheme
Sites rarely have one answer. A lower-density scheme with a shorter planning route can outperform a larger scheme carrying two years of additional risk and finance. Testing three or four credible options side by side is usually the fastest way to find where value actually sits.
Option testing also sharpens negotiation. A developer who knows the land value at which each option stops working has a defensible position on price rather than a hope.
Carry the assumptions forward
The appraisal should not be filed once the site is acquired. It becomes the commercial baseline against which design development, planning conditions, procurement and change are measured throughout the project.
Where a decision moves the scheme away from that baseline, the effect on residual value should be visible immediately, not at the next funding review.
In short
- Fix and record every material assumption before committing capital.
- Sensitivity test downside cases; judge the scheme on those, not the central case.
- Compare credible options rather than refining a single scheme.
- Keep the appraisal live as the commercial baseline through delivery.
Project management
Keeping commercial control through delivery
Cost certainty on site comes from disciplined change control, honest reporting and decisions taken at the right time.
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