adverse weather

How can adverse weather impact a development project?



As a result of heavy snowfall across the UK during March, a number of construction sites had to temporarily bring their operations to a halt.

At the time, the Federation of Master Builders (FMB) claimed that some firms reported that it was too cold to lay bricks.

Following this, Development Finance Today looked into the impact that weather can have on construction work, and what measures developers and development finance lenders can put in place to prevent delays.

What measures are normally put in place for extreme weather?

According to the Mortar Industry Association (MIA), masonry construction should be discontinued when the air temperature drops below 3°C – unless the mortar temperature can be kept at a minimum temperature of 4°C until it has hardened – as this can cause the characteristics of the mortar to be affected.

During the summer in excessive heat, the MIA claimed that evaporation of water from the mortar was a main concern, meaning that if there isn’t sufficient water present, the bond between the mortar and masonry unit may be reduced.

Michael Dean, principal at Avamore Capital, said: “Weather conditions in the UK (especially in the South where we operate) are rarely so bad that works should ever shut down, unless the ground is extremely frozen.

“A borrower is going to find greater issues with the provision of materials or workers on a 365-day cycle than issues with the weather.

“There are no provisions in loan agreements we are aware of that [can] extend loan terms.

“Nor should there be if a borrower requests an adequate loan term.

“Reasons for requesting an inadequate term will be the consequence of seeking to minimise the period of interest roll-up/sales tail in order to maximise the net loan advance made by the lender.”

Robert Simpson, associate director at Naismiths, added: “For the industry as a whole, such severe weather is a serious problem as it can result in the loss of productive days.

“Clearly, it’s not possible to predict individual weather events months in advance, but basic good practice would be to work with what you do know and coordinate site activities around the local weather cycle.

“However, even with the best planning there are only so many days in the year when construction work will be achievable, and unfortunately developers can often be overly optimistic in their targets with the provision of an adequate programme float often getting overlooked.

“There are a variety of contractual mechanisms to facilitate the allocation of risk and responsibility in these events.

“However, I would always recommend that any mitigation strategy be approached collaboratively.”

How can lenders accommodate developments delayed by adverse weather?

If construction has been suspended due to adverse weather conditions, this can have a knock-on effect for the whole development.

When asked how lenders could accommodate such delays, Michael said: “Be patient and allow a reasonable LTV buffer and/or length of loan term.

“A late, but complete development is preferable to an incomplete development.”


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