Development lenders need to be aware of project feasibility when companies procure pipelines 'extremely competitively'

In a filmed interview with Development Finance Today, Blane Perrotton, managing director at Pride IMS, has urged lenders to be careful around issues that could arise from potentially lower project costs.

Last week, the surveyor announced the launch of his boutique consultancy which focuses solely on project monitoring.

Pride IMS has set out to “significantly raise the bar” within project monitoring, a sector Blane feels is “hugely overlooked” within the wider surveying community. 

DFT asked Blane what key advice he was giving development lenders right now, and what things they should they be looking out for.

“The issue we have at the moment is [that] people are trying to secure workload and pipeline,” he said, as a result of the impact Covid-19 has had on many businesses, globally. 

Referencing recent data on the US construction market from Turner’s Building Cost Index, he claimed that with labour becoming cheaper, and there being difficulties around materials, people are tendering and procuring their pipelines “extremely competitively”.

“So now my advice to lenders is when they are considering new developments, the costs may be coming in lower, as reported by the developer, but what I see is they are going to get hit later down the line, because actually the projects aren’t feasible and they can’t be built.

“I’m always looking at it from the perspective of the lender, that if they were to step in and to be able to build out that scheme, can it be built for the cost?”

He believes that later down the line, they could be impacted.

“…That’s a huge thing at the moment that I’m advising my funders just to be careful of.”

The full interview can be viewed below.

Leave a comment