Feet On The Street – Utilities, You Cannot Start Early Enough
What everyone who has never built a project does not understand is that your destiny is in the hands of so many others. From Cities, Counties, Fire Departments, Neighborhood Councils, Water Districts, School Districts, Planning Departments, Subcontractors and the like all affect the cost and time it takes to approve and build a project.
Utility providers consistently, and often, negatively impact construction schedules. Now, not every single provider falls under this description, but in our decades of experience, and especially during the Covid and post-Covid eras. Quick Draw’s reporting shows that final utility connections are one of the biggest delays in construction projects. Without them, a certificate of occupancy cannot be issued which means revenues and even refinancing is on hold, adding another unforeseen cost.
In May 2024, a utility business representative’s email response to our client’s begging request for electrical service stated, “To be completely transparent our scheduling for construction is currently falling in January 2025.” This means that after plans are approved (no small feat) and conduit pipes are in the ground, it takes 7 months to get the first inspection and likely many weeks afterwards to be connected to permanent power.
What can you do??
Identify
During the due diligence process, identify all of the utility providers. These include Electrical, Sewer, Water and Gas. The size of the providers can vary. From large cities to one water district that operates out of a small house with a yard, they are all different. This is critical, especially if the project location is new to your business.
Engage
Engage a Utility consultant or a Civil Engineer at the earliest possible time (due diligence before you close on the purchase). We have seen scenarios where an existing utility system was immediately adjacent to the subject property, yet the requirement included upsizing the system for the property and to serve future projects. In one case, the utility provider stopped issuing will serve letters all together.
Budget
It is critical to spend the time to understand the requirements and estimated costs for each provider. Once you have calculated the costs, add 10% and place it into contingency. Do not use prior projects costs as gospel. The devil is in the details.
Schedule
With your findings, build estimates into the construction schedule and be realistic. 95% of projects go over schedule.
Pay and Start
At the earliest possible time, pay the required fees and start your plans immediately. As we all know, this takes time and requires corrections and revisions. The goal is to have approved plans with fees paid well ahead of the installation. Some good news, not all utilities require plans!
Meet your new friends!
Establish a relationship with your representative. I know this is harder than it sounds, but no one ever got mad when showing up with a box of doughnuts and thanking them for working on your project.
Buy
If your project requires materials that have long manufacturing lead times, like switch gear, order ASAP. Your construction lender will support this as well.
If you have found this information useful but have questions, please contact me on my cell (818) 254-5823. Thank you!
– Greg Norris
QuickDraw is the go-to fund control partner for residential, commercial and industrial construction projects. From coast to coast, QuickDraw makes the fund disbursement process a positive experience for all. We provide an array of services including: Fund Control, Site Inspections, Cost Reviews and Portfolio Management.