New Development and Compliance Costs Frustrate Builders & Lenders
The construction industry is facing new development and compliance costs, but we also have new tools to cut costs in other areas
Whether you are a builder or a lender, you’ve no doubt experienced the frustration of having projects go over budget due to various new development and compliance costs imposed to protect the environment and/or shore up local city finances.
After noticing this trend, Builder Magazine surveyed 100 home building executives to collect some specific examples of new costs that simply did not exist 10 years ago:
Erosion Control Costs: Even in areas where it only rarely rains, builders have to comply with Storm water Pollution Prevention Plan regulations. Many builders have contractors on site to plan, sandbag, sweep, monitor, and clean up the building site daily. Costs can easily total $5,000 per home.
Energy Code Costs: Updates to the energy code have the potential to add significantly to project costs. The average cost per home is about $2,500, but some California builders put the number closer to $8,000.
Fire Sprinkler Costs: In markets requiring the installation of fire sprinklers to new townhomes and sometimes to new single family homes, project costs can increase $5,000 to $10,000 per home.
Delay Costs: Builders across the country report that planning and permit offices seem more understaffed than ever, which introduces costly delays in plan approvals, building permits, and inspections.
These kinds of costs are not only eating away at builders’ and lenders’ bottom lines; they are also making new home construction an uneconomical prospect when it comes to affordable, entry-level housing.
Fortunately, there are ways to help mitigate the impact of these rising costs—if not compensate for them entirely.
One approach you can take is upgrading your software to a more efficient product that is going to stream line your operations and save you time and money. ECL Software has options specifically designed for both the builder and lender side of the construction business. Both of these options (CMIS for builders and Fund Control for lenders) run on a single entry platform that allows for instant, real-time observation, management, and communication on all important parameters and functions. It can replace redundant systems and also help reduce the costly errors that normally accompany repetitive data entry tasks.
If you would like to learn more about how our Fund Control software for banks or CMIS software for general contractors can streamline your business and help you tackle rising costs, please contact us today. We’ll be happy to set up a free online demo just for you.