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By Toby White, head of project monitoring and project management at JLL
Having worked in the project monitoring sector for the past 10+ years, I have seen the good, bad and indifferent in terms of property development and funding practice.To put it simply, a monitor, acting on behalf of a funder or investor, sees a huge range of different approaches to development and the inevitable obstacles encountered.Like every development, every deal is different, and the assortment of people, products and practices keeps things interesting. This variety is what drew me to monitoring, and is what keeps me excited about the day job.Indeed, the importance of proper due diligence should not be underestimated, and is reflected by the Royal Institution of Chartered Surveyors producing two guidance notes for the monitoring niche in the past 10 years. The professional advice of a monitor will, of course, benefit the monitors’ client, but additionally, from my experience, most of the advice provided also aids the developer in reducing their own risk and smoothing the development process. Monitors can come from a variety of backgrounds and variety is good if there is a depth of subject knowledge, which can be applied to the specifics of any given development.A view commonly held is that the monitoring fees, which are normally a cost to the developer, are simply that: an additional cost to the development. It is factually correct that our fees are a cost of financing the development, but this view doesn’t acknowledge the benefit actually being derived from the cost. Therefore, viewing monitoring fees from a purely cost perspective is, in my opinion, short-sighted.Why do we need monitors?Funders and investors core business is not construction and development, and conversely, a developer’s core business is not finance and funding. The monitor can be seen to be the funder/investor’s equivalent of the developer’s employers agent or a contract administrator. It’s all about protecting their clients’ interests, while facilitating the development.The project monitor offers a technical-biased interpretation of the specifics of any given development in coordination with the specifics of the funding/development agreement. In my experience, the monitoring is generally the third-party consultant that actively coordinates with the funder/investors as well as the lawyer and valuer.The inherently tangible aspects of construction and development benefit from pragmatism and early technical input into the core agreements linking the developer and funder/investor, which allows for the practicalities of development to be properly reflected in the core agreement. This reduces the risk of unworkable provisions causing delays later, which can require amendments to previously executed documentation.Adding valueThe breadth of knowledge held by an experienced, dedicated professional monitor can provide a wealth of value to a development on which they are deployed. As a minimum, they are another set of professional eyes at the team table (generally with a broader understanding of development, and wider experience of projects than the core team) able to offer insight into risks and options. The nature of the monitoring field means that experienced monitors have a deep understanding of the entire development cycle, and their appointment by the funder/investor means they understand and can guide the development through the funding process.This facilitation can provide vast benefits, such as developer risk mitigation, as well as the monitoring’s appointing client, with the added benefit that the developer has an informed professional able to facilitate the two-way relationship, providing early warning of bumps in the journey to completion.However, the development will only maximise the benefit of the experience of the monitor if they and their team fully engage and act as one team. After all, the overriding objective of everyone involved should never deviate from a win-win outcome (successful development feeds the pipeline for everyone involved).An experienced, professionally qualified, dedicated monitoring surveyor should be viewed as an asset to a development, and the development team should look to maximise the benefit through engagement.
Posted on Development Finance Today
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