A Quick Guide to Land Development
By
Kenneth R. Dees, P.E., CFM
Copyright © 2024, All Rights Reserved
This brief narrative is intended to serve as a guide for those who wish to become land developers. The intent is to reveal the nature of this type of work, how we can best work as a member of your team and especially, the principles upon which our organization is founded including our beliefs regarding issues which will affect the success of your development.
Traits of Great Land Developers
There is one fundamental truth that applies to all our land developer clients. Every single client is unique. Often, they are home builders who have decided to become involved in land development. However, we have had clients come to us from all walks in life. Some are equipped better than others to deal with the complexity of land development. Here are a few traits as well as things that great land developers understand.
Vision
All clients have a vision before we are commissioned to join their team. One of our key roles is to validate their vision and, in some cases, to help tweak it a bit to insure it’s sound.
The Team
It’s especially important to understand the vital nature of developing a team. The team must be comprised of members who will work together to perfect our client’s vision, as well as to carry out the Action Plan. A wise land developer will seek to develop a great team and take advantage of the combined knowledge, experience, and wisdom of the team but especially, acknowledges that without a team, they’re taking on unnecessary risks by “going it alone”.
“The team should work together to strengthen the vision and execute the plan of action”
Diplomacy
Hat in Hand diplomacy is essential when dealing with the various parties that you will be encountered during the project. Each party has its own unique stake in the opportunity. The role of the land developer is to understand these differences and ensure that all parties are happy.
“Happy can take you places that unhappy never will”
Promotion
All great things require a great deal of promotion before they gain acceptance. Remember that people laughed at the folly of Will and Orville Wright. The degree of promotion is directly proportional to the degree of uniqueness of a product. The vision of a good developer can be contagious, provided that they truly believe in that vision. The vision must be shared and accepted by many people before it can become formally validated.
“Remember that people laughed at the folly of Will and Orville Wright”
The Plan
A great developer is one part initiator and one part visionary. Your primarily role is really to prepare a plan for success. However, the plan must be vetted against the stark reality of the natural world, basic economic principals, legalities and regulatory compliance to be taken from the conceptual plan stage to a formal business plan. That is where others come into play.
To accomplish this feat, a team of experts must be consulted before any plan of action can be developed. For this reason, we always recommend that we become involved in the planning of a project sooner than later. We also depend upon the input of the overall team.
Feasibility and Due Diligence Studies – Regardless of the initial appeal of an opportunity, great care must be exercised in identifying the true nature of an opportunity. To do so, we always recommend that the following questions be answered:
1. What is the return on investment?
2. What are the challenges?
3. What resources will be needed?
4. What is the plan of action?
Return on Investment
Too often, we think of return on investment only in terms of dollars in the bank. However, there are other stakeholders in an opportunity, including the customer, the team and especially, governing authorities. Each stakeholder has a different concept of return on investment. For instance, a governing agency quite often will look at an opportunity in terms of its appeal at the voting booth and especially, what the opportunity will mean in terms of tax dollars.
Quite often, stakeholders clash due to their varied interests and expectations regarding a particular opportunity. A good plan will account for this discrepancy in thought.
“Each stakeholder has a different concept of return on investment”
Challenges
Every single opportunity is unique, as is its juxtaposition on this planet. For this reason, we must approach a project as if we had never completed one before. Assumptions can prove to be a fatal flaw. Before we prepare a plan of action, we must do our best to identify the challenges of an opportunity before any portion of the plan is carried out, lest we paint ourselves into the proverbial corner, at great expense and waste of time.
“Every opportunity is unique, as is its juxtaposition on this planet”
Natural Constraints – The assumption that the laws of nature can be violated will always prove erroneous. The assumption that a particular opportunity can be compared to another can oftentimes prove to be erroneous.
“At the end of the day, physics prevails”
Man-made Constraints
Like nature, government regulations are localized and can often throw us a curve ball unless we identify these regulations and plan accordingly. As the laws of nature mandate that water must flow downhill (unless it is engineered to do otherwise), the laws of man require that they be identified and considered when formulating a plan of action. A failure on the part of the team to acknowledge this fundamental concept is the quickest way to delay and in some cases, defeat a project.
“The Laws of Man are just as important as the Laws of Nature”
Resources
Time and money are the two investments which always come to mind when we mention the word, resources. How much does it cost? When can we get it done? Although these questions are valid, there are additional questions which must be answered. When must the money be paid and to whom? What milestones in time must we identify and meet along the path to success?
Financing
All great enterprises require funding, including monetary resources, energy and stamina. Without these three elements, the enterprise is under-funded.
“Energy and Stamina are just as important as Funding”
The true cost of project is not just the construction cost, but the operational cost prior to and after construction. What type of money does it take to get started? When must I pay for construction? What are the ongoing costs of the project after construction? What taxes must I pay and when? What do governing authorities charge and when? All of these questions should be addressed as part of the feasibility study for a particular opportunity.
The Team
It’s imperative to identify the team which will be required for a specific project. As we have pointed out, due to the arbitrary and sometimes chaotic order of nature, every project is unique. Furthermore, the regulations which must be honored vary considerably, dependent upon the locale in which the project resides. Other than the limitations posed by nature, the limitations posed by man are the single most important consideration when planning and executing a project. It’s imperative to recruit the appropriate professionals to deal with the challenges which will appear during execution of the Plan of Action.
“Successful creation of the team is paramount to succeed”
A typical team can consist of the following:
- Land Developer
- Attorney
- Accountant
- Land Planner
- Civil Engineer
- Architect
- Surveyor
- Landscape Architect
- Geotechnical Engineer
- Structural Engineer
- General Contractor
- Sub-Contractor(s)
Plan of Action
We always recommend writing a business plan for every opportunity. The business plan should include a project calendar which identifies each task along with its features including its projects start time and duration, as well as relationship with all other tasks. Calculation of the critical path is just that, critical, to the timely success of an opportunity. Time is a fundamental parameter of success. Finally, understand that your friendly engineer cannot in any way guarantee the timeliness of a project. The time required for a project to be “shovel ready” largely is dependent upon the processes of local, state and federal agencies.
“Time a fundamental parameter of success”
Strategic Initiatives
It’s imperative for the new land developer to understand his responsibilities of being primarily responsible for the direction of a project. Sun Tzu’s “The Art of War” is great reading for further study regarding what it takes to be a great general. I have listed below some key strategies to keep in mind. I’ve included three strategies which I believe are instrumental to the success of every opportunity:
- Need to Know – One thing has stuck with me since my days in the military, “need to know”. If someone does not need to know of some facet of the battle plan, they should not know. This simple credo will prove invaluable in the land development business.
- Know Thy Enemy – Understand that there will be others who will not agree with your vision. Some of these naysayers may have power over the success of your project and if left unfettered, can delay or even defeat your vision. Provided that you understand this, you can take steps to overcome defeat. The first step is to understand and accept this key provision of success.
- Plan for Success – the challenges presented by land development should be construed as a series of barriers to the success of your vision. In order to circumvent these walls, do not charge head-on into the wall and demand that it moves. It will not. Sometimes it’s easier to eliminate the wall by adjusting the plan of action. Above all else, do not question the validity of the wall. This is futile and not only a waste of time but can lead to serious problems.
In summary, I hope that this brief treatise is helpful. If it helps you to identify things that must be considered, then I have succeeded!
Best Wishes!
Kenneth R. Dees, P.E., CFM
President
Chalk Mountain LLC
March 20, 2024