Jobsite Due Diligence Can Prevent Costly Delays

Good building sites remain on the market. But many of those sites must be made good with early planning and intervention.

When a prospective site can be made suitable for building by extending utilities (such as water, electricity or gas lines) or infrastructure (such as paving or rail services), funding may be available to offset these costs.
When a prospective site can be made suitable for building by extending utilities (such as water, electricity or gas lines) or infrastructure (such as paving or rail services), funding may be available to offset these costs.

If you’ve attended a conference focused on site selection for manufacturing or distribution facilities lately, you’ve likely heard people saying, “all the good building sites are gone.”

One reason for this perception is that most currently available sites are not on untouched land. When a site has a history of previous occupancy, there is a risk that environmental contamination has occurred. Another reason for the perception is that geologically “simple” sites are becoming rarer.

Even if a real estate parcel gives the first impression of being easily developable, it is wise to perform comprehensive testing to understand what the scope of work to build on that land might entail. Project teams who have failed to make these early investments and who have consequently paid millions of dollars to mitigate unforeseen conditions are the ones lamenting that “all the good sites are gone.”

For example, one company relied on a geotechnical survey that stated rock would be encountered 5-6 feet beneath the surface. In reality, rock was discovered 6-7 inches below the surface. The shallower rock required increased blasting and fill dirt, adding three months to the schedule and costing the owner an additional $8 million.

Similarly, another company unexpectedly encountered a network of water pipes underground on their chosen site; pipes that had not been identified in geotechnical or environmental site surveys. Situations such as these, while not uncommon, indicate that site surveys and ecological assessments are all too often rudimentary, lacking the amount of thorough testing needed to fully inform the building team.

The solution for achieving cost efficiency on capital projects is to collect and utilize an adequate amount of data during site selection. What constitutes “adequate” may vary by site. For example, it may not be enough to know that rock exists on site; it may also be necessary to know the rock classification, especially if the site is a known expansive rock area. Identifying rock classification may require additional borings as well as lab testing. This is where experienced general contracting partners can play an important role in identifying and mitigating the risks. By working with an experienced preconstruction team, owners and developers can minimize challenges and find great building sites.

Reliable geotechnical reports can provide information on the amount of rock that will need to be excavated, the amount of groundwater or surface water that will need to be pumped out, and the bearing capacities of existing soils. They can even identify slope stability and seismic risks. Geotechnical information is essential for the team to arrive at an optimal site layout, develop a grading and/or shoring plan, lay out utilities, design load-bearing components, and much more. Nevertheless, it is crucial to exercise caution and thoroughly review geotechnical investigations for common issues in the specific region where the construction project is located.

In one case, a geotechnical report was completed early in the site selection process, identifying all the vital information needed to make an informed decision. However, one common impediment to the region was not investigated: expansive shale. In this case, the initial geotechnical report did not test the underlying shale formation for pyritic material, which was common to the region. Pyritic shale, an expansive material, can lead to significant heave problems years after construction when exposed to air during grading activities. While the issue was successfully mitigated, it serves as a good example of understanding the information being provided in relation to the site’s location.

Environmental assessments further assist the team, identifying toxic substances such as lead, oil, asbestos, and other contaminants. Soil borings and well monitoring of groundwater are typical testing approaches. Environmental assessors may also use additional resources to broaden the picture. For example, they may aggregate historical property information or review government and regulatory agencies’ information about the site. Vapor intrusion (VI) models can also be valuable. These models use numerical equations to calculate the movement of volatile organic chemicals (VOCs) through soil and, separately, the movement of those chemicals into the built structure. Since aspects of a building ranging from foundation details to HVAC air exchange rates will influence the ingress of VOCs, VI models provide an excellent illustration of how environmental testing and site and structural designs should go hand-in-hand.

Balancing Out Upfront Costs

The additional testing and analysis required for previously occupied real estate can cost from $30,000-$50,000, but this cost may be recouped in various ways. One way comes in the form of responsive design practices. For example, groundwater may be eliminated by designing and constructing proper drainage systems, and structural systems that work with existing soil conditions may be designed in early. Economic incentives are also often available, including tax incentives and abatements, grants, and low-interest loans. Expenses associated with site remediation may also be rolled into initial land deals.

When a prospective site can be made suitable for building by extending utilities (such as water, electricity or gas lines) or infrastructure (such as paving or rail services), funding may be available to offset these costs. States and municipalities often use funding tools in this way to attract development. One caveat is that companies who obtain this funding may have to meet certain requirements. For example, they may need to guarantee a certain number of new jobs or occupy the site for an agreed-upon amount of time.

Identifying Unsuitable Sites

Some needs—notably water—are not things that can be negotiated for or augmented. In this case, companies who work with preconstruction teams during site selection have a clear advantage, since they will be able to identify and rule out unsuitable sites before construction commences. Some states have already compiled public water and wastewater studies that help project teams identify locations that have the required capacity for a planned project. Knowledgeable general contractors will be able to help the team calculate a close estimation of their project’s operational phase water and wastewater needs, and they will also be able to match the team with appropriate state and other governmental resources. They will even be able to tie in considerations of the company’s environmental, social and governance goals when early, important decisions about resource allocation are being made.

It's safe to say that good building sites remain on the market. But many of those sites must be made good with early planning and intervention. To achieve an equally good final outcome in terms of cost and schedule, it is important to put together a pre-construction team that represents a range of expertise, and to invest in all relevant testing and assessments.