GLE Associates, Inc.
Facebook
LinkedIn
888.453.4531
  • About
    • Locations
  • Services
  • Projects
  • Federal
  • Careers
  • Our Blog
  • Contact us
Previous post What Is a Building Condition Assessment and When Do You Need One? Next post What You Need to Know About Asbestos Air Testing

How to Protect Your Construction Project from a Common Lending Mistake

Jill Hanson, CDT, CITMay 16, 2019 Jill Hanson, CDT, CIT

In an ideal world, every new construction project would take place on a plot of perfectly clean and prepared land that is well suited exactly for the purpose.

In reality, most projects, especially those in urban areas, are sited on property that has a history, and not always a clean one. Often, that history means the soil or groundwater is contaminated, and the property requires remediation before the construction project can receive a certificate of occupancy.

In many cases, there are two loans on the project–the property loan and the construction loan. When clean-up is required for the property loan or to meet governmental regulations, this means there are two sets of requirements: Construction requirements, and environmental requirements.

Usually, these two sets of requirements exist in siloes. This can create unnecessary risk for the lender and the construction company, when environmental requirements are not communicated effectively to the construction team.

If any of the requirements are missed as a result, the project can come to a grinding halt, lose funding, or get slapped with fines.

Here’s how to protect your next project from an expensive snafu.

How The Problem Occurs

Most lenders and property purchasers know to invest in a Phase I and/or Phase II Environmental Site Assessment (ESA) prior to making a purchase of land.

Depending on the results of the ESA, lenders may require certain remediation be completed on the property prior to or following the purchase.

In most cases, once the land is secured, the property owner begins the process of planning for construction. Environmental remediation may occur during this stage, or may occur later in the process.

Once construction documents are prepared and a GC selected for the project, the lender may require a Plan and Cost Review (PCR) be conducted to ensure that the GC’s plans are complete and associated costs are reasonable. Construction Loan Inspections (CLIs) may be used to ensure that materials are in place and stored correctly during construction, work is completed as stated, contingencies are met, and other terms of the contract are met satisfactorily.

However, a standard PCR and CLI are not designed to ensure that environmental regulations are being met. These requirements are usually put in place by a different department at the bank or even a different bank, and rarely communicated effectively to the construction lending team.

As a result, a construction project can run into regulatory problems and unnecessary expenses when environmental requirements fail to be met. This can get costly when the remediation requires work in place to be dismantled and reworked.

How to Protect Your Projects

The solution to this problem is to hire a company with experience in both the construction side and the environmental side, to conduct a complete review of all requirements on both sides.

A firm like GLE can conduct a PCR that incorporates environmental requirements, and CLIs that review whether they are being met as the project proceeds.

We would love to talk to you about how we can help you mitigate risk on your next construction project. Speak with our experts today.

Previous post What Is a Building Condition Assessment and When Do You Need One? Next post What You Need to Know About Asbestos Air Testing

Related Articles

The Secret (Asbestos) History of Ca’ d’Zan, the Ringling Family Mansion

April 28, 2016Robert B. Greene, PE, PG, CIH, LEED AP Robert B. Greene, PE, PG, CIH, LEED AP

9 Costly Renovation Mistakes to Avoid

April 28, 2016Robert B. Greene, PE, PG, CIH, LEED AP Robert B. Greene, PE, PG, CIH, LEED AP
renovation mistakes

What Is a Property Condition Assessment

April 28, 2016Craig Gardei, AIA, LEED AP Craig Gardei, AIA, LEED AP
Jill Hanson, CDT, CIT Construction Consulting Services Manager Ms. Hanson has been involved in numerous aspects of the construction industry for 23 years. Starting with GLE in 2000, she found her passion in the construction industry and worked through project inspector and project manager positions. Now as the Construction Consulting Services Manager, she works with GLE’s financial institution clients nationwide monitoring construction loan activities for more than 30 national, regional, and community-based lending institutions.

Blog Subscription

  • This field is for validation purposes and should be left unchanged.

Categories

  • Building Forensics
  • Catastrophe Response
  • Civil Engineering
  • Construction Consulting
  • Indoor Environmental
  • Industrial Hygiene
  • MEP Engineering
  • Outdoor Environmental
  • Property Condition Assessment
  • Who We Serve

Search

How to Protect Your Construction Project from a Common Lending Mistake

Services

  • Indoor Environmental
  • Outdoor Environmental
  • Industrial Hygiene
  • Construction Consulting
  • Building Forensics
  • Property Condition Assessment
  • Catastrophe & Insurance Services

Site Links

  • Home
  • Our Blog
  • About
  • Career Opportunities
  • Contact us
  • Locations

Learn More

Subscribe To The GLE Blog

  • This field is for validation purposes and should be left unchanged.
© 2022 GLE Associates, Inc. All Rights Reserved. AR 0007729; PE RY5483; Asbestos ZA 0000034; PG 1737
Design & Developed by TranquilBlue

Subscribe To The GLE Blog

Blog Signup

  • This field is for validation purposes and should be left unchanged.