Consultants and Other Stakeholders

A common operational strategy is to manage risk by operating in a limited area, and to rely on local information and contacts (Logan, 1993). For example, development funding is often easier to obtain for developers who have, with past projects, shown a good knowledge of the local area and the sub-markets within. However, when

developers operate in markets and regions other than where they are based, the most common strategy is to use the services of local consultants.

Consultants are commonly used by developers to navigate the complex regulatory environment. However, the costs of hiring consultants can be onerous for smaller operators, and such costs may represent barriers to entry and participation in the industry and affect competition. This, in turn, can have flow-on effects, such as the capacity of industry to deliver innovative climate mitigation or adaptive designs (Coiacetto, 2009). Thus, smaller developers often have to rely on their own ability to acquire knowledge of the complex, and sometimes rapidly changing regulatory environment. This may leave them liable to insurance or legal claims if they omit to keep up to date with the regulation.

A developer or peak consultant coordinating sub-consultants has more control of what goes into the final product, but also increased risk because, “the financial trail goes through you” (AR1, Architect). Such developers are reliant on the expertise of the sub-consultants and if these made recommendations (for example, regarding an energy saving innovation) and the predicted results do not eventuate, the developer may be liable for any costs or legal action. This issue can sometimes lead to perverse incentives, such as cost and time “rewards” for being reactive and conservative.

In this study, a range of consultants were interviewed and surveyed. Like developers, consultants differed widely, with firms ranging from large multi-national ASX-listed companies, to single person operations. Some consultancies operated more as head contractors, coordinating a range of sub-contractors and consultants. Consultants also tended to specialise in specific fields, including planning and climate adaptation.

Similarly to developers, consultancies had been hit hard by the GFC, with two reporting losing 50% or more of their staff during the GFC.

Most larger (and a few smaller) development firms outsourced all their expertise to consultants. The most common consultancy services offered were conducting and submitting planning and development applications to government, and engineering services.

The capacities of private developers in urban climate change adaptation 55 Many larger consultancies also used sub-consultants to conduct further research.

Consultants were also limited by data availability; some expressed frustration with State and Local Government data provision; much government data was expensive, inadequate, poorly communicated, and difficult to obtain. Another issue with

consultants was the reliance on grey literature, and previous consultancy reports.

“Engineers by and large are not necessarily doing the research, or have the time to do the research which is necessary, so we rely on other bodies to present us with the information we should use, so that

probably means engineers are quite reactive as well in terms of dealing with these types of issues” (CS8, Consultant).

Consultants had varying degrees of influence over the development process, depending on whether they were considered a part of the development team.

Sustainability consultants said their worth was judged on how much money they could save the company—unlike engineers or planners, who were seen as integral to the development process. Not all developers viewed consultants favourably: “Consultants tell developers what they are legally obliged to do, and they don’t like it” (CS3,

Consultant).

Most consultants and professionals, such as architects and engineers, are bound by codes of conduct, which require them to be environmentally responsible. One engineer commented that previously the firm only had to be concerned about engineering constraints, but now they also had to be “across the legislation” (CS8, Consultant).

This was thought to have substantially changed the field for engineers and developers.

Finally, it was considered that professionals such as consultants, could instigate change to a certain extent, but they were often limited by the development or construction manager. A few respondents, including a banker, stated that builders deliberately made money out of regulation changes, by issuing variations.

4.3 Conclusions

In accordance with previous research, the property development industry, together with allied professionals, such as consultants, was highly heterogeneous. A wide range of firms practised property development activity; and projects ranged from large, multi-stage, master planned developments to small townhouse complexes. Common themes arising from the research included: the diversity of developers and their product; the time and scale of development; the difficulties in obtaining finance; and the overarching importance of the market. The importance of consultants to the development process was also highlighted.

These all have implications for adaptation to climate change, which presents a variety of risks to developers; which are more or less relevant to different developers.

Moreover, how developers evaluate and deal with climate risks will also be different.

For example, some firms may be willing to accept a bigger climate change risk (i.e.

developing in popular coastal areas) instead of taking a lesser risk in another area, such as market risk (i.e. developing in an inland area).

Further, all developers’ exposure to physical climate risk is limited by their relatively short commitment to a site or project compared to the enduring nature of their development products. Even the longest term development is relatively short term in comparison to the built product, which may endure for a century or longer. Arguably, developers may have a long-term social and environmental responsibility to mitigate and adapt to the risk of climate change hazards for the eventual users of their products.

56 The capacities of private developers in urban climate change adaptation

Development projects also require a considerable investment of financial resources, so gaining access to funding is critical for developers, and for development to occur.

However, because of the risk involved in development, gaining access to finance is traditionally problematic for developers. Moreover, the constraints imposed by financiers also have direct implications for adaptation to climate change.

In the post GFC environment, financiers have become increasingly risk-averse.

Developers noted that banks were very unwilling to fund new or innovative products, which were untested in the market. Further, the time frames required by bankers to repay loans were typically under two years, and this further exacerbated the short term focus of the development industry.

Marketing and selling was absolutely fundamental to development, as most developers wish to profitably sell or lease their development products. It was also fundamental to obtaining finance, as many banks would not lend money unless 75% or more of the development had been pre-sold. Few developers reported any demand for “green”

products by the residential market. The only exception was the retirement housing sector, but this was based on a desire to save money rather than for sustainability.

Finally, consultants were commonly used throughout the development industry, in a range of roles, from specialists, to development coordinators. Consultants were regarded as an important source of expertise, and often used to provide extra “checks and balances” to reduce risk to developers.

The capacities of private developers in urban climate change adaptation 57