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A Tip Top Job

The Asian Executive


Client focus and close collaboration saves money and time

Major Australian developer, Little Projects transformed the former 12,000 square metre heritage Tip Top bakery in Brunswick East into a highly-successful lifestyle precinct. As part of its commitment to servicing the needs of the local community, an innovative 92-place childcare centre was created with a rooftop area for a secure and pleasant playing area within a multi-unit residential development. The 411-apartment and retail complex was awarded the prestigious Property Review Australia, Heritage Property Award at this year’s Australia Property Institute Excellence in Property Awards.

Little Projects appointed trusted and experienced project management company, Pomeroy Pacific to achieve a successful outcome at Tip Top Brunswick East.

In this article, The Asian Executive interviews both Little Projects’ Managing Director, Michael Fox and Pomeroy Pacific’s Founder and Executive Chairman, Dug Pomeroy to gain insight into how complex projects can be successfully undertaken and managed with an eye towards meeting multiple and at times competing objectives.

 

TAE

The historic Tip Top site is not a site which is straight-forward to develop. In fact, the site was on the market for nearly ten years before Little Projects stepped in and purchased the site after a dismal development history.

 

Michael Fox

When I first came to review the site, I knew what kind of deal I wanted in order to justify the investment. After a long period of nothing happening with the site, the mortgagee was by then amenable to a fair deal. Still, once we took over the site and carried out a really detailed design and tender process, the costs exceeded our initial estimated and a rigorous value management process was required.

It was during this period that my discussions with Dug and the Pomeroy team really set about helping my team cut through the key issues to get the development costs to where we were comfortable without sacrificing any of the architectural integrity.

I would go as far as to say that the amount of money we saved in construction through value management with Pomeroy Pacific was a great achievement with a project that won a Heritage Award which has vindicated our vision of combining cutting-edge design with an eye towards respecting the history of the site.

 

TAE

Two aspects of the site made it extremely challenging to develop: site contamination and heritage controls. How did you go about dealing with the complexity of the issues surrounding these twin ‘minefields’ of property development?

 

Dug Pomeroy

When you properly anticipate and comply with all the requirements of both these challenges, they don’t need to become a ‘minefield’, as you put it, for your Client.

With contamination, you need to focus on the specifics of the nature of the contamination and carefully budget for either its removal or containment.

We apply the same working principle with heritage – you need to appreciate what is essential and less essential and work cooperatively with the heritage authorities to negotiate a good outcome for all parties concerned.

We believe in early negotiation with the relevant authorities with an attitude that we are there to cooperate with them.

 

Michael Fox

Yes, the point being, that the site did dissuade other developers from taking the challenge by virtue of the prospect of heavy contamination. I never saw it that way because I have a background in developing industrial land and dealing with contamination which is a regular part of what we do. Environmental laws may have become more stringent over the years, but the process is manageable and mostly quantifiable.

 

Dug Pomeroy

A lot of overseas developers get caught by surprise by the strictness of our environmental laws and find it quite disturbing when they first have to deal with such a regulated process for its removal and/or containment.

 

TAE

From an overseas development perspective, there is a tendency not to undertake a high level of due diligence in site acquisition that factors in the cost of remediating a site with a known history of contamination.

 

Dug Pomeroy

There’s always a higher level of risk with a contaminated site, however, with experience, you can actually put some parameters around the problem. You can’t always get it right but good developers assess the risk and buy accordingly by adjusting their purchase price.

 

Michael Fox

Your offer price for a site must factor your estimation of how much you think it would cost to remediate a site. And you must stay firm by your position.

 

TAE

It seems to me that there is a high level of both experience and part intuition that was required to acquire a site that had already been on the market for many years with all its inherent risks.

 

Dug Pomeroy

Experience, part-intuition and having a good team around you with the propert advice counts for a lot in making an acquisition that has risk and Michael has years of experience and a good team within his organisation that provides him the support to embark on sites such as Tip Top. When you are presented with a good development site with all the appropriate hallmarks, your experience tells you to acquire it, provided you can manage its potential risks within the price sought for the site.

 

TAE

Could you talk to us more specifically about the value mentioned processes Pomeroy Pacific practices to ensure that you keep your Client profitable?

 

Dug Pomeroy

In order to provide good Project Management services to your Client, you need a Client who is commercially minded, cooperative and open to suggestions. Above all else, we need to be clear about our Clients needs, objectives and outcomes from the beginning. If we are clear about the objectives, we can focus on meeting them.

On the Tip Top project, our objectives were to value manage the construction costs budget and maintaining our town planning obligations while not compromising quality. The second objective was to act as Project Manager, delivering the project within the parameters of the first objective. I am pleased to say that we achieved our Clients objectives, delivering a profitable project, on budget and ahead of schedule. It certainly helps when both the Developer and Prokect Manager bring a wealth of experience to the table particularly when solving complex development challenges, Tip Top is a great example of how experienced partners can work together to achieve a great outcome.

 

TAE

Other developers can become beholden to the influence that architects exert over their projects which can lead to cost overruns. Can you comment on this general observation?

 

Dug Pomeroy

There are no good reasons for cost overruns and we ensure that this does not occur on our projects. Architects, by their nature vie3w their projects like children and they naturally aspire to have the best for them. The role and true value of a good project manager is to work collaboratively with the architect and ensure that all consultants and the builder work harmoniously as a functional team to achieve the goals of the developer Client.

 

TAE

What other items does Pomeroy Pacific focus on to value manage a project?

 

Dug Pomeroy

There are many protocols that we undertake to value manage our Clients projects. These include everything from structural review to assessment of build-ability issues. We review standardisations, modulation and repetition. We review the use of materials, layouts and identify likely issues that could impact the project from authorities to compliance. We constantly think of ways to assist our Clients in maximising their objectives. Our attitude always is to treat our Client’s money as we would treat our own money – with discretionary care.

 

TAE

With the tidal wave of Asian capital in Australian property development and with it a different set of expectations surrounding investment outcomes, what challenged are presented to a company like Pomeroy Pacific?

 

Dug Pomeroy

There are always challenges with new market players. We can deliver any project. It doesn’t matter whether the Client is local or from overseas. We don’t pretend to work miracles but we do work with the benefit of 44 years of development experience. The challenge that we face with ‘first timer’ Asian Clients is predominantly developing trust. Project Management services are not common in Asian countries nor necessarily required. Australia, however, is a different playing field which is far more structured, regulated and regimented. A trusted Development and Project Management company often assists in achieving a profitable outcome. This message is not always seen or accepted by foreign developers. Our advice to Asian Investors is to get the best local advice possible from accredited, reputable Consultants and Development and Project Management companies.

 

TAE

You obviously saw the benefit in using Pomeroy Pacific on your Tip Top project and had the trust in their ability to deliver a project in excess of $250 million in sales value.

 

Michael Fox

Most of our projects are managed in house. With a project of the magnitude of Tip Top, we were confident, given our prior experience with Pomeroy’s that they were the right choice for the job. To Dug’s credit, his team finished the project ahead of schedule and I have to say Pomeroy Pacific did a fantastic job of it. Tip Top consisted of six individually designed buildings above a level basement – the majority of our developments have only one building. With other projects, I can always count on him to sort out a problem and come up with solid solutions. The Tip Top project was never straight-forward from the beginning and needed a company of Dug’s experience and integrity to take charge of its complexities to get the job done.

 

Dug Pomeroy

Michael and the Little Projects team deserve full credit in having the vision to conceptualise such a project that is world class in design and finish. The success of the project is a testament to all those that participated in the project. Both Little Projects and Pomeroy Pacific are proud of our roles in providing a fantastic legacy to the City of Moreland and look forward to continuing and repeating our collaboration in the future.

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