How to Estimate Sitework and Land Development Costs
It's one of the most significant question marks facing real estate developers when assessing a project.
Picture this – you’re all in on the site selection process for a new site for your corporate headquarters. You’ve identified a piece of land that could work and hired a civil engineer to help you sketch a quick site plan.
The site seems to layout well for your new building, so you decide to press forward and begin assembling a preliminary development budget.
But here’s where it gets tricky.
It’s one thing to estimate a project’s construction costs – you can rely on 3rd party estimates and historical data to get pretty close.
It's an entirely different challenge to estimate sitework and land development expenses - above ground and subsurface uncertainties can present major budget unknowns.
Let's unpack it.
What is sitework?
In construction, sitework is everything that must be done to prepare a site before building.
The scope of sitework and land development tasks can vary by project, but they're necessary whether you're building a single-family home or a massive mixed-use project.
Sitework begins during the development & construction phase of the real estate development process – once land entitlement is complete, and all permits are obtained during pre-development.
Effective land development will set the vertical construction process up for success by preparing the land according to a project’s site plan for a safe build-out.
Common types of sitework
Not all different types of site work are necessary for every project. Instead, environmental considerations, a municipality's unique guidelines, and parcel-specific characteristics drive precisely what needs to happen to a site before you can begin construction.
There are, however, several common land development tasks that are universal to most projects and worth considering when planning a construction project.
Land clearing
Depending on the physical characteristics of a site, it may need to be cleared before you can begin moving dirt.
Land clearing is the process of removing any trees, shrubs, and large visible rocks from a site. This helps prep the site for future land development tasks, ensuring it's fit for construction.
Construction staking
Construction staking, or a site layout survey, is the process of physically marking and mapping out the land based on the approved site plan.
The staking acts as a land reconnaissance of sorts before any builder breaks ground on a project. It ensures that a project complies with the site development plan and the location of physical improvements are marked at the correct elevations.
Excavation & land grading
Once land is cleared and staked, it needs to be graded for construction. Excessive rocks and soil are removed from the site during the excavation process.
After excavation, the land needs to be graded for construction. Land grading involves leveling the ground or moving the dirt at a specific slope to lay foundations, install roads, and other improvements needed to prepare the land for a structure.
Depending on the site’s topographical characteristics, additional fill dirt may be required to help grade the earth at the precise elevations according to the site development plan.
Erosion control
Erosion control is a critical aspect of the land development process. Construction sites tend to produce significant sediment runoff during sitework and construction. Therefore, erosion control is an important measure to help avoid pollution and any adverse impacts on neighboring properties.
Temporary sediment and erosion control measures include vegetation buffers, silt fences, fiber logs, and other techniques to help avoid the movement of dirt and construction waste.
Utilities
The installation of a site’s utilities brings water, sewer, gas, electric, and storm to a building. Depending on what utilities are present at or near the site, utility work needs to be done.
If public utilities exist at the site, work will be required to connect to the public utilities. But suppose utilities aren't readily accessible to your parcel and exist off-site. In that case, off-site improvements may be required, and utility lines will need to be run from the development to the nearest off-site utility connection.
Alternative systems may be required if you don’t have access to utilities at all – well and septic systems are viable options commonly used. The topography of a site may also dictate what utilities can service a project. For example, if sewage can’t naturally flow by gravity, an on-site sewage pump station may be required to pump the waste out of a site.
Stormwater
Stormwater detention is a critical aspect of land development and a significant component of a site development plan.
As land is developed, impervious surfaces like buildings and roads created during construction increase runoff from rainfall. And when stormwater runoff isn't adequately routed and collected, it often finds itself in waterways and other bodies of water, which leads to increased pollution.
To avoid negative consequences from stormwater runoff, some type of detention or retention device needs to be installed during land development.
Off-site improvements
Many real estate development projects require site work and land development outside of a property’s boundaries.
A project may change vehicular and foot traffic patterns or require re-routing or upgrading public utilities. Municipal requirements may also dictate off-site improvements that need to be made if a property is developed.
A real estate developer would be required to make these improvements as part of their site development plan.
Building pad & foundation
Preparing the building pad for construction provides a solid surface to set a foundation and eventually construct a building. They’re built to withstand erosion from weather and heavy equipment.
A properly constructed building pad is often built in small and repeated increments of filling and compacting dirt to ensure the site doesn’t suffer from cracks or structural damage.
Concrete & paving
In many cases, paving starts before construction as part of land development.
Once the land is graded and building pads constructed, roads and parking lots may be poured to help with the speed and safety of construction and erosion control.
Paving won’t be complete until after construction, but it’s not uncommon for sitework to include much of the parking and paving base.
Landscaping
Many real estate development projects include particular horticulture work that needs to happen to a site.
Landscape irrigation systems may need to be installed, and landscaping features beyond planting trees and grass are incorporated into land development before construction begins.
The deliberate selection of key landscaping features is essential for a development project.
How to estimate sitework & land development costs
The extent of sitework required as part of a real estate development can be overwhelming. And it becomes hard to quantify precisely how much land development will cost, especially because hiccups are often encountered during due diligence, leading to unplanned costs.
When discussing development budgets, the real estate industry often differentiates between hard costs vs. soft costs. That can be helpful with overall budget control but doesn’t help much if you’re trying to estimate costs by the development phase.
So, if you’re trying to estimate sitework costs, you need to take a slightly different approach.
Early in a project, a developer may only have conceptual engineering drawings or a site sketch outlining a proposed site development plan. Therefore, to estimate sitework costs, you need to make a calculated judgment about the extent of work required as outlined by that site plan.
Above ground sitework is a little easier to plan for based on historical cost estimates – grading, paving, curb and gutter, etc. But subsurface conditions and regulatory curveballs present a different challenge.
Here are a couple of the many questions you should consider:
- Are the soils adequate for building construction and installing alternative utility systems if you need them?
- How many linear feet of utility lines will need to be run to serve the property?
- Will the municipality require you to install traffic lanes or make significant improvements to rights-of-way or driveways entering and exiting a property?
- Will you be exposed to wetland mitigation expenses?
- Have you conducted a geotechnical survey & soil study to determine the composition of soils and whether rock blasting is required?
- Will fill dirt or outside soil need to be brought to the site?
- Will you need to relocate already existing public utilities?
But understanding the right questions to ask is only the first step. After all, how can you get an accurate idea of land development costs at the conceptual stage of planning?
A trusted contractor and estimator are important resources you can leverage. The quality and accuracy of your conceptual plans ultimately impact the accuracy of any sitework cost estimates.
Consider implementing the following best practices to improve the quality of your conceptual site development plans:
- Engage a municipality for a pre-submittal meeting: A pre-submittal meeting with the governing municipality often yields powerful information regarding potential off-site improvements, stormwater regulations, and other mandatory land development improvements.
- Familiarize yourself with the governing UDO: The UDO outlines all the standards you might be subject to when developing a property. That information should be incorporated into your conceptual plan before estimating sitework costs.
- Leverage subject matter experts: Your civil engineer should be an expert in most things land development. They’ll prove an invaluable resource when you’re conceptually planning your site.
Estimating sitework and land development costs is not an exact science. Development budgets need to be continually refined as a project progresses and new information about a site is uncovered.
A real estate consultant with extensive land planning and real estate development experience may also be a good resource in your effort to quantify costs.
Even if you have quality historical data from previous projects - costs change, and municipal standards evolve. You don’t want to get caught months into a development project with unplanned sitework expenses that could derail a project.
