Case Study – Technical Due Diligence

July 15, 2016

By Tom Greening

The aim of Technical Due Diligence is to provide a thorough understanding of the condition of a property, or development, and to facilitate precise capital management.

In order to make informed and potentially cost saving decisions, independent and accurate technical information is required prior to entering into a commercial building lease or purchase decision.

This process will enable new owners and occupiers to concentrate their efforts on running their business, rather than facing the potential for disruptive and costly surprises with their building(s).

Recently Prendos were engaged by a prospective purchaser to complete a visual inspection of a four storey commercial property in central Christchurch.

The client’s main concerns were with the roof although, upon review of the council file information made available, we advised that it would be wise for us to also comment on the external wall cladding system to the top floor of the building.

During the inspection a number of high risk details were recorded to the roof and wall cladding.

These details included top fixed metal parapet cappings with minimal crossfall, an exposed low pitched membrane gutter with inadequate drainage, concealed downpipes draining internally and a number of wall cladding junctions reliant on smeared silicone for weathertightness purposes.

A visual inspection was undertaken internally and, following conversations with tenants, it was revealed that leaks are common during periods of heavy rainfall beneath the high risk details identified.

A condition report was prepared for the client documenting our findings and recommendations. A repair estimate prepared by in-house quantity surveyors highlighted the true cost of repairs and the items of concern were outlined in our report.

This information facilitated negotiations between our client and the vendor and in this case no purchase agreement could be reached and the repair works necessary was considered too significant. Nevertheless the advice we provided prevented our client from purchasing a defective building requiring major remedial works.

More typically technical due diligence surveys involve assistance from M&E consultants and structural engineers to ensure the condition of all elements can be captured, as well as allowing a seismic assessment to be completed.

This is particularly important in Christchurch, and New Zealand as a whole, where buildings are now required to be at least 66% of the New Building Standard.

Prendosbuilding surveyors, structural engineers and quantity surveyors have the qualifications and experience to complete technical due diligence, which should be considered a fundamental requirement of commercial property ownership or occupation.

For more information on Technical Due Diligence please call us on 0800 773 636 or email us at prendos@prendos.co.nz.

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