Common problems with local utilities in Spain

Constructing in Spain

Unfortunately, it is a common issue when building in Spain to experience problems with the local utilities. We have seen many cases of people who do not engage a Project Manager early enough, then struggle with regard to the available utilities. Especially in the cases of large developments, there can be a need to increase the capacity or create additional infrastructure for power, water and drainage, or add access routes. When due diligence, or project feasibility studies are not undertaken at the very early stages, issues such as these do not become clear until further into the project and significant additional costs are incurred that were not budgeted for.

Before choosing a plot, or committing to a particular design, or project scope, you need to make sure you are connected to utilities and have enough power or water available to enable your project to function. In the cases where this is not currently in place, studies need to be done to allow you to understand the cost implications of connecting up to the grid or adding water systems and how much capacity you need. By bringing in a Project Manager at the early stages of a project, you can rest assured that they will be asking the right questions and know the right people to get reliable figures for any additional utilities needed, so you can decide if it is viable, or not.

Without the support of a professional Project Manager, you can be left with some really nasty surprises and big bills that you were not expecting. Here are some examples of where things have gone wrong with utilities and how we solved it.

Bursting Pipes

We were called in by a client who was buying a €10 million villa and had a problem.

The villa, although almost new, had experienced a recurring problem of burst pipes inside the basement, causing floods and damp issues on the lower floor.

On review, we were able to find out that the water pressure reduction valve had not been fitted at the entrance to the plot, but was instead fitted inside the villa. This was a significant design fault by the engineers. The valve had functioned, but the pipe leading to the valve had burst due to pressure increases, causing the damage. We were told this had happened before, but that repairs had been made, rather than finding the cause and solving it.

We recommended that the valves be installed at the entry of the plot and not inside the villa, to avoid such damage in the future.

Lack of Power

A large hospitality company bought a plot which was set up and zoned for markedly less units than they wanted to build. As a hospitality company which was going to have the development run as a tourist resort, they were allowed an increased volume on the site and took full advantage to build the maximum units possible. However, the implication of this increased number of units on the power supply requirements was not fully understood at the planning and budgeting stages. Although there was an existing power supply, which was planned to supply a lower volume development, it wasn’t enough to cover nearly 300 units. This meant that the developer had to upgrade the transformer installations, costing many hundreds of thousands of initially unbudgeted investment.

A similar situation happened when we worked for an American Investment Fund, who bought their plot intending to service the units from the existing infrastructure. Before approving the building licence, the Town Hall requested an internal road traversing the site, which didn’t currently exist. In order to comply, the Fund had to invest in creating a brand-new street, including sewage, rain drainage, power cabling and transformer, telephone cabling etc. This was not expected, therefore not in the budget, and made it a much less attractive investment opportunity.

On another occasion we were called to inspect a new villa whom the new owners had just occupied but were having dire problems with the stability of their power supply. It was a luxury villa boasting some wonderful features such as; spotlights, led lighting, sauna, jacuzzi, heated exterior pool, heated interior pool, 5 separate aircon systems, 2 kitchens, electrical underfloor heating and electrically controlled large pane windows and blinds. These were lovely features, but required a larger amount of power than a standard property would.

On review, it transpired that the villa, although new, was built on the site of a previous villa that had been demolished. The new villa had been designed and built to require several times over the power draw of the previous dwelling, yet was connected to the preexisting power supply.

On further review, it became apparent that in order to save on cost, the developer of the villa, had merely connected the new villa to the old meter and had neglected to apply for a higher supply, which was required. Had he applied for a higher supply, he would have found out that the existing supplies were saturated and that not only a new meter was needed, but a further supply cable to the nearest transformer station needed laying, costing a serious amount.

Unfortunately, this can happen quite often here. It can be simply because the Developer is unscrupulous, or not very experienced and has made an error in the overall product cost calculations and needs to take desperate measure to save on costs. That’s why having expert Project Managers on your side is essential. They know all the tricks that unscrupulous developers and builders can use, and know the industry inside and out, so they can take steps to protect you.

How to avoid these issues

When you benefit from the work of a Project Manager these sorts of issues are eradicated, thanks to a thorough strategic analysis process. The focus of the PM from the start is to accurately define the correct Product Costs and ensure they are within budget. Project Managers also have tried and trusted methodologies to steer the project to achieve the pre-established targets. A proper process for defining the draw on the local utilities is made and the necessary permissions and connections made in good time. This results in a safer and less stressful process which benefits developers, sellers and buyers.

Unfortunately, without this expertise, things can be missed. There have been many instances where we have been approached by Clients who have already calculated their investment budgets on the back of non-specific data that simply aren’t viable.

A Product Cost should contain ALL of the expenses pertinent to the cost of the product to be built and sold – in order to fix a viable and profitable sales price. Sadly, in many cases people tend to underestimate the cost of areas outside of the construction shell, exposing themselves or their business venture to unrealistic numbers. In order to complete the project, they need to implement a “crisis management strategy” and very often bring Project Managers in to undertake a Project Rescue.

In one case a developer “forgot” to include the necessary banking and costly retaining walls needed to create distinct levels, resulting in an amount equivalent to 30% of the development budget needing to be added to the budget. For individuals involved with building a luxury villa in Spain for themselves, it can be even easier to overlook things, as they have never done it before.

MDCI – saving you on budget, on time, every time!

Please contact us if you are planning to embark in a building or development project in Spain and let us help you to avoid the pitfalls and achieve your goals, without the stress.

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