Estimated Development Cost (EDC)
· Clients, General, Releases · EDC, Estimated Development CostAn exemplar in Government and Private Sector collaboration for Planning in NSW
This is the first in a series of posts to help our clients, esteemed industry colleagues and Partners in Progress, understand changes to how Development Costs are calculated for Planning purposes in NSW.
In a career that has spanned nearly six decades in the construction and property industry, I have witnessed profound transformations that have not only redefined our skyline but also how we envisage the creation and valuation of our developments.
It is with a deep sense of responsibility that in this post I present to you the evolution of the Estimated Development Costs (EDC) framework a significant milestone in the continuous journey towards excellence and integrity in property development across New South Wales.
Nearly a year and a half ago, an opportunity was presented to me by the NSW Department of Planning, Industry and Environment (DPIE) Major Projects Advisory. This was not merely an invitation to assist DPIE but to advise in their pioneering and revolutionising the methodology by which Capital Investment Values (CIVs) are calculated. This initiative, inspired by the recommendations from the Independent Commission Against Corruption (ICAC) in its Operation Dasha inquiry, was embarked upon with a singular vision: to root out the possibilities of corruption by establishing a more transparent, robust, and uniform approach to calculating development costs.
Collaboration has been the cornerstone of this endeavour. The DPIE, I as their advisor together with the Australian Institute of Quantity Surveyors (AIQS) and the Royal Institution of Chartered Surveyors (RICS), have crafted the EDC proformas and practice notes required to comply with the new planning circular. These are more than just documents; they are examples of change that exemplify the strength of partnership between the NSW Department of Planning, Industry and Environment (DPIE) Major Projects Advisory and the private sector, developers, financiers, and professional consultants.
The changes came into effect on the 4th of March 2024.
The EDC Report has already become an integral part of Development Applications for State Significant Developments (SSD), State Significant Infrastructure (SSI), and any development exceeding $3 million.
This milestone is not just a change in procedure but a significant leap towards a more accountable, transparent, and fair planning system in NSW.
Background
It is imperative to understand the transformative impact the Planning Circular PS 24-002 holds for our industry. This regulation revises the Environmental Planning and Assessment Regulation 2021 (EP&A Regulation) to supplant the previous, more convoluted methods of estimating development costs with the singular, streamlined approach of the EDC. This change not only enhances clarity and consistency in planning applications but also fortifies defences against manipulation and ambiguity.
Why Change Was Imperative
The genesis of this monumental shift finds its roots in the challenges illuminated by the ICAC’s investigation into the conduct at a Local Government City Council between 2013 and 2016. The vulnerabilities exposed in the existing methods of development cost calculation underscored the necessity for a paradigm change. The EDC arises as a beacon of this change, promising a future where our assessments are safeguarded against inconsistencies and where our values of integrity and transparency are upheld with unyielding resolve.
What Lies Ahead
As these changes become a day-to-day regularity, I invite you all to join in a series of enlightening dialogues with us that will further explore the implications and nuances of the EDC framework. From understanding the distinctions between EDC and CIV to navigating the intricacies of staged developments and its impact on local government area (LGA) council applications- a wealth of insights awaits.
As we embark on this journey, let us hold fast to our shared commitment to fostering a development landscape that is not only resilient and fair but evokes pride in what we achieve for generations to come.
The EDC collaboration has provided an exemplar of how change can be achieved through the strength of partnership between the NSW Department of Planning, Industry and Environment (DPIE) Major Projects Advisory and the private sector, developers, financiers, and professional consultants.
Together, we are not just shaping buildings; we are sculpting the future of our industry and our community where our values of integrity and transparency are unyielding.
Excellent sources for additional information can be found in:
AIQS Practice Standard 1st Edition
NSW Department of Planning, Housing & Infrastructure
In our future posts we will comment on:
– How will LGA council applications be affected?
– What is the position of EDC’s less than $3.00m?
– When are quantity surveyor reports required?
– What is the effect on development levies?
– AIQS Practice Standards Impact on the QS profession.
We look forward to receiving your questions and engaging in informative dialogues with you.
Warm regards,
Bob Richardson
Advocate for Integrity in Property Development
Disclaimer
This disclaimer informs readers that this post does not constitute legal advice. The statements made in this post are provided by Xmirus Pty Ltd as an information source only. Users are advised to seek professional advice and refer to the relevant legislation, as necessary, before taking action in relation to any matters or information contained in this post. Xmirus is not responsible and will not be liable to any other person or organisation for or in relation to any matter dealt within this Post, or for any loss or damage suffered by any other person or organisation. Links to third party sites are inserted for convenience. Xmirus makes no representation or warranty regarding the content of these sites, and no responsibility is taken for the consequences of viewing and relying on their content.
