The need for technical due diligence
Technical due diligence (TDD) enables those involved in the acquisition, occupation, disposal and development life cycles of commercial property to understand and manage risk, make informed decisions and future-proof their investments.
This is a significant area of work in which Chartered Building Surveyors are able to provide valuable advice to their clients when assisting with their decision making.
Undertaking technical due diligence of property generally involves the review, analysis, discovery and collection of information about the physical characteristics of a property and/or land. Technical due diligence for acquisition purposes is the most common of the four life cycle stages.
The benefits of commissioning a building survey at whatever stage of the property life cycle can help clients gain a better understanding of the property’s design, construction quality, suitability for intended use, future costs and liabilities.
The format in which TDD information is presented can take various forms and report titles such as Pre-acquisition Building Survey Report, Building Reinstatement Cost Assessment, Stock Condition Survey Report, Planned Maintenance Schedule, Defects Diagnosis / Building Pathology Report, Vendor Survey Report and Feasibility Study. The content of these reports may be biased towards their intended purpose but will generally identify such matters as:
- Building defects
- Non-compliance with current statutory requirements
- Poor workmanship and materials
- Building elements and services approaching, at or beyond the end of their economic life
- Deleterious materials, ie. asbestos, lead
- Neglect or misuse
- Costs of repairs and replacements
- Deficiencies that could impact on the safety of building occupants
- Cultural, social or religious requirements
- Necessary new design and refurbishments
- Leasehold liabilities
- Planned maintenance
With the above TDD information to hand, the client then has an informed basis for negotiating better terms and conditions with the vendor or landlord and it can also provide an enhanced level of protection and property knowledge for the occupier, owner, institutional investor or funder