Building Engineer Blog

Environmental due diligence consults should not just perform  Phase I Environmental Site Assessments, they should focus on managing their client’s environmental liability. However, in order to do so, it is imperative that clients ask for the help.

Environmental consultants can perform better if they are given the opportunity to meet with the client and understand their business.  It is also a necessity to understand the client’s risk tolerance.

 All clients do not have the same risk tolerance - and they shouldn’t. For example, a child day care chain should obviously be more risk adverse than an owner of a warehouse. Consultants must also keep in mind that some investors and lenders are conservative when it comes to environmental issues. These nuances need to be expressed. 

 To be a good engineer, the client’s business must first be understand by the engineer.

Partner Engineering and Science offers clients free environmental liability management  consultations where the client’s business, their objectives, and their risk tolerance are all discussed in great detail.

Writing a sound environmental risk policy is not too difficult. Partner will give their clients multiple free samples of what lender’s policies should look like, so that they can pick the policy that fits their bank. If there are missing elements within the policy that are important to the client’s bank, they are easy to insert.  

The bottom line is, if clients are spending a lot of money on environmental due diligence, they should take a more holistic look at their environmental policy.

Real Estate, Real Estate Due Diligence Bank Environmental Policy, environmental liability management, Environmental Policy, Lender's Environmental Policy, Manage Bank's Environmental Liability, Manage Environmental Liability

The acronym “ALTA” stands for American Land Title Association. Specifications of this type of Survey include (but are not limited to) determining improvements, location of property lines, utilities, identifying all easements and other conditions affecting the property. ALTA surveys are very comprehensive surveys and can typically cost thousands of dollars and can take several weeks to complete. All ALTA Land Survey must meet the “Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys” as adopted by the American Land Title Association, the American Congress on Surveying and Mapping, and the National Society of Professional Surveyors. The Alta Survey is most often performed on commercial properties.

Real Estate, Real Estate Due Diligence, Structural Engineering

When investing in commercial buildings, real estate investors are need a high quality commercial building inspection, often called a Property Condition Assessments.  

When asked to do a Commercial Building Inspection, I start by trying to understand the client’s goals.  Are they ordering the report for a lender?   Do they want a 100% detailed inspection or a walk through?   Has the seller made any significant disclosures?  Are there other stakeholders such as equity sources or partner who need to understand the condition of the building?  Once I understand the goals I propose the appropriate level of diligences, which can range from a walk-through inspection by a senior building inspector to a team of engineers and specialist digging into every aspect of the building.

Either way, the Property Condition Assessment Report which includes a discussion of the following building systems:

-          Structure;

-          Building Envelope;

-     Roof;

-         HVAC Equipment

-          Mechanical, Electrical, and Plumbing;

-         Paving, Drainage, Landscaping;

-          Fire Suppression and Security Systems;

-          Elevators;

-          ADA Compliance.

A PCA report typically includes two important tables: an Immediate Repairs Table; and a Replacement Reserves Table.   The Immediate Repairs Table is a schedule of all failing or worn out systems requiring attention in the next 90 days.   The Replacement Reserve table will typically estimate the building’s capital replacement schedule for the next twelve years.  

When I dispatch a team of engineers and building systems specialists, I call the report a Property Condition Evaluation.  These reports typically range between $5,000 and $25,000 and are appropriate for large complex assets.   The most common specialist to add is that of a structural engineer.  The structural engineer will produce a structural report or a Probable Maximum Loss Report, when in seismic zone 3 or 4.  

Other specialists that add great value are an HVAC specialist, an elevator specialist and a roof specialist.  The specialist typically produces reports that are ultimately included in the appendix of the master PCE report. 

The specialist does thing that are beyond the scope of our building inspectors.  For example, the HVAC specialist will turn on the air conditioning system in the dead of winter.  The specialist opens up the systems being inspected and collects parametric data.  The result of the more detailed inspection is a very detailed report with specialty reports in the appendices.  Partner Engineering’s project manager and field inspector is almost always a registered engineer or very senior building inspector. 

Our Property Condition Evaluations save the client significant money in most engagements.  Often clients are able to negotiate price reduction or other consideration that is 10 times our fee.  Our work typically pays for itself!

Commercial Building Inspection, Real Estate, Real Estate Due Diligence, Structural Engineering Commercial Building Inspection, PCA, PML, Probable Maximum Loss, Property Condition Assessment, Property Condition Report