Policy

How Builders Can Accelerate The Pre-Construction Permit Process

By surfacing municipal requirements and digitizing the permit process, Ivory Prize-winner PermitFlow saves applicants’ time, minimizes errors, and shortens municipal review cycles — resulting in a faster time to permit. That can lead to more attainable homes.

Policy

How Builders Can Accelerate The Pre-Construction Permit Process

By surfacing municipal requirements and digitizing the permit process, Ivory Prize-winner PermitFlow saves applicants’ time, minimizes errors, and shortens municipal review cycles — resulting in a faster time to permit. That can lead to more attainable homes.

August 28th, 2023
How Builders Can Accelerate The Pre-Construction Permit Process
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It's one of real estate development's hard truths. It's also one people learn earliest on. What takes too long costs too much.

Success or failure of any project is mostly a matter of hour-glass-like timing.

Housing's present-day dire shortage of healthy, safe, decent, attainable shelter alternatives for millions of Americans attests to this: Too many projects take too long -- running into delay after delay – and therefore cost too much to match up with people who need them the most.

When project pro formas make real-world contact with dirt, local officials, access to cash streams, and neighbors, Murphy's Law awaits, ready to strike in everything, everywhere, and all at once. Life and hour-glass timing often work at odds. So there's a housing crisis, particularly a human crisis around access to housing a large number of people can ill-afford to inhabit.

For nine out of 10 time-sensitive development projects, the big proverbial hour-glass gets turned over at the instant project owners take title to a property. This starts a building lifecycle pre-construction gantlet of Catch-22s, trick questions, moving goal-posts, political snares, and site-specifically random requirements.

Once that hour-glass flips over and the sand starts seeping into the bottom chamber, stakeholders will either profit, break-even, or lose money based on how ably they navigate the obstacle course of pre-construction and construction. Specifically, the "carrying costs" meter starts running, often enough at a steadily upward trajectory. If a project's start-completion-and-delivery cycle extends beyond a certain modeled time window, carrying costs can eat up margin, fast.

How? Well, look at what those "soft costs" are made of.

  • Debt payments (now subject to higher interest rates)
  • Utilities costs (going up)
  • Taxes (also going up)
  • Insurance (ditto)
  • Legal fees (yup, up)
  • Not to mention stalled crews, weather-damaged materials, etc.

This is why timely turns in inventory are such a big deal, and why companies that are good at turning inventory are ones that win. In construction, time is duration, or how long things take. However, it's a costly mistake to say that project timelines and workflows are in a speed-race with the clock. Speed often kills project success in not one, but at least two ways. Speed, which refers to the rate at which objects move, doesn't rule out moving very fast in the wrong direction, which has costs involved both to fix the error, and in opportunity cost from delay in completing the project.

It's velocity – the rate and [correct] direction – projects need to reach completion by the time the last grain of sand drops into the hour-glass' lower chamber.

It is in this domain – in a crush of paperwork application forms required to obtain necessary permits for every phase of pre-construction, construction, and occupancy – data science can do two things to yield cost-curve bending effects.

One is to add rocket-fueled velocity to the tedious, painstaking permit applications and approvals process, with heat-seeking, reality-tested technologies designed to maintain rates of speed in the right direction through the end-to-end build cycle.

The other is to chunk back that time, frustration, and bandwidth to builders in ways that free them to focus on where they drive the most value – building and matching their product offerings to customers.

If you talk to any developer or general contractor, what will you'll see what you'll hear is the visceral negative reaction to the construction permitting process," says PermitFlow co-founder and ceo Francis Thumpasery. "When I hear that sort of reaction, I get energized, because that's an opportunity to improve the life of someone striving to make a company or business more successful. Particularly with permitting, it has a lot of different steps. You're trying to figure out which permits you need, which departments you go to which forms you need, which documents are required. And as a general contractor or a developer, that's not what you're trying to do. You're trying to build a building. We take all those i's, all those t's and we help make sure they're dotted and crossed so that our customers can focus on what they care about. That is designing and building beautiful buildings."

Thumpasery and co-founder and chief technology officer Samuel Lam – both of whom worked previously with "deep workflow software and construction" started PermitFlow in 2021, and beta-tested its automation solutions that year and last, prior to its go-to-market this year. This past May announced it had landed $5.5 million in seed round funding to support a revenue-generating early business stage of software improvement, customer experience, scale-up, and staffing – see their solution as a friction-removal capability that both eliminates wasted time and frees value-creation to work at greater velocity. The PermitFlow product platform has reportedly supported 2,000 new and remodeled units of single- and multifamily housing projects, with an aggregate value of $600 million.

PermitFlow’s software, offered with ProCore platform solutions, allows builders and owners the ability to easily prepare and submit permit applications, respond to municipal comments, and receive approvals in a single platform. Rather than juggling through the unique processes of municipalities, builders can use PermitFlow’s standardized, nationwide permit application workflow. By surfacing municipal requirements and digitizing the permit process, PermitFlow saves applicants’ time, minimizes errors, and shortens municipal review cycles — resulting in a faster time to permit.

What PermitFlow does is we take the project scope, map that through our software workflow engine, and map that over to the required permits, the relevant departments, the forms and the documents required," says Thumpasery. "We then go through a TurboTax-like workflow, where you pull information in from different sources to prepare the product package. We submit that to the municipality, and meanwhile provide monitoring and full transparency to our customers. This way, they're always proactively in control of their process. As the GC or as the developer, you see everything, and how it's all being orchestrated is entirely visible, but it's not you having to manage that day to day, while at the same time having less control."

The PermitFlow team – winners of the 2023 Ivory Prize for Innovation in Housing Affordability in the recognition's Policy category – have focused on two principle opportunity-areas for scale:

Increase geographic scope

PermitFlow is currently focused on the strategy of moving across hubs in the US. They will need to have flexible software architecture to do this. PermitFlow’s ultimate goal is to get to the top 50 metros in the US, each of which has 10 municipalities. The vast majority of projects live within these metros, which is why PermitFlow has chosen them as focal points. The team recognizes that they must make the software flexible enough to expand into new areas smoothly.

Increase the programmatic nature of permitting

PermitFlow is end-to-end software, which means that it is learning constantly. Any comments made during a permitting process are integrated back into the program, and the program does automatic checks to make sure that these questions don’t arise again. PermitFlow’s goal is to have less and less comments arise over time throughout the permitting process. One thing PermitFlow would like to do as well is fix the inefficiency on the municipal side, but it is hard to interact with municipalities when introducing new software.

If you're focused on affordable housing, what you know is that the carrying cost of a project is also dependent on how much you need to retain talent and keep your contractors on schedule," says PermitFlow head of growth Chad Waite. "Delay costs – having things sit around versus moving ahead on a project – have a huge impact. Our case studies on the impact PermitFlow has had on our builder clients mostly show the dollar amount that they've saved in carrying costs. If your goal is to minimize the cost of the affordable housing to the end user or the end consumer, that has a significant impact."

Thumpasery, Lam, Wait and a very lean start-up team of developer-engineer-and local permit analysts take their roles personally when it comes to cutting out some of the time that layers into why ground-up home production has decoupled from most working households in so many cities and towns.

We want to make it easier for developers and for the folks who are building housing stock, to reduce that carrying costs, reduce that internal risk premium," Thumpasery says. "Hopefully, it reduces the cost of construction and then directly makes housing more affordable. And then also it augments the ROI so that more projects actually happen. So more construction, more housing actually is created."

What doesn't take too long to produce may then have the best shot at not costing too much.

ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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