What to take into your next appraisal
- Separate known remediation scope from unresolved ground risk.
- Keep abnormal works out of the base estimate if they are added separately.
- Price time as well as physical treatment.
Start with the conceptual site model
The Environment Agency’s land-contamination risk-management guidance follows risk assessment, options appraisal and remediation and verification. The relevant work depends on the site, proposed use and pollutant linkages.
Record historic uses, receptors, ground and groundwater evidence, access limitations and areas not sampled. An early desk study is different evidence from intrusive investigation or a priced remediation strategy. State the confidence level attached to each allowance.
Sources: Environment Agency: Land contamination risk management
Define three distinct cost packages
For a fictional English site, assume £600,000 for contaminated-soil treatment, £250,000 for abnormal foundations and £150,000 for verification and specialist supervision. Total abnormal cost is £1m. Ordinary excavation is already in the construction estimate and is excluded from these lines.
Obtain quantities and rates separately. A contractor’s lump sum with exclusions may leave disposal classification, groundwater handling or unforeseen structures with the developer.
Test volume and programme together
Suppose further investigation increases the soil-treatment package by 40%, adding £240,000, and delays construction by three months. Assume site holding costs of £30,000 a month and £5m of existing drawn debt at 8% simple annual interest.
| Incremental downside item | Calculation | Cost |
|---|---|---|
| Additional treatment | £600,000 × 40% | £240,000 |
| Holding costs | 3 × £30,000 | £90,000 |
| Interest on existing debt | £5m × 8% × 3/12 | £100,000 |
| Combined increase | Before new borrowing interest | £430,000 |
Link verification to the next activity
The programme should show when investigation, approvals, remediation and verification allow subsequent construction or occupation. Paying for works does not establish that the site is ready for its intended use.
If remediation overlaps construction, model the actual work zones and interfaces. A blanket three-month extension can overstate delay where phases are independent, or understate it where verification controls the entire scheme.
Use investigation to improve the bid
Compare the cost of further information with the exposure it could resolve. A £25,000 investigation is not automatically worthwhile; it becomes useful if it can change the design, contract, programme or land decision before commitments are made.
Show known cost, risk allowance and stressed funding separately. Before purchase, identify which risks are retained, transferred or excluded by contract, and leave a named owner for each unresolved assumption.
Sources and further reading
- Land contamination risk management Environment Agency
- Valuation of development property RICS
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