One of the greatest unknowns in any transaction is what lies below the surface. When you think of pre-transactional due diligence, the most common concerns are associated with the environmental condition of the property and the structural conditions of the existing onsite improvements. On a property where new construction is planned, an in-depth look at site geology and geotechnical conditions is of critical importance and is part of a complete due diligence package. Sites with existing buildings, especially those exhibiting evidence of structural or foundation issues, should also have a geologic review or geotechnical study completed as a part of a complete due diligence package. Multiple variables come into play in determining the need for a cursory review or an in-depth study, but the most common relate to current building condition and local geology.
Time and cost are very relevant to the due diligence process. What is important to know is that much of the information gathered to complete a Phase I Environmental Site Assessment can be used to create a more comprehensive geotechnical report. For someone who is managing the due diligence process, it is important to recognize that using the firm that conducted your Phase I may be a great benefit and time saver.
A geotechnical investigation consists of gathering information about the properties of the soil and rock makeup of the property that are used when designing foundations or any other structures that require earth disturbance for any structures onsite. A geotechnical investigation can help to anticipate subsurface conditions and determine how the soil will respond to the proposed changes. This investigation is typically required to obtain a building permit for a construction project.
In a scenario where there is an anticipated change of use, which has become a common occurrence with the repurposing of certain property types, preliminary foundation recommendations come as a result of a geotechnical investigation. For example, a property that is currently being used as a flat slab industrial building will differ greatly from that used for a proposed multi-story parking garage. If the geotechnical investigation is done after the start of the project, a new, unanticipated and significant cost item now needs to be added to the budget at a later date.
The bottom line is that a firm specializing in due diligence will understand the sense of urgency associated with a property transaction. It is essential to know the risks and costs associated with any issues, since the timing and accuracy of the information is of the utmost importance. From the acquisition of a property and site changes or improvements, these investigations are essential to avoiding liabilities and additional scope and budget costs. Most importantly, making sure that you have a consultant who specializes in a diverse suite of services is essential to ensure an efficient smooth progression to your project or transaction.