A Deep, Practical Guide for Small & Mid-Sized Developers

For many small and mid-sized developers, the dream begins with a piece of raw land. The vision is clear: a community of homes, a profitable return, and the satisfaction of building something lasting. But between purchase and profit lies one of the most underestimated challenges in land development — the true cost of servicing.

Servicing isn’t just about putting in pipes and pavement. It’s about the full spectrum of obligations and expenditures that stretch from the day you close on the land, through construction, into the warranty and maintenance period, and finally to the issuance of the Final Acceptance Certificate (FAC). These hidden costs can erode margins and stall projects if they aren’t anticipated from the start.

This guide unpacks the key categories of servicing costs, explains why they matter, and provides strategies to manage them so that smaller developers can move forward with eyes wide open.

1. Off-Site Upgrades: The Costs That Aren’t on Your Land

Context:

One of the most common surprises for small developers is that municipalities often require improvements beyond your property boundary. It’s not just about what happens inside your site. It’s about how your project ties into the larger municipal system.

What to expect:

• Sewer trunk extensions or upsizing
• Water main upgrades
• Intersection improvements or signalization
• Sidewalk or multi-use path connections

Why it matters: These items are rarely obvious at first glance but can add hundreds of thousands of dollars to your project.

Developer strategy: Commission a servicing feasibility study before land purchase, and consult with municipal engineering staff early to identify off-site obligations.

2. Geotechnical Surprises and Poor Ground Conditions

Context:

The land may look ready for development, but what’s beneath the surface often tells a different story. Soil conditions, groundwater, or contamination can trigger major cost escalations.

What to expect:

• Over-excavation and replacement of unsuitable soils
• Dewatering and groundwater management
• Contaminated soil remediation
• Heavier pavement or foundation structures

Why it matters: These are high-impact, high-cost risks that typically appear only after construction begins.

Developer strategy: Invest in meaningful geotechnical investigations early — not just one or two boreholes, but enough coverage to identify true variability across the site.

3. Stormwater Management: Land vs. Infrastructure Trade-offs

Context:

Stormwater isn’t optional. Municipalities demand solutions that handle heavy rainfall events and protect downstream systems. For small developers, the choice between surface ponds and underground systems carries big financial implications.

What to expect:

• Retention or detention ponds (land-intensive but cost-effective)
• Underground tanks or vaults (higher capital cost but preserve land yield)
• Culverts, outfalls, erosion and sediment controls

Why it matters: The wrong solution can eat up saleable lots or force costly infrastructure.

Developer strategy: Work with engineers to compare the capital cost per cubic metre of storage against the land-value impact of lost lots.

4. Roads, Paving, and the “Top-Lift”

Context:

Building roads isn’t just a one-time cost. Most municipalities require a staged approach: a base lift of asphalt at initial construction, then a top lift after a maintenance period once the ground has settled.

What to expect:

• Granular base, curb & gutter, and sidewalks
• Initial base lift asphalt
• Final top lift asphalt, often 1–2 years later
• Maintenance bonds or securities held until top lift completion

Why it matters: The second lift often falls due long after initial construction, when developers may already have moved on to other phases. Failing to budget for it can create cashflow crunches.

Developer strategy: Treat the top lift as a separate budget line item and confirm municipal requirements on bond release timing.

5. Landscaping and Boulevard Maintenance

Context:

Landscaping is often underestimated because it looks minor compared to underground pipes. In reality, it carries its own complexities and obligations, stretching into multi-year maintenance.

What to expect:

• Boulevard trees and sod installation
• Irrigation systems and water meters
• Maintenance and watering for 1–2 years
• Replacement of dead or damaged plant material to meet survival standards

Why it matters: Municipalities won’t grant Final Acceptance until landscaping meets standards, which means the developer must carry responsibility, and costs through the establishment period.

Developer strategy: Negotiate clear survival thresholds with the municipality and hire a maintenance contractor with a detailed log system to track compliance.

6. CCC to FAC: The Lifecycle of Developer Responsibility

Context:

Servicing obligations don’t end when the pipes are in the ground. Municipalities enforce a staged acceptance process to ensure infrastructure performs before they assume ownership.

What to expect:

• Construction Completion Certificate (CCC): issued after municipal inspections and testing confirm works are in place
• Maintenance period: typically 1–2 years where the developer remains responsible for deficiencies
• Final Acceptance Certificate (FAC): granted only after deficiencies are resolved, landscaping survives, and the top lift is placed

Why it matters: Securities are held until FAC is achieved. Cashflow is tied up, and deficiencies must be corrected before release.

Developer strategy: Track deficiencies continuously, not just at inspection time. Treat the maintenance period as a guaranteed cost, not a hopeful zero.

7. Repairs from Builder Damage

Context:

Once homebuilders enter the site, municipal assets are at risk, especially curbs and sidewalks. Heavy equipment, driveway cuts, or careless trades frequently cause damage.

What to expect:

• Cracked or chipped curbs from driveway access
• Sidewalk sections broken by heavy vehicles
• Landscaping damaged by site traffic

Why it matters: Municipalities expect the developer to fix these issues, even if caused by builders. Without controls, the costs fall directly on your pro-forma.

Developer strategy:

• Require damage deposits from builders as part of lot sales agreements.
• Maintain pre-construction photos to document original condition.
• Hire a dedicated repair subcontractor to keep costs predictable.

8. Carrying Costs: The Silent Erosion of Profit

Context:

Even if construction goes smoothly, the time it takes to complete and sell lots creates ongoing expenses. These “soft” costs, often overlooked, add up month by month.

What to expect:

• Interest on financed capital
• Property taxes and insurance
• Site security and fencing
• Utilities for sales centres and temporary services
• Marketing, sales, and overhead staff

Why it matters: Carrying costs can be $300–$400 per lot per month or more, depending on project size and absorption rates.

Developer strategy: Stress-test pro-formas using conservative sales velocity assumptions and build in contingency for slower markets.

9. Contingencies, Bonds, and Cashflow Management

Context:

Even the best-planned budgets need buffers. Municipal securities, unforeseen conditions, and delayed releases can tie up significant capital.

What to expect:

• Geotechnical contingency: 5–15% of earthworks
• Off-site contingency: 10–30% depending on municipal requirements
• Construction contingency: 5–10% for defined scopes, more if unknowns remain
• Maintenance securities: held until FAC, sometimes years after initial investment

Why it matters: Without contingency, one unforeseen obligation can erase your margin.

Developer strategy: Model securities and contingencies in your cashflow, not as afterthoughts.

Final Thoughts

Servicing costs are the quiet killers of small development projects, not because they’re impossible to manage, but because they’re too often underestimated. By taking a lifecycle view,  from land purchase through CCC, maintenance, FAC, and even curb repairs during house construction, small and mid-sized developers can avoid being blindsided.

The key is early diligence, transparent budgeting, and strong contractual controls with builders and contractors. Partnering with experienced engineers who understand both the technical and municipal approval side ensures that what starts as a vision ends as a successful, profitable community.