Calculating Section Eighteen Diminution in Industrial Property Reversionary Valuations
Section 18 caps industrial dilapidations at actual reversionary value loss, stopping landlords from recovering repair costs that exceed open market impact.
EPC Compliance Friction
Meaning
Regulatory and procedural bottlenecks emerge during the design, procurement, and construction phases of large industrial infrastructure projects. When engineering firms execute complex builds, EPC compliance friction occurs as standards and regional codes clash with standard designs. It is measured by the hours spent modifying drawings to meet local industrial rules.
Regulatory Delay
Structural delays occur when municipal approvals are sought for standardised equipment. In managing EPC compliance friction, the developer must balance the speed of utilising pre-engineered modular units against the demands of regional safety boards. This often requires custom structural reinforcements.
A single delayed approval for a foundation design can halt heavy lift crane operations, incurring standby fees of tens of thousands of dollars per day and throwing the entire master commissioning schedule into disarray.
Coordination Expense
Redesigning certified components after procurement begins introduces substantial risk into the construction schedule. This EPC compliance friction frequently causes contractor disputes and cost overruns when materials are held at the site awaiting inspection clearances. It threatens the overall return on capital.
Quality Verification
Independent inspection agencies play a major role in validating that pressure vessels and high-voltage gear comply with site-specific standards. Such validation resolves the issues that arise from EPC compliance friction before the asset is handed over to operations. Early verification is less costly than post-installation correction.