Maja Nesdale, principal at Arcadis, explains that the industry’s approach towards viability must change to avoid more costs and delays through late-stage value engineering.
Rising costs, tighter capital and longer approvals have widened the gap between ambition and delivery. The answer is not another late-stage round of value engineering, but earlier, integrated decisions backed by evidence.
For all the noise around planning reform and funding, UK development keeps colliding with the same hard fact: viability. Costs have risen, capital has become more selective, and approval timelines have stretched. Recent reporting on Gateway 2 alone has pointed to determination periods of roughly 22 to 25 weeks, far beyond the statutory target, with predictable consequences for programme risk, interest carry, investor confidence and subsequent stagnating values.
That is why more schemes can look consented on paper yet remain undeliverable in practice. The uncomfortable truth is that viability is not failing because the industry cannot do the maths. It is failing because we keep doing the maths too late.
Viability is a system problem
The industry still treats viability as a series of separate inputs to optimise: land, build cost, planning, ESG and programme, with each discipline pulling its own lever. The result is predictable: teams squeeze 1% here, 2% there and 3% somewhere else, then wonder why the scheme still does not stack.
Developers and investors are reporting viability gaps of 10-30%, depending on location and typology, with some clients saying costs may need to fall by as much as 30% across the project cycle. The challenge is not recognising the scale of the problem. It is finding credible, repeatable ways to close that gap in practice.
When the gap is that wide, late-stage value engineering is not a solution; it is a tax. It means redesign, delay, re-approval and still more uncertainty. Too often, it leaves a scheme less investible, not more.
Recent evidence suggests the challenge is not confined to a handful of difficult schemes. Across residential and mixed-use developments, planning appeals and viability assessments increasingly show residual land values falling well short of benchmark land values, even after affordable housing requirements or planning obligations are reduced. A recent viability exercise for a housing site in Kent found that even a best-case scenario remained 27% below benchmark land value despite significant proposed relief from planning obligations. More strikingly, some schemes have reported viability deficits exceeding 300% of benchmark land value, underlining the scale of the challenge in the most stressed parts of the market. The pattern points to a structural problem: many projects are struggling to absorb the cumulative impact of higher costs, regulatory requirements, planning obligations and market uncertainty all at once.
The trend is reinforced by wider viability studies undertaken across London and other major UK cities. The City of London Corporation, for example, estimates that planning obligations can reduce commercial land values by around 20-26%, while the GLA’s latest viability evidence suggests viability becomes increasingly challenging across much of inner and outer London once affordable housing and policy requirements are factored in. While prime locations and certain specialist sectors continue to attract investment, viability across mainstream housing delivery is becoming significantly harder. Whether the issue is residential, mixed-use or commercial development, the conclusion is broadly the same: the gap is often too large to be bridged through incremental savings alone.
The fix: earlier certainty, faster
If viability is systemic, the response has to be systemic too. That means integrating cost, planning, design, ESG and delivery decisions early, and testing options quickly before teams lock in assumptions that are expensive to unwind. The point is not to add another layer of analysis, but to create enough certainty early enough for capital to stay engaged. In this market, decision speed is not a nice-to-have; it is a viability lever.
The same thinking is visible in Arcadis’ work at a large site in the Midlands, where parametric modelling enabled rapid scenario testing as infrastructure and stakeholder requirements evolved. That is what earlier certainty looks like in practice: less rework, faster decisions and stronger confidence before the cost of change spirals.
Planning and regulation are where viability so often unravels, because uncertainty is either priced in or enough to make capital walk away. I have seen schemes struggle not because the ambition was wrong, but because the route through planning and building safety lacked enough certainty early enough. At another recent site, that certainty helped move a previously difficult scheme through planning and into delivery. Proof points like this matter because they show the gap can be closed in practice.
Regulation only reinforces the point. The likes of the Building Safety Act and BNG bring additional duties, competence requirements and information-management demands across projects. Anticipated early, those requirements reduce risk. Discovered late, they stall programmes, erode confidence and deepen the viability gap.
A challenge to the industry
Closing the viability gap will not be solved by another roundtable or another ritual call to cut costs. It will be solved when the industry stops treating certainty as luck and starts treating it as something it can design for.
If we keep running viability checks after the design is fixed, the programme has slipped and expectations are already baked in, we will keep producing immaculate appraisals and stalled sites. The winners will be those who replace late-stage argument with early-stage evidence, moving from asking whether a scheme can be built to proving how it can be unlocked while capital still wants to back the answer.
Ultimately, shaving another 2% from a scheme that is already 20% or 30% adrift will not restore viability. The real opportunity lies in making better decisions earlier, reducing uncertainty before it becomes cost, delay and lost confidence. In today’s market, certainty is not a by-product of delivery, it is increasingly the prerequisite for it.
