Pace Development: Dangers of the ‘Design-Construct’ Model

Pace Development Group has completed over $2 billion worth of real estate construction in Australia over the course of the last 20 years. 

Founder Shane Wilkinson says the group’s success is in its point of difference: Pace is a builder-developer. 

The ‘design and construct’ model used by property developers, where a site is acquired, planning permission is granted, the development is marketed and sold and then a builder is appointed, has been a popular route for years, but according to Wilkinson, the model “no longer works. It needs to change.”

He says problems arise when builders are appointed that wish to maximise profit margins, creating financial tension, and potentially compromising the quality of the development. 

Building defects consultant Ross Taylor said developers often use well-known architects at the concept stage to sell off the plan, dropping them once it comes time for construction to begin.

“Developers, when they develop a strategy for selling, they have to get the sales off-the-plan straight away. Once they’ve got the pre-sales and the bank then allows the money to flow, they then cut the name architect and then go to an unregistered architect or draftsman just to map out the basics to go to tender. That’s the start of the defects,” Mr Taylor said.

Mr Wilkinson says this means buyers should be more diligent when investing in apartments. 

“They should be asking questions like: has the developer done this before? What is their history like? And who is going to do the build?

“We’re a developer and a builder. We buy the land, do the planning, strategy and vision, do the marketing and sales and follow through with constructing the building itself.”

This method, Wilkinson says, is the way to avoid delivering faulty buildings like the Opal and Mascot Towers, as there is no opportunity for the builder and developer to “point fingers” and avoid taking responsibility.

This approach acts as insurance for Pace, which plans to acquire $150 million worth of property in the next 12 months. 

The group is confident that population growth will increase demand for dwellings it currently has in its pipeline – with almost 1800 under construction or in development. 

“We have a clear strategy for the next five years, which is to be in all sectors and to grow the business,” said Wilkinson.

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