Why Governments Should Invest in Building Permit Software

The current way housing is approved and built was designed for a different era. Now, the housing crisis demands it change. 

Developers face sky-high construction costs, labor shortages, and inflated material costs, while many buyers and renters are priced out of the market. 

The issue? Complicated. The solution? Debated.

What isn’t debated, however, is the impact of modernizing the building permitting process. 

Though the building permitting process is but a small piece of the overall development approvals process, the benefits of investing in building permit software should not be overlooked. Especially among other strategies to speed up development approvals that demand sweeping regulatory reform that will be slower to implement and take effect.

The Case to Invest in Building Permit Software

Complex development approvals are costly for developers. Combined, layers upon layers of government regulations account for an average of 40.6% of the final cost of a multi-family development, and 23.8% of a single-family home. Then you add in the costs from inflated construction materials and delays caused by labor shortages and you can start to see why housing costs are so high. 

Improving the building permitting process with a configurable solution is only a part of solving the bigger development approvals challenge, but can have immediate effect.

Slow, complex, and inconsistent building approvals processes can significantly hinder commercial and residential development, delay government tax revenues, impact housing affordability, and cost developers and citizens money.

In a Canadian study by the Fraser Institute, it was found that every 6-month delay in approvals reduced growth in new housing supply by 3.7%, and that in general, lengthy permit wait times result in millions of dollars of delayed property tax revenue for municipalities. 

Similarly, in looking at the cost of delays to the public, Business in Vancouver found that a six-month building permit delay in the City of Vancouver cost builders and homeowners $30 million in land financing costs in just one year, not including the $1 billion+ in deferred construction spending and accompanying loss of jobs. 

And it’s not just in Vancouver that these effects are being felt; compared to 33 other high income countries ranked in a World Bank report on dealing with construction permits, Canada ranked 22nd based on the time and cost to complete all formalities to build a commercial structure. Comparably, the U.S. ranked 24th. 

Throughout North America, these impacts are widespread, as a large number of cities - 53% in the U.S. as of 2019, and a similarly estimated percentage of cities in Canada - still rely on outdated, siloed building permit processes that slow development. These complicated and lengthy approval processes, as the National Housing Conference explains, tie up developers’ capital, resulting in mounting price tags for project-related soft costs such as architect and legal fees, and insurance payments and property taxes incurred during the development period. Some projects can take months or years to be approved.

Delays are not only costly, but may in fact put off developers from building in a new neighborhood altogether. Given the choice between a city with a quick, consistent, and hassle-free building permitting process, or a city with a slow and unpredictable building permitting process, they’re understandably more likely to go with the more efficient option to save time and money. 

In California, for example, as noted by the Fraser Institute, it was found that cities with more stringent land-use regulations and lengthy development approvals had higher home prices, and experienced less new home construction compared to cities with quicker turnaround times. 

Likewise, in Boston, and other cities across the U.S. and Canada, slow approvals and hard-to-navigate regulatory processes were shown to do the same - drive up home prices and slow new construction. 

Even big companies such as Boeing, Intel, and Toyota have made decisions about where to locate large production facilities partly based on the degree of efficiency of building regulatory systems according to the US Department of Housing and Urban Development.

Evidently, something has to change. 

How Building Permit Software Can Help

 Building permit software takes the permitting process 100% digital. Customers can apply for and manage their permits online via a self-serve portal, and staff can then review, inspect, and approve the permit in a few simple steps. Essentially functioning like an always-open digital permitting counter.

With everything available online, staff can work more efficiently, customers don’t need to come into the office, and information can more easily be shared between stakeholders and departments. It’s also much easier to analyze performance metrics and data. 

Critical data and metrics are accessible in digestible reports and dashboards so it’s easier to spot what’s going well, what can be improved, and where resources are needed or not. This can inform better decisions, and help teams make predictions about the future. 

Not only that, with automation that takes care of unnecessary, repetitive administrative tasks, staff are free to work on their most important responsibilities, whether that’s conducting field inspections, reviewing electronic plans, or reviewing applications to move them to the next step. 

This freedom from mundane work in addition to the ease of completing everyday tasks online can not only improve the employee experience and encourage staff to stick around, but help teams keep up with demand despite being understaffed. 

As the inspections team in the City of Aspen, Colorado, explained about Clariti's Building Permit Software, "It just makes everything a million times easier.”

Similar benefits and more were noted by Neep (Northeast Energy Efficiency Partnerships), including: 

• Reductions in processing time between 20-80%
• Cost savings and an average payback on investment within an average of 4 months for NCSBCS survey respondents 
• Ventura County, California, saved over $1 million in costs after an initial investment of $160,000 for a permits and inspections software package, while their workload increased by 80% over a 6-year period.
• After initially investing $235,000 in an online permit processing system, Clackamas County, Oregon, saw an annual savings of $40,000, and were able to relocate two staff to other functions -- all while handling a major increase in construction volume.
• Better enforcement with the ability for inspectors and code enforcement officials to view all related and historical property data from the field using a mobile device
• Decrease in staff administrative work, freeing up time to work on other more important tasks
• An increased supply of affordable homes and apartments due to expedited permitting and review processes