Why Governments Should Invest in Building Permit Software

May 21, 2021

Why Governments Should Invest in Building Permit Software

A government’s building permitting approvals process - and its speed and effectiveness - has a significant impact on the pace of community development, making it critically important to overall economic activity and growth. Especially now amid a building boom and recovering economy post-COVID-19 pandemic, and with the availability of American Rescue Plan federal stimulus money to be put towards improvements to public services, there’s never been a better or more critical time for governments to invest in modernizing the building permitting process. In the U.S. alone, housing starts saw a growth of 19.4% month-over-month from April 2020 to March 2021 (Figure 1), while the demand for building permits surged 30.2% from March 2020 to March 2021 (Figure 2) - soaring demand that governments without permitting technology struggle to keep up with.

Figure 1: U.S Housing Starts from April 2020-April 2021

U.S. housing starts 2020-2021

Figure 2: U.S Residential Building Permit Demand

U.S. residential building permit boom

To meet this surging demand and support economic growth, among other steps to improvement like standardizing building codes and regulations, governments should look to invest in building permit software that can drastically improve and speed-up often complex and unnecessarily lengthy permit processes. Offering faster permit turnaround times (up to 80%), more equitable access to services, and 24/7 online service availability, building permit software provides governments a way to tackle permit backlogs, improve staff’s day-to-day, and meet ever-increasing public pressure to move services online and bring them up to present-day standards. Basically, with the permitting technology available today, acquiring a building permit can be quick, straightforward, and transparent.

The Case for Governments to Invest in Building Permit Software

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. And when developers face higher costs, the public are impacted too: if the cost of a finished project goes up, so too does the cost of housing, making affordable homes more difficult to deliver. The cost and administrative burdens associated with a slow and inefficient building permitting process may in fact put off some developers from proceeding with a project in a certain area altogether. If a developer has a choice between a city with a quick 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. A slow pace that, in an already booming housing market, further contributes to the lack of affordable homes. And it’s not just developers who may be swayed, and housing prices that may be affected, as outlined by the US Department of Housing and Urban Development; 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. 

So, what should governments do to improve the development approvals process? Well, now that American Rescue Plan funding is available to make investments in technology to improve public services and support economic recovery post-COVID-19, there’s never been a better time to invest in building permit software to speed up the process.

A Solution to Development Delays: Building Permit Software

In essence, building permit software allows governments to streamline and manage all permitting functions and correspondence electronically, in one place. It offers a way for the public to apply for permits online, and for staff to then review, inspect, and approve (or send back for corrections) the permit in a few simple steps, supported by automation and powerful features like GIS and dynamic reports and dashboards. Across North America,  although software adoption has been slower for governments compared to the construction industry, that’s changing. The use of building permitting technology is rapidly growing as governments realize the significant benefits to digital systems, such as drastic reductions in permit approval times. In the U.S. specifically, as reported by the
World Economic Forum, advanced electronic permitting systems and mobile inspections technology have reduced approval times by an average of 30%, and the number of required on-site inspections by 25%. 

With everything available online, staff can work more efficiently, citizens don’t need to come into the office, and information can more easily be shared between stakeholders and departments. Plus, all critical data and metrics are easily accessible in easy-to-read reports and dashboards, so you can easily spot areas for improvement and areas where you’re doing well; better allocate resources; make more informed decisions; and spot market trends that can help you better prepare for the future -- just a few of the benefits that come with a building permit solution and better data management. Similar benefits and more were noted in a survey of 101 jurisdictions of all sizes in the U.S. done by the National Conference of States on Building Codes and Standards (NCSBCS), with government respondents reporting the top benefits of a building permit solution to be: 

  1. Customer satisfaction and an enhanced working relationship with builders, contractors, elected officials, and the public
  2. The ability to offer services 24/7/365
  3. Being able to share critical data with other agencies
  4. Being able to better prepare for, respond to, and recover from both man-made and natural disasters

Other benefits of building permit software noted by both NCSBCS and Neep (Northeast Energy Efficiency Partnerships), include: 

  • 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

Given that new construction and renovations are vital components of a vibrant economy, having an efficient building permitting process in place is crucial to a community’s ability to grow and prosper. An efficient building permit system can attract developers, investors, and new business; and it can make all stakeholders’ lives so much easier. With building permit software, local and state governments can meet the public’s demands for excellent service, and fast-track development approvals while ensuring compliance. And now, with the availability of American Rescue Plan State and Local Fiscal Recovery Funds, there’s never been a more opportune time to modernize critical building permitting functions, and invest in building permit software

For more general information about the available American Rescue Plan stimulus funds, or to know more about building a business case to secure ARP funding for building permit software,
let’s chat! Or check out these resources about the American Rescue Plan and building permit software: 

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