Archaeological-related time and cost impact risk is often underestimated in Romanian real estate projects – an endorsement requiring supervision obtained during the permitting phase does not eliminate the risk of being mandated preventive archaeological research or archaeological diagnosis after RTB and before construction initiation.
Background. The issuance of the building permit based on an archaeological endorsement requiring supervision does not necessarily close the archaeological process. After RTB, before initiating construction works, the developer has to pursue a separate procedure whereby a committee convened at national level authorises the project-specific archaeological supervision by the nominated archaeologist. This national committee may impose additional archaeological work, including archaeological diagnosis or preventive archaeological research, despite the earlier endorsement issued by the County Culture Department. If the authorisation process takes place between June and August, investors should also factor in potentially longer lead times, as the relevant committee meetings are less frequent during this period.
Time and cost impact. If additional archaeological research is imposed by the national committee, the safest approach is to complete the relevant archaeological works before construction can proceed under the envisaged building permit. The combination of the legal procedures, limited availability of authorised archaeologists, and, in practice, the involvement of local museums in appointing the archaeologist can result in significant delays.
The consequences of these delays may cascade through the project:
- EPC: construction works may need to be resequenced, with additional resources and associated EPC costs.
- Financing: if the additional costs exceed the assumptions underlying the financial model, the project budget and potentially the financing arrangements may need to be revisited.
- COD: delays may push the project beyond the contractual COD, potentially triggering delay liquidated damages under the PPA/VPPA and financing documentation.
- Long-stop date: in a more severe scenario, prolonged delays could trigger termination rights under the PPA/VPPA. A project without secured offtake revenues may then become materially harder to finance or develop, with the available alternatives depending heavily on market conditions and offtaker appetite at that time.
Investors should therefore assess this risk before financial close. The archaeological requirements stated in the endorsement supporting the building permit should be distinguished from requirements that may arise after RTB during the subsequent archaeological authorisation process for construction purposes.
Potential mitigating measures:
- Early preventive archaeological research: consider undertaking preventive research covering the relevant project areas at an earlier stage, potentially identifying and excluding areas affected by archaeological findings. This can reduce construction-stage uncertainty, but adds development cost and time. The availability of suitably authorised archaeologists should also be assessed early.
- EPC risk allocation: expressly address archaeological delays, additional investigations, resequencing, standby and associated costs.
- Financing buffer: incorporate realistic time and cost contingencies into the financial model and Facilities Agreement, rather than assuming that an endorsement requiring supervision represents a fully de-risked position. The buffer will not eliminate the risk, but it can materially reduce its impact on the project's financing and contractual commitments.
Key takeaway: an archaeological endorsement requiring only supervision at the permitting stage should not automatically be treated as confirmation that the project is fully de-risked from an archaeological perspective. For investors, this is a potential construction and financing risk that should be identified and priced before financial close.
This newsletter is for general information only and does not constitute legal, commercial or technical advice. Seek professional advice for your specific situation. Rapt.vu accepts no liability for decisions made based on this content. Full disclaimer: Terms & Conditions