3 Ways Real Estate Data Analytics Help Developers Earn Higher Returns

In 2018, McKinsey & Co. published an article explaining why a data-driven approach to real estate development is better than relying on gut feelings. For example, the consulting firm noted that artificial intelligence-powered systems could provide project managers with predictive insights with an accuracy rate of 90 percent. Because those insights are generated in real-time using a wide range of data, project managers can use them to achieve better project outcomes.

It’s worth noting that real estate data analytics platforms have become significantly more sophisticated since then. Contemporary solutions have automated functionality that centralizes project data, eliminates data-entry errors, and expedites workflows. More importantly, cutting edge-platforms help developers increase their earnings by optimizing every stage of the real estate development process.

Enables Better Project Planning 

Creating a robust roadmap is one of the most challenging parts of executing a real estate project. Anticipating the costs involved with a major development is daunting because you can't predict all the internal and external factors that complicate its execution. However, you can hedge your bet by tapping your firm’s cache of historical data.

Maintaining an easily accessible database featuring all the cost data from your previous projects is critical to improving your future performance. Hunting down information held by different departments can be time-consuming and frustrating. But a historical data repository will later recognize and mitigate potential pitfalls from a 30,000-foot perspective.

One area where data-driven project planning is especially useful is vendor procurement. Let’s say you've worked with a provider on multiple occasions without apparent problems. Your gut instinct might be to bring them aboard your new project and rubberstamp all their invoices. But a careful analysis of their history across your portfolio could reveal a pattern of low-ball bids and pricy change orders. Once you’ve identified that issue, you can work with a vendor that’ll better meet your project expectations. 

By contrast, modern real estate data analytics solutions allow developers to exert greater control of what can be a very volatile process.

Prevents Cost Overruns

Nothing can turn a lucrative project into a spectacular failure faster than unexpected cost overruns. Unfortunately, keeping track of expenditures on large projects that take years to complete and involve hundreds of vendors is no easy task. It's even harder for organizations that use spreadsheets or antiquated legacy systems to track their spending. When someone discovers that a budget line has exceeded its commitment, the damage is done, and only reactive measures can be taken.

But project managers can proactively address cost overruns using real estate data analytics solutions.

AI-powered intelligence platforms let you monitor your project spend in real-time. Cutting-edge systems can integrate with your company’s email-based workflows to automatically capture and store pertinent information like proposals, invoices, and change orders. By collating this information, it can generate forecasts alerting you to any imminent overages.

Having advanced warning gives development teams a chance to reallocate funds, tap into their contingency, or make other adjustments before things spin out of control. Traditional project management systems provide important insights after worst-case scenarios have already happened.

Real estate data analytics platforms provide visibility that can help reduce cost overruns by as much as 66%. That kind of budget stability allows project managers to maximize their returns on all their projects.

Identifies Cost Cutting Opportunities

One of the best things about using cloud-based real estate development software is being able to identify cost-cutting opportunities. Having a single source of truth for your historical data can help you establish benchmarks for your current project. That way, you can anticipate your costs 3, 6, or 12 months into the future.

Moreover, stay-of-the-art real estate data analytics software provides actionable insights at a granular level. Let’s say you’re in the early stages of a major new project. Soon, your team will start accepting bids that will form the bedrock of your initial budget. Instead of sorting through mountains of spreadsheets to evaluate your potential costs, you can use your historical data as a point of comparison.

With those benchmarks at your fingertips, you can negotiate more favorable terms for every proposal, contract, and change order. And you’ll be able to make more cost-effective design and building material choices to streamline your budget.

Purpose-built real estate data analytics platforms can help you plan more effectively, mitigate risks, and achieve more predictable project outcomes. Removing ambiguity from your development process will make your workflows more efficient, and those operational improvements will increase your earnings. In the long run, becoming a more effective player in the commercial real estate field will lay the groundwork for bigger projects.

Download The Complete Guide to Commercial Real Estate Data and Analytics to discover more ways your company can become more efficient and profitable.