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Undeniably, commercial real estate projects are complex. With so many moving parts and people involved, these projects always have their share of challenges. While there are many opportunities for mistakes to be made in the planning stage, the errors aren't exclusively happening early on. Just one wrong number entered into project tracking logs, no matter when it occurs, can lead to major financial issues down the road.
The project's overall success relies on precise planning and swift adjustments to strategy to address any challenges that may come up throughout the project lifecycle.
Here are the four ways your real estate development team can reduce project errors:
#1 Rely on data, not memory
To this day, many real estate developers often base their project forecasts on how their last project performed.
The previous project costs, although accurate for that specific project, are outdated and aren't necessarily relevant to your subsequent development. And, the project data pulled from a high-level spreadsheet, or off the top of your head, aren't always 100% accurate—resulting in forecasting that is skewed, vague, and imprecise.
According to KPMG, only 31% of commercial real estate projects have come within 10% of their budget in recent years.
Cost overruns and late schedules don’t need to be your team's norm. A centralized database of historical data, which a real estate team can reference easily, in real-time, will eliminate imprecise strategic decision making, improve financial forecasting accuracy, and keep project budgets within scope.
#2 Stop using spreadsheets
Real estate teams tend to rely on spreadsheets and manual data entry to keep track of project progress and financials.
When team members manually enter data, you're opening your project up to opportunities for human error. One wrong input leads to a cascade of bad information, which means decisions made based on erroneous data and wasted time trying to reconcile the numbers and figure out what went wrong.
Automating your data entry process eliminates inaccuracies caused by human error. Modern automation tools will extract and organize your project data so that you can access it and drill down into specifics quickly at any time.
All of your data is in a proactive intelligence system that you can then use to automate reporting, make split decisions, share information real-time information with financial partners, and, best of all, break off from your reliance on spreadsheets to keep projects on track and under budget.
#3 Correct early and adapt to change
One of the biggest mistakes your development team can make is not adapting your strategy to handle a project that is veering off course.
For example, if the material used for countertops in all of the apartments in the building end up costing more than was planned for, you can change the cabinets to a cheaper, yet similar-looking material to compensate.
But, what if a contingency goes unnoticed?
It’s common for developers to notice the budget discrepancy in the project spreadsheet when it’s too late to make changes, escalating project costs.
Integrating a proactive intelligence tool with early warning systems helps real estate developers identify challenges in real-time, reduce the impact of unexpected changes, and have a clear picture of if the project is on track to meet the desired outcome.
#4 Invest in the latest, innovative technology
For decades, commercial real estate professionals have been relying on traditional processes, like manual data entry and spreadsheets. Since many teams have been functioning without technology for such a long period, it can be difficult for developers to consider investing in a pricey, unfamiliar tool that they don’t think they need.
Bringing on the right proactive intelligence technology will help your team keep costs down and increase returns. In fact, Northspyre has helped real estate project teams save as much as 6% on overall project costs and eliminate 80% of admin tasks.
By using AI to sift through all of your project data, proactive intelligence tools flag warning signs and reveal opportunities to keep project costs on track.
Interested in learning more about how to cut real estate development costs, eliminate admin work, and be a proactive decision maker? Check out more of Northspyre’s resources.
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