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Northspyre commissioned NewtonX to survey real estate project managers in the U.S. this summer. The research firm interviewed dozens of project managers employed by small, medium, and large-sized companies across the country working with residential, retail, office, hospitality, industrial, and mixed-use buildings.
Northspyre compiled a report, The Biggest Challenges and Opportunities Facing Commercial Real Estate Project Managers in 2023, based on its findings. As it turns out, employees in the role have similar concerns about the economy, operational efficiency, and keeping projects on budget and on schedule.
We also uncovered major disconnects between project managers and leadership regarding workflows and resources. Because of that disconnect, projects aren’t getting the level of attention needed to ensure they stay on track. The majority of our study participants felt that a technology enablement gap is undermining their project outcomes.
Here’s a look at some of the key takeaways from our real estate development project manager survey.
Economic Uncertainty Casts a Big Shadow
Understandably, growing economic uncertainty in the U.S. has been a serious concern for the country’s project managers. Our survey found that 60% of participants believe rising inflationary pressure will have a “moderate” to “major” impact on their companies. Further, 68% anticipate inflation will prompt their organizations to become more strategic when making purchasing decisions.
Although several factors contribute to America’s economic anxiety, project managers’ worries are concentrated on inflation. Increasing costs for raw materials and vendor services is a prominent concern at that level.
Our survey also revealed that the size of a project manager’s company shapes how they view the threat of inflation.
Excessive Administrative Work Is a Widespread Problem
While economic uncertainty is causing widespread anxiety, 67% of project managers identified spending too much time on administrative tasks as their biggest challenge. In this context, admin work means completing manual data entry. While necessary, dedicating almost 40% of their workday to collecting, collating, and reporting on project information is a strain on employees in that role.
One survey participant told researchers, “The high volume of administrative tasks is a drain on productivity.” Indeed, 51% of respondents admitted they spend over eight hours a day at the office. Another said, “Time spent on tasks that are considered administrative which takes focus away from the project itself.”
Why Real Estate Projects Go Over Budget and Off-Schedule
Our survey showed the second most significant challenge facing project managers is “keeping projects on budget and on schedule.”
Unfortunately, 52% of our survey participants said they “aren’t equipped to minimize and manage the risks to their projects.” Based on the information we collected, the most significant driver of cost overruns and delays is vendor change orders, and 61% of our respondents said the leading cause of change orders is “unforeseen conditions of the job site.”
The Technology Enablement Gap
Drilling down, most survey participants expressed concerns that they don’t have adequate visibility into the projects. Many project managers admitted they don’t have a good handle on the change orders and vendor performance, an issue that has made cost overruns commonplace. Since complex projects can involve hundreds of service providers, the prevalence of information management difficulties isn’t surprising.
Nevertheless, the lack of control employees in that role feel has an obvious impact on their project results. Only 62% of interviewees said that most of their projects came in on schedule, and only 50% agreed that most of their projects were delivered projects under budget.
Want to read the full report? Download our Biggest Challenges and Opportunities Facing Commercial Real Estate Project Managers in 2023 to discover which changes project managers want their leaders to make.
Tag(s): Real Estate Development
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