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It’s natural to think that one successful project means repeating the same processes on your next project will lead to the same result. In reality, that success is often dependent on external factors that depend on luck.
Once a developer gets enough projects under their belt, they realize that luck eventually runs out. And for a developer, a little bit of bad luck can have catastrophic effects -- like a failed project and a tarnished reputation.
While you might not be able to remove luck completely from the equation, there are ways to achieve more predictable outcomes on your development projects.
At its core, the key to trading out luck for a reliable result is making proactive and data-driven decisions. From choosing your vendors to handling change orders and managing contingency, there are opportunities to leverage data to drive strategy.
The Problem: Backwards-looking Financial Tracking and Management
Teams are inherently disadvantaged when using their monthly cost report to manage their commercial real estate project and financials. It makes sense that after spending a week putting together a comprehensive draw request package, developers would want to use that data to inform decision-making and see where their project stands. However, that information is looking 30 days into the past, meaning you aren't getting an accurate look into where your project currently stands and are retroactively managing contingency and handling change orders.
The industry standard for development teams is to manage each project in one or multiple spreadsheets, each created and managed by a different team member, resulting in no repeatable processes from project to project. Each spreadsheet is organized -- or disorganized -- differently, leaving it impossible for team members or executives to get information quickly or even get just a holistic understanding of how the project is doing.
Given that the data from historical projects is all formatted differently in miscellaneous spreadsheets, there is little desire to refer back to those sheets and maintain easy access to them. This leads to lost institutional knowledge and learnings not shared across the organization, resulting in information silos and higher key person risk.
Teams are starting completely fresh at the beginning of each project bringing only the knowledge they can remember from a multi-year development process. Things like comparing vendor price and vendor trustworthiness or referring back to how vendors handled change orders are valuable to inform decisions on future projects. Without centralizing your project data, there is no guarantee that your team won’t repeat the same mistakes.
Although every real estate project is different, starting each project like it’s your very first one is not a promising project delivery method for any firm. Teams put a little too much trust into the fact that they’ll always have good luck on their projects once one goes well using a certain process. In reality, there’s much ambiguity in traditional development management processes.
So, how can you take the luck out of your projects?
Although there is no way to guarantee projects get delivered on time and on budget, there are tools and best practices your team can adopt to take the guesswork out of each project and take control of your development projects.
The Solution: Take a proactive approach to your development project
What’s the key to stop relying on luck?
Pair forward looking projections and a single source of truth to take your project outcomes into your own hands. Here’s how:
- Historical database of vendor information. Centralize all of your project’s vendor invoices, change orders, contracts, etc., to access them quickly and use them to inform future decision making. Never make the same mistakes twice.
- Make key documents searchable. Sort your invoices, proposals, and contracts so they are searchable and allow you or your team members to drill down into any number at any point -- allowing all team members complete visibility into project data.
- Early warning systems. Utilize AI and data analytics to project future financial challenges. Use this technology as a worst case scenario planning tool to ensure you are minimizing risk.
- A full view into your contingency remaining. Take control of your projects with real-time dashboards that allow any team member from project manager to senior leaders to get an immediate understanding of where your project stands and how it is trending.
Once a developer works on enough projects, they run out of good luck without improving their processes. Development projects can be tricky and implementing a strategic and dependable project delivery strategy is instrumental in pivoting from a luck-reliant process to a skill-reliant approach.
The days of being unable to have forward looking visibility are in the past for savvy real estate developers. Be a proactive and data-driven decision maker to avoid the one disastrous project that can leave a permanent stamp on your career.
Tag(s): Real Estate Development
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