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Anyone involved with commercial real estate knows that projects require razor-sharp planning and flawless execution to be successful. So why are developers still clinging to a project management methodology that involves tools and practices that became outdated in the 2000s?
The obvious reasons are there's no time to change, the disruption would be costly, or your employees are used to doing things a certain way. But at the end of the day, these are simply excuses that are costing your organization the very thing it set out to make: money.
Creating an efficient, repeatable approach to project management will ensure your projects hit the deadlines and margins you planned for, time and time again.
Real estate project management software can help you achieve that goal. Modern cloud-based intelligence platforms, powered by artificial intelligence have an established track record of improving project outcomes while making them more dependable. Effectively modernizing your firm's operations means identifying what needs to change and how to implement those changes.
Here's a look at some common blind spots real estate development firms have with traditional project management.
10 Major Blind Spots of Traditional Real Estate Project Management
Running a $200 million+ real estate project in a static spreadsheet exposes it to unnecessary risk, delays, and budget overruns. Knowing that, why would a savvy real estate developer manage a project of any size in something inflexible and error-prone?
Relying on traditional cost tracking and reporting methods like spreadsheets and legacy applications only makes your job harder.
Real estate teams that are not using modern technology are:
- Making gut decisions based on static data. Any data that needs to be manually updated becomes outdated quickly. And depending on backward-looking information puts you a step behind in your decision-making.
- Force-fitting commercial real estate development projects into the wrong solution. Using spreadsheets as a project management tool is bad for two reasons. They lack the functionality to let team members share analysis and insights, and they become so layered with information that only one team member can navigate it. While understandable, using traditional software - that wasn’t created with commercial real estate developers in mind – is incapable of adapting to the nuances of project delivery.
- Lacking access to historical project data. Real estate teams are leaving money on the table if they don't leverage data from past projects to inform future decisions. This problem is common among firms that use spreadsheets for project management.
- Unable to create accurate project or portfolio forecasts. The inability to anticipate costs leads to teams operating from a reactive rather than proactive position when faced with unexpected challenges or opportunities, which puts a project at risk of running over budget or falling way behind schedule.
- Siloing important information between departments. Usually, information siloing involves accounting and project teams, making it difficult for development managers to make informed decisions quickly. With something as time-sensitive as development, these real estate professionals feel pressured to make gut-driven decisions without hard data to back them up.
- Missing visibility into current project data. Project data often lives as institutional knowledge within the project manager’s mind or in a complex spreadsheet managed by a single person. Either way, both methods depend on one individual as the source of all project data.
- Lacking product support from their team. There is no one to contact when you have issues with your spreadsheet. Teams waste hours resolving formula errors and updating force-fit software to achieve greater returns.
- Utilizing rigid templates or ad hoc spreadsheets. Each project is managed differently, without any uniformity. That leads to teams finishing every project with no repeatable process.
- Inevitably running into spreadsheet inconsistencies. Manual systems and spreadsheets are vulnerable to human error via data entry mistakes. Inconsistencies lead to necessary but tedious reconciliation, which can take up an entire afternoon of a busy PM’s workday. Spending time fixing avoidable mistakes removes focus from guiding a project or portfolio.
- Having difficulty tracking who has and has not been paid. Development teams must go through a long and complex process to review and approve invoices. This process usually involves multiple departments, including accounting, which creates bottlenecks that inevitably cause delays and cost-tracking difficulties. When that happens, vendors end up being over and underpaid.
How to Improve Real Estate Project Management
After understanding common industry blind spots and starting on the path to improved real estate project management, the next step is sunsetting your legacy processes.
Spreadsheets can be helpful, but there are better information databases for your organization. Suppose you depend on error-prone historical files to inform future decision-making. In that case, you leave these crucial decisions vulnerable to human error. And when those input mistakes happen, they are hard to catch, cultivating outcomes riddled with mistakes and massive budget overruns which no stakeholder saw coming.
When you review what went wrong, can you pinpoint the single keystroke mistake that disrupted your project? Can you identify the equation producing numbers that are just slightly off? It's unlikely that the same errors will persist in future projects, but the operational flaws that created them will.
Your organization must be able to contextualize vendor performance across past and present projects. Spreadsheets won’t let you do that. Your firm will stagnate without a system that supports consistent growth and advancement with each new project.
Similarly, you shouldn't waste time on tedious, administrative duties every day. Instead, your focus should be on managing potential risks and critical events affecting your projects. Your organization isn't maximizing the value of your time and expertise if excess admin work consumes a large part of your workday.
It's also critical to prevent conflicting, duplicated information does bog down your project management workflows. When different departments maintain separate data silos, they open the door to reporting mistakes that can result in development delays and reputational damage. Fixing those problems is a time-consuming, manual process that slows teams down and takes focus away from high-value work.
The key is to create a repeatable project management strategy that isn't reliant on any single person. Reducing manual data entry and creating a system centered around a platform that houses all necessary information enables far more effective project management.
Your stakeholders will take notice of the clear improvements in each phase of development. And your bottom line will benefit from better and more consistent project deliveries.
How Real Estate Project Management Software Helps
Modern technology solutions are designed specifically to facilitate the success of real estate development firms. You can move faster and make smart choices by replacing traditional systems with new technology. After onboarding a cloud-based intelligence platform, project teams can:
- Dramatically increase project and portfolio visibility. With fast, real-time access to all project data - current and historical – teams are always up to date and don’t have to rely on gut instincts to guide development.
- Make forward-looking decisions using an anticipated cost report. Real estate professionals can be forward-looking and proactive, making the most informed and data-driven decisions for their projects.
- Scale by utilizing purpose-built, adaptable technology. Modern technology allows firms to scale successfully and handle a wide breadth of project types and sizes - from $100,000 to over $1 billion. Modern software supports a repeatable process that can be applied to any project.
- Leverage valuable, proprietary data from past projects. Easy and fast access to this past project data is essential to creating benchmarks that enable better, smarter, and real-time decision-making across an entire portfolio.
- Lean on a single source of truth to enhance collaboration. All team members have access to the necessary information to do their respective jobs. With a single source of truth, you gain greater efficiency and effectiveness. You'll be able to deliver fast-moving, complex projects with hundreds of vendors and many moving parts.
- Gain insight into vendor analytics. Teams can manage their vendors in one place and quickly check the status of each one, with the bonus of real-time benchmarking.
- Remove information silos between departments. Eliminating bottlenecks associated with constantly going through an accounting team to pull project data is critical. Development teams need the ability to share project details in real-time with management teams quickly, JV partners, clients, and other key stakeholders.
- Eliminate data entry and numerous administrative tasks. Taking human error out of the equation saves project teams from wasting hours reconciling spreadsheets or compiling lengthy monthly cost reports.
- Smartly index and store all critical documents and data. Project teams can quickly source information to answer questions and make decisions at every pivotal moment of a project. A database featuring contracts, invoices, proposals, and COIs can affirm stakeholder confidence. All members of the team can track and feel a sense of responsibility over the budget.
- Gain a dedicated customer success team. When working with a skilled customer success team, real estate developers gain additional team members to support the delivery of their projects from a domain and technical perspective.
Real estate project management is inherently complex, but it doesn't have to be a headache. Developers can bring their methodologies into the 21st century by upgrading their technology. It’s also important to remember that modernization doesn’t have to be arduous. By partnering with the right provider, firms can avoid serious implementation problems and start achieving better outcomes right away.
Want more insights on how to make your projects more lucrative? Download our How to Cut Real Estate Development Costs eBook today to learn how you can increase margins on each of your projects.
Tag(s): Real Estate Technology
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