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Today's commercial real estate analytics software provides users much greater functionality and overall project benefits than force-fit and legacy programs. Developers can use them to mitigate risks, significantly reduce cost overruns, and improve project outcomes. Modern platforms can offer those benefits because they track all project data in real time. The cloud-based programs also provide insights about past projects that inform and drastically improve your firm’s decision-making.
One of the most important features of real estate development software is its real-time tracking of your project spending.
Once the setup is complete, modern platforms can automatically generate a project roadmap using all your estimated acquisition, hard, and soft costs. Unlike older and generalist solutions, current generation tools integrate into your company's existing email-based workflows. That functionality enables it to update your spending with every new contract, invoice, and change order that comes into your inbox.
Real estate analytics platforms can provide actionable insights by tracking expenditures at the granular level. Because the program stores all your vendor contracts, they can show you how those commitments compare to how much money you’ve actually paid them. Having this information before reconciliation begins will allow you to make proactive decisions to prevent your budget from spiraling out of control.
Another powerful feature of real estate development software is anticipated cost tracking, meaning your future and potential expenses. The tool creates a spending forecast based on your existing commitments and updates that projection when information comes into play.
For instance, a vendor could submit a change order to reflect the recent 21% increase in prestressed concrete product prices. A real estate analytics platform can show how approving that request will impact that service provider’s commitment. And how that unexpected cost increase will affect your overall budget.
As an added benefit, it can give you this information in real-time, so you won’t have to wait for accounting to consult a spreadsheet to get the answers you need.
Modern software solutions also give you the ability to run different budget scenarios. The platform can use the information in the vendor’s change order to predict how the price of concrete will shape your budget several months into the future.
Real estate development software can help you chart the effects of unexpected events on your project. As an example, A construction crew could discover a higher groundwater level at the job site than expected. Resolving that issue will require construction delays, consultation with your engineering team, and a redesign, all of which will expand the budget.
The total cost of addressing the groundwater issue can’t be calculated immediately, but your team can estimate its financial impact. A project manager should be able to create a rough order of magnitude (ROM) for the event based on personal experience and the company’s historical data. Real estate software can integrate the ROM data into its budget forecast and revise its projections as invoices related to the groundwater discovery come in.
Tracking anticipated costs will enable you to harness the power of predictive analytics to achieve stronger project outcomes.
In addition to providing insights into potential costs, real estate analytics software also tracks contingency. Having real-time visibility into your project’s remaining unallocated funds gives you flexibility when dealing with unexpected events.
Depending on its complexity, the contingency for a real estate project should be between 2 and 20% of the overall budget. Analytics software enables you to create budget lines for your contingency, like extra money to cover unanticipated vendor costs. Therefore, if a vendor sends you a change order, the program will tell you how much of their contingency will consume. You’ll find the best way forward with that information and data about the project's overall progress.
Being able to make data-driven decisions over the lifecycle of a project will pay dividends when nearing closeout.
The ability to track ongoing and future costs can have a transformative impact on a real estate development firm's business. But accessing historical data on your past projects can be just as impactful. Real estate analytics software can give important insights that help make your projects more cost-effective and your deliveries more predictable.
One area where access to properly collated historical data can be invaluable is vendor procurement.
Choosing which service providers to work with is a task that has major implications on project outcomes. To that end, being able to identify vendors with patterns of low bids followed by expensive change orders is mission critical, especially during the construction phase. When it comes to the allocation of 70 to 80% of your budget, having a thorough contractor vetting process is a must.
Utilizing real estate analytics to leverage your firm’s historical data enables greater operational efficiency and significant competitive advantages over those entrenched in old-school processes.
Modern real estate development software can do much more than track your project data. Download our Complete Guide to Commercial Real Estate Data Analytics eBook to learn how technology can help your firm improve its project deliveries.
Tag(s): Real Estate Technology
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