Managing Your Development Projects
Managing development projects involves the developer taking into account a broad range of issues. Once the developer has completed the necessary due diligence and feasibility assessments, the project is ready to begin. Most development projects are complex and multifaceted in nature, and developers recognised that effective management is central to reduce risk during the development and getting the project completed on time and as intended. Real estate development software can play a significant role in assisting developers with managing ongoing projects.
While most costs associated with property development (such as development approval costs, operational expenses, acquisition expenses, and title and sealing) are usually fixed and relatively easier to manage, there’s one particular cost item that developers tend to watch carefully. Construction cost, by nature, are usually the largest expense item on the property development balance sheet. A small change in the construction costs, caused by delays or change in availability of materials, can lead to significant alteration in the margins for the project.
One way to avoid this is to have a fixed price contract with contractors. The building contractor’s quote will cover all items and associated costs, including labour costs and building materials. Keeping provisional or prime cost items to a minimum will reduce the likelihood of cost fluctuations.
The prospect of a contractor going bust during the construction stage may be small, but this is one risk that every developer would probably like to eliminate from their projects. Choosing a contractor with a proven track record and good reputation in the industry are some of the ways to reduce this risk. Many developers will readily enquire about the contractor’s financial status and obtain information about past projects.
While construction warranty insurance will cover the contract in the event that contractors become bankrupt or become unable to complete the agreed work, disruptions to the project can be avoided by choosing a contractor carefully at the outset.
While choosing a reputable contractor reduces risk of poor construction quality, developers will make periodic inspections to assess the quality of construction work. Together with visits by the structural engineer and the architect and/or building designers, who make inspections to make sure that the approved plans and regulations are being adhered to, developers can actively manage the construction quality throughout the entire building period.
Periodic Budget Review
Periodic budget review is an essential aspect of managing any type of construction project. Developers can obtain a good idea of where the project is going with respect to the original timeline and budget projections. Potential cost blowouts can be quickly identified and averted. Adjustments can be made to keep the project on track.
Property valuation software and real estate development software often come in compatible packages, allowing developers to track their financial commitments, expenditure, and revenue data from start to finish. Data from other software platforms, such as financial or accounting data, can be imported and used in reporting. It can be extremely useful for developers to compare the actual budget outcomes at each stage of the development against original budget projection and feasibility assessments. Report generation and updating forecasts can assist with ongoing management of the project as the development nears completion.