Real Estate - Challenges of Project Management with
Maharera, DCR 2034 and, stakeholder dynamics
MAHARERA will be completing one
year of confusion and, DCR 2034 four years. We need to exercise project
management techniques by adapting deviations in standard practice. Business
alignment to project management techniques is now well set approach. Stakeholders
in real estate business premise, government, neighborhood, developers, customer
and consultants have or are updating their approach very fast. This is posing
difficult times for project management professionals to align standard
practices as they need adjustments every now and then. Good management does not
guarantee that there will be no problems but, it ensures that one is prepared
to handle them better.
1.
Stakeholder
analysis:
Talking about
developers who are promoters of project and major risk takers, are now fast
changing the ways they made money or, made the money work. Projects are either
higher capitalized now or, are collaborative. Reducing the front loading of
projects at the cost of sharing profits now work better in lower, middle and
higher middle income group projects. Redevelopment projects have mass management
skill, higher capital as well as collaboration requirements. You must have
experienced Collaborating with landlords, marketing consultants and executing
agencies at various levels.
·
Collaboration is desirable but one finds it
difficult to achieve as, sharing liability of delivery comes with the package.
·
You will succeed in collaborative development if
interests are resolved and, shareholder management is taken care of.
2.
Planning
– Financial & marketing
Planning had
never been so dynamic, desirous and serious before. Yet, one needs to
understand difference between estimate and forecasts. You must have had time/
cost estimate and, sales forecast. Also one needs to understand different types
of estimates, their limitations and use. One need to understand that estimate,
does not guarantee anything but, better management decision making. It is
heartening to see that planning has taken an approach for closure by completion.
i.e. delivery and handover from the previous payment milestones or, cost
approach. Your funds flow has become more stressed under the escrow and limitation/
certification regime. Certification and, release have become successor of
payment from customer. This is giving importance to “delivery” approach. Time,
cost and Project risks differentiation is thinning. Hence risk impact has
become more sensitive and demands response to be specific.
·
Plan for release of funds rather than receipt.
Estimate and calculation of working capital demand needs to be acceptable as
well as sufficient.
·
Plan what you are confident. Not what can tweak
numbers. Integrating sales forecast, funds flow and, construction management.
·
Plan risk management for completion with
responsibility matrix focused.
3.
Contract
Document
Today becoming
more responsible and for a long period for defect liability, it is obvious to
transfer responsibilities proportionately to all the people who are making
business in the process. Right from developer company, to vendors and executing
agencies to consultants. All need to share the responsibility of Promised
delivery. It’s no more one year defect liability, its five years and, Good
Delivery. It’s not far off when consumers shall be approaching different regulatory
or judiciary for Quality deficiency also. Hence, contract document has to
specify “Quality acceptance criteria” for customer contract as well as material
supplier and execution agency contract.
·
Sharing responsibility makes you better link to
get collaborated with. Accept it.
·
Quality is unwritten condition of timely and as
promised Delivery. Write it.
4.
Delivery
– Product, governance
Someone asked me
when to book profit in a real estate project. Apart from an accountant or tax
consultants view point; I feel when the delivery is accepted in completion and
closure of sale agreement. Till then, receipts should be treated as advance,
i.e. liability. More or less, one need to understand this in its essence and
spirit that, business is complete when delivery of promised and, compensation
of the same has taken place. Phased projects have a new focus emerging –
governance and maintenance. Governance is the activity for which a promoter has
to carefully draft and observe policies suitable for the customer segment,
product and life style that is promoted by the project amenities. The subject
requires in-depth study of the customer segment culture, post purchase behavior
and, life style change related issues.
·
Long term maintenance – Select material,
executing agency/partner carefully.
·
Governance – Develop social entrepreneurship if
in redevelopment or phased project.
Project management of Phased
projects is exposed to such new challenges that are yet to be streamlined for standardized
practices.
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