Project management is a growing field, and professionals employ it interchangeably across many industries. The Project Management Institute (PMI), which certifies project managers, defines projects as both temporary and unique endeavors that require the hire of a temporary team and completion of a series of tasks within a defined timeframe. A project manager is a person who brings all the disparate pieces of a project together, ensuring that the different phases of work are completed efficiently and within a predefined budget. Sometimes a project manager isn’t designated or given a title, but the work of a project manager is completed under someone’s purview within an organization or given project.
The Commercial Real Estate Industry Runs on Smart Project Management
Property transactions and construction initiatives (whether new builds or remodels) require multiple steps, lots of money, and input from multiple stakeholders. Think of buying a house: You secure a loan, research available properties, choose and bid on a property, inspect it and secure insurance, negotiate the purchase, close on the purchase, and move into the space. Now port those concepts to the commercial real estate world: Buying a large empty lot for a future building requires similar steps, but on a much larger scale. The developer must conduct research, secure financing, negotiate the purchase, hold conversations with city or county zoning and permitting departments to determine whether the property’s planned use is permissible, hold public comment sessions, coordinate with engineering experts about matters such as the property’s site plan or parking lot drainage, submit plans to a city or county planning board, and so forth. The necessity of all this planning evinces the fact that smart project management is a vital aspect of any successful real estate project.
Why Is Project Management Important in Commercial Real Estate?
Large-scale real estate projects are expensive and often high visibility undertakings with many stakeholders. Companies that oversee their own real estate projects or that regularly tackle real estate projects across a network of buildings must cultivate systems for managing projects for the following reasons:
Budget Management : Project managers must hire and manage multiple contractors, watch cost increases due to change orders, budget for materials, pay vendors, use financing properly, and follow dozens of protocols to keep a project at or under budget.
Time Management : Project managers must also keep track of time. Not ordering supplies on time, failing to coordinate among contractors, or forgetting to pull a permit that takes several weeks can slow a project down. In turn, this can add to a project’s or project client’s costs - even costs not directly tied to the project itself. For example, if a new office headquarters isn’t ready on time, that may mean a company must extend a corporate lease while it awaits a build-out.
Risk Management : All projects risk going over budget or taking longer than expected. They also expose companies to risk. Project managers are tasked with reducing risk by hiring only properly licensed or bonded professionals, securing adequate project insurance, designing and managing contracts that clarify all parties’ responsibilities, and other tasks designed to avoid litigation or other expenses. Learn more about the intricacies of project risk management in this article.
Communications Issues : Large and complex projects may require public comment periods, community resistance or community notice requirements, and public outreach. Additionally, if multiple parties are collaborating on a project, explaining the “story” of the project’s progress is advisable - and sometimes necessary - to build local goodwill and support, and to assure that local leaders will approve zoning and permitting or press for permission to make exceptions to normal rules so that the project continues as planned. Read The Definitive Guide to Stakeholder Management for tips on how and when to share relevant information with the public.