A systematic flow is required for the smooth operation of the business. We have to outline the business plan based on business requirements. This is the formal projection of the value the venture is expected to generate and will justify the investments that need to be made.
Four components are like pillars that sustain the real estate program:
The Legal Pillar, which encompasses compliance issues and risks
The Financial Pillar, which handles the capital resources
The Commercial Pillar, represented by sales and marketing
The Engineering Pillar, which is the actual construction work and the projects that define it
Each pillar has its own critical success factors, which can be combined in a variety of ways. In addition, the project manager bases his or her actions on the vulnerabilities and strengths of the developer. Project Management requires careful evaluation of a project and to create a plan according to the requirements. However, as much as managers may differ from each other, their mission is one and the same: ensure the economic balance of the real estate business.
For the legal pillar, fulfilling this mission translates into mitigating what could threaten success, ensuring compliance with laws and stakeholder requirements, and putting lessons learned in previous dealings with suppliers and clients into practice. The company must also comply with environmental legislation to avoid fines. Following environmental standards will also give access to cheaper capital. Therefore, a solid legal pillar not only reduces unnecessary risks but also saves money.
The financial pillar ensures that the venture meets the requirements of banks and investment funds, which are the two main financiers of the real estate business. The bank ties the interest rate to the perceived level of risk and minimizes that risk by requiring the developer to first build and/or sell a certain number of units. When choosing to finance a real estate endeavor, each fund will likely have its own requirements (for example, that the company is profitable and that the bank loan will cover the entire construction project). The program manager equates these assumptions and makes any necessary adjustments throughout the negotiations.
For the commercial pillar, ensuring economic equilibrium is not only about establishing the right selling price of the property, but also determining the value of the down payment, the value of the installments, deciding whether or not there will be intermediate charges, and what policies will be used in case of exceptional circumstances. For example, in some markets, a buyer may propose paying higher installments upfront before taking possession of the unit so that he will pay less after taking possession, or the negotiation may include a car. This pillar also encompasses marketing strategies: market research, defining the target audience, promotions, monitoring the profiles of clients who visit the model sales unit, etc.
The more closely expectation and reality are aligned, the stronger the engineering pillar will be. When the plan and the execution line up, it’s a sign that everything is on track and that the product will be delivered on time or before the deadline; within or under budget; and meeting or exceeding quality expectations. If any technical or financial adjustments are required, it is the job of the program manager to step up to the plate.
There will inevitably be a need for adjustments, and these must be implemented wisely to ensure that later, in the operational phase, everything goes according to plan.