Project management is the backbone of most of the real estate company. It is crucial to practise high standards of project management so that you can have better management and quality control, deliver the project on time, save costs and meet both process and product requirements.
Project management evolves at each operational level of the real estate business. The main stages in most projects include initiation, planning, execution, monitoring & controlling and lastly closure.
Importance of project management in real estate
industry
Project delays might happen due to a few common factors such as bad management in procurement, receiving unclear and unprecise project updates from the site, using old technology and others. As a result of that, the company will have to pay for the project delay penalty fee, which is an unexpected extra cost for the company.
Therefore, it is essential to implement project management in real estate development as it is used to ensure that the project completes within the budget and time as well as according to construction design and quality requirements. Project management plays a vital role in any real estate development as it will act as a catalyst for the completion of the project.
Proper project management can increase efficiency with regard to cost, quality, delivery and profit. Additionally, the chances of resource wastage can be reduced as it ensures the proper allocation of resources.
Project Management in Real Estate
In this new era of the Fourth Industrial Revolution (4IR), a digital transformation has been initiated across different industries, including the real estate industry, especially in project management.
Let’s explore how 4IR can be applied in project management?
Drones
The use of drones in construction has already benefiting project managers as projects can be evaluated adequately. Drones are generally used to track the construction progress on site via aerial insights. This saves a lot of time in terms of checking the daily site progress and getting higher data accuracy using ground control points (GCPs) for measurements on-site. Overall, drone technology acts as a tool that improves safety, communication and capturing real-time images on-site in real estate projects.
Companies such as Balfour Beatty, Kier and Vinci Construction have started using drones on-site for inspection of projects. In Malaysia, several projects like the Tun Razak Exchange (TRX), Mass Rapid Transit (MRT) and other rail projects also adopt the use of drone technology as a tool for project monitoring and land use analysis.
Sensors
RFID sensor is used in Hong Kong to track modular construction assets to reduce errors and ensuring all assets are stored on-site and recorded into a computer system. This can improve the procurement management as well as quality control.
Besides that, RFID-enabled technology can be used to track the number of workers on sites as well as their identities. Construction project managers or any site supervisors can use that to capture the identity of workers who enter and leave the site. This RFID-enabled solution can provide information during emergency situations especially when managing building safety and accessing a construction site.
Artificial Intelligence (AI)
The implementation of AI potentially will enhance the efficiency of operational tasks in parallel with helping real estate developers to make smarter decisions. There are a number of real estate companies that have started using AI technologies, such as Compass and Localize in New York City and Zillow in Seattle.
AI can be used in real estate industry in finding the market value of a building by predicting the demand in the market based on the location and features of the listing. For example, house prices can be predicted based on the age of the structure, the number of rooms, and the quality of life in that area.
AI also helps
in predicting long term value of new listings and identifying user needs by
using Natural Language Processing (NLP). Scanning of documents can be done via
AI by identifying red flags and key terms.
The other
feature is classifying images for people to search for similar properties
easily for comparison. For machine learning, the advanced form of AI, can be
used to help in matching offers between real estate agents and tenants. People can
also be notified for the best time to call back the other person via machine
learning. Overall, the impact of digital transformation of AI in real estate is
found to be useful.
Blockchain
Blockchain technology has been recently adapted for use in the real estate industry. It has the potential to drive transparency and cost savings for commercial real estate owners. Through the use of blockchain, the property search process can be improved, more efficient process of financing and payments will be enabled and also enable smarter decision-making.
One of the
blockchain application is the implementation of smart contracts which can
streamline and change the real estate process. From smart contracts, it can be
transformed into rental contracts with the details of agreements made between
each party.
PropertyClub, a real estate platform, uses blockchain to refine properties for people to search for, buy, sell and invest. PropertyClub also uses smart contracts to conduct real estate transactions digitally. Another example is BitOfProperty, which uses blockchain technology to help people investing in fractional ownership of property. This allows investors to invest in real estate by purchasing BITS.
Virtual Reality (VR)
Virtual reality has huge potential in real estate industry. It can help real estate agents to get more clients and grow their business continuously. As an example, VR technology allows people to visit properties without the need of travelling. They have to put on the VR headset to experience immersive, three-dimensional walkthroughs of multiple properties with full furniture before making any decision.
In other
words, virtual reality technology assists landlords in having excellent
communication with tenants. The other benefits of VR technology will be time
and cost-saving, builds emotional connections and offers good accessibility for
global buyers.
RealVision and Roomy have been using VR technology in the real estate industry. RealVision provides 3D virtual tours for agents who are selling homes. Roomy allows users to transform 2D product imagery into 3D models and renderings.
Above are the five common 4IR technologies which have been used in the real estate industry across the world. With so much cost and time savings, labour cost will be reduced automatically while increasing project delivery efficiency.
Potential Hindrances / Obstacles / Challenges
in adopting 4IR
Financial Issues
The adoption of 4IR technologies comes with huge capital expenditure. As the 4IR technologies are rather new in the industry, the cost of implementation could be too high, especially for smaller players who do not have economies of scale.
In addition
to that, 4IR combines the advance knowledge in revolution and talent to be
trained in which will require investment in the upskilling and reskilling. For
developing countries, most of the SME companies need funding to start
implementing the 4IR systems.
Regulatory
Before
flying a drone, it has to meet the regulations set for unmanned aerial
technologies in different countries. In Malaysia, the maximum permitted height
of ascent is at 120 meters, and drones are only allowed to fly within the
visibility. Hence, for any building height more than that or bad weather,
drones must not be used.
A safety distance of at least 50 meters shall be maintained between other people, vehicles, boats and buildings to avoid any unfortunate incidents. Drones are only permitted to fly during the daylight, therefore, night uses of drones are not applicable in Malaysia.
Other rules for drones are to ensure that the distance to airports and heliports are 4.5 km. Drones should also be carried out by qualified pilots or trained persons. Thus, before flying a drone at any construction site, project managers have to send their people to attend the training class for drones flying.
Challenges
There are several
common challenges when it comes to the adoption of 4IR technology in Project
Management. The existing project managers will need to go through rigorous
training and upskilling in order for them to harness the benefits from 4IR
technologies. However, there might be a certain level of resistance to change
among the existing workforce.
Implementing 4IR in different industries will need higher transition costs and capital expenditure. On the other hand, project managers have to be aware of the economic scales as well, where 4IR technologies might eventually be used in every sector. By that time, the cost of utilizing 4IR technologies will be reduced.
Another
challenge will be the lack of digital strategy and also poor in data security. Some
consumers may not be willing to risk their money on new technologies due to the
huge amount of transactions and unpredictable value return on investment.
Solutions
To solve the obstacles in using 4IR technology for better project management and delivery, we first must have a holistic digital transformation roadmap that can be developed with revised financing strategies. The capability of human assets like reskilling and upskilling current workers effectively on the field is also crucial. It is also very important to ensure that the project has proper change management with the adoption of PMBOK.
Written by Yu Ting Tan, Consultant at 27 Advisory, obtained her bachelor’s degree in the field of Chemical Engineering (Honours) at Monash University. She is interested in nanotechnology as well as consulting field and wishes to gain more experience in these areas to help people afford a better quality of life.
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