Say you’re managing a real estate project to rebuild an old town cinema.
You thought you’d need fewer materials since the structure already exists. However, when you start developing, you realize way more walls are busted and unusable than you originally thought.
Alright, you’ll just pause for a few days and get more materials.
Oh, no — you’ve spent the whole budget already.
This is what happens to real estate projects that don’t follow key project management principles — in this case, when there’s hardly any proper planning at all.
It’s high time you took your project management efforts to a whole new level.
So, let’s see what real estate project management is all about, its types, benefits, challenges — and what you need to become an incredible real estate project manager.
Table of Contents
What is project management in real estate?
Real estate project management means just that — using project management principles to manage real estate projects.
This means managing the project schedule, budget, and quality, as well as ensuring that execution runs smoothly and yields all project deliverables on time.
Fittingly enough, project management was originally developed for the construction industry.
Real estate endeavors are often enormous in project scope. Statista’s research published in May 2022 shows that the average construction time for residential buildings in the US is 7.2 months. During that time, the project goes through many phases, resources, tasks, etc.
For example, for a residential building, you need to determine the funds and location before even starting the project. Then, you need to see whether the building would be breaking any regulations and acquire all the necessary permits — and you still haven’t even laid one brick.
Once development begins, you need to coordinate the workers’ schedules and resource allocation so that construction goes by smoothly.
So, the sheer size of these projects demands you have an experienced project manager.
Try Plaky for project managementWhat does a real estate project manager do?
The main responsibilities of a real estate project manager include:
- Collaboration — communication with architects, real estate developers, and government officials. A PM will make sure that all project stakeholders have access to all relevant information at all times,
- Sorting out legal issues — securing permits, regulations, or any paperwork necessary for the project,
- Resource allocation — determining which and how many project resources you need, and deciding how they should be distributed across all project tasks,
- Progress tracking — creating a project timeline as well as a work breakdown structure (WBS), and making sure that the team adheres to it during the course of the project, and
- Conducting necessary research — conducting feasibility studies, market research, financial research, etc.
How to become a real estate project manager
Now that you know the responsibilities of a real estate project manager, how can you get to that job position?
For most real estate project management jobs, a bachelor’s degree in real estate (or a related field) is required. Another qualification that will boost your chances of getting that job is the PMP certification.
In addition to this, there are many real estate project management courses you can attend.
For example, the eCornell managing real estate development projects course can lead you into real estate development. IREM (Institute of Real Estate Management) also offers a real estate PM course.
Lastly, UCLA has both a Project Management Certificate Program as well as a Real Estate Development, Construction, and Management course.
But, like with most industries, at first, you might work in entry-level positions — such as a real estate agent. These positions are a gateway into the industry, as well as a way to gain some real experience.
Types of real estate projects
There are 2 main types of real estate projects:
- Acquisition projects, and
- Development projects.
We’ll explain each below.
Type #1: Acquisition projects
Acquisition projects focus on acquiring commercial property for development.
Now, you might be wondering, isn’t that just the beginning of a development project? Yes and no.
While it is necessary to begin development, the acquisition process is so complex that it can be considered a project on its own.
An outside contractor might also hire a real estate company specifically to handle the acquisition of property, making it its own project.
Type #2: Development projects
Development projects focus mainly on the construction of real estate.
They can range from anything as basic as a residential building to complex niches such as medical facilities and factories.
A real estate PM might even be hired for an interior remodeling project, which is also considered a type of construction.
Development projects can further be divided into:
- Greenfield projects, and
- Brownfield projects.
Subtype #1: Greenfield projects
Greenfield projects are development projects run on undeveloped land.
Ever noticed an undeveloped, empty plot of land or a field in your neighborhood? That is a prime target for a greenfield development project.
These projects are usually more expensive, as you have to not only acquire the property but also start development from scratch. As you can imagine, the process is time-consuming.
However, greenfield land gives way to plenty of flexibility. If there’s nothing there, you can create whatever you want. The project itself is in your control, allowing you to easily comply with any safety requirements from the start.
Subtype #2: Brownfield projects
Brownfield real estate development focuses on bringing life to already existing, often abandoned buildings.
There’s probably a skeleton of an unfinished building somewhere in your neighborhood. That skeleton can be utilized in brownfield development.
As the opposite of greenfield in many ways, brownfield projects have lower development costs, as someone else has already started the work for you. Consequently, they also take less time to complete.
That said, in brownfield projects, you are constrained by the properties of the already existing structures. You must also remember there’s probably a reason someone else abandoned that project. It might be in a poor location, or it didn’t meet an expected standard.
Manage your real estate projects in PlakyReal estate project phases
A real estate development project can be divided into 5 project phases:
- Initiation — this phase starts with an idea, a location, or capital, and ends when you secure all 3. For example, an idea could be a residential complex with an enclosed playground/leisure area, while a location could be the greenery-filled outskirts of a town.
- Research — conduct a feasibility study to determine how likely your project is to succeed. This includes market, risk, cost, location, and competitive analysis.
- Planning — create a detailed project plan that outlines the budget, resources, scope, the WBS, and how all of them will be implemented in your project. Make these plans available to your key stakeholders so that they can refer to them at any point.
- Development — track progress and oversee the development to make sure your project plan is coming to fruition. For this purpose, we recommend you use Plaky to keep administration over the entire project in one place, track KPIs, and manage tasks.
- Marketing — market your final deliverable to secure a sale or a lease on the property. Keep in mind that this phase can start way earlier in the project — even in the initiation phase — as a way to attract early investors.
Why is project management important in real estate?
Without project management, every project is doomed to failure. But what is it about real estate development that requires a project manager?
Real estate development often involves large investments, and mishandling such an expensive project can have disastrous results. So, a skilled professional is needed to oversee schedules, reports, and government regulations that will ensure the project’s success.
The main benefits of using project management in real estate include:
- Greater client satisfaction,
- Better oversight of project phases, and
- Advanced risk aversion.
Benefit #1: Greater client satisfaction
You might get hired by a real estate owner to develop, manage, and market their project. Conversely, you could be hired by a real estate developer to manage and market a project.
In either case, a project manager is responsible for client satisfaction. While overseeing the project, the PM will send project status reports to the client, keeping them in the loop and satisfied.
The communication between the project manager and the client will also ensure that all requests that a client makes are taken into account. To this end, the PM will:
- Analyze requests,
- Arrange requests with developers,
- Create a schedule for the requests, and
- Manage any request a client makes.
Benefit #2: Better oversight of project phases
The project manager will ensure that every project phase is completed on schedule and within the appropriate budget.
The responsibility of the initiation and research phases often falls on the project manager. They have to handle site selection and budget acquisition in the initiation phase.
In the research phase, the project manager is often the one who conducts a feasibility study too. Further, the PM will provide oversight during the development and marketing phases of the project.
This means that project management is necessary and brings benefits throughout every phase of the project.
Keep track of your project's progress in PlakyBenefit #3: Risk aversion
As they oversee the project, PMs have an exceptional insight into the potential project risks it might run into.
During the feasibility study, a PM will conduct a risk analysis, predicting possible issues that might pop up throughout the project. They will also collaborate with the team to create contingency plans for these risks, meaning that — assuming the risks occur — a solution will already be prepared.
But, proper project risk management doesn’t lose sight of risks right after the research phase.
During the whole project, a PM will analyze budget and schedule overruns. They will also make sure that the project remains on track if there are any schedule issues.
💡 Plaky Pro Tip
If you want to learn more about solving cost overruns, check out this helpful guide:
Common challenges in real estate projects
Real estate is a complicated area, so you’ll run into plenty of challenges while managing it.
We’ve listed some regularly encountered challenges below, along with ways to overcome them.
Challenge #1: Unexpected market developments
To tackle these challenges, we’ve consulted a couple of experts. One of them — Cam Dowski — is an expert in the real estate field.
With more than 16 years in the business, he has seen his fair share of challenges, but he specifically highlights the difficulty of accurately predicting costs:
“Due to several macroeconomic factors, the uncertainty in the real estate sector continues to loom. This affects the ability to accurately project the overall cost of a project, which could mean the loss of money or the inability to complete a project within the stipulated time frame, if at all it is completed. This factor also affects access to capital to fund the project.”
This challenge affects your project through an unexpected development in your project environment. It could be a sudden increase in energy prices or suppliers running thin on materials you need.
In turn, this makes it difficult to predict the funds needed for your project. In the worst-case scenario, your project might be halted due to the inability to acquire certain materials.
How to overcome unexpected market developments
Cam has spoken to us about his experience with solving this issue:
“In order to overcome this, I have found that it is always important to include funds that can cater for uncertainties and some as a kind of contingency fund in the event that macroeconomic factors do not play out in your favor.”
An important step is making sure price changes cannot put your project on hold while you look for additional funds.
So, it’s always best to have a contingency fund — a fund that will only be utilized in case of sudden, unforeseen shifts in the price of development.
💡 Plaky Pro Tip
If you want to learn more about project finance management, check out this guide:
Challenge #2: Legal issues
Legal matters are always complex in their own right, and that complexity can easily create issues in your real estate project.
Another expert we’ve spoken to, Jon Sanborn, the co-founder of 2 real estate agencies, has mentioned some legal issues you may run into as a real estate project manager:
“Real estate projects can involve a range of legal issues related to zoning laws, contracts, and property rights.”
Contract disputes, for example, can happen over the negotiated price of a property. If either party believes that the contract terms were misinterpreted or breached, a dispute can occur.
More legal issues can arise from state and local regulations, safety requirements, and project permits. Permits are required for basically everything in your project, from new construction to electrical repair.
Jon listed some of the most important regulations you need to follow:
“When developing a real estate project, developers must adhere to a variety of regulations. These include environmental regulations, building codes, and local zoning ordinances.”
How to overcome legal issues
Jon’s advice for preventing legal issues is to get help from a lawyer:
“You may need to hire a real estate lawyer to ensure that your project is in compliance with all relevant laws. Additionally, you should be aware of any potential disputes that may arise throughout the course of the project and prepare for them accordingly.”
A person with experience and skills in the real estate legal department will best determine what risks your project will face and how to overcome them.
Alternatively, look into ways you can improve your feasibility study. This is where you should determine all legal requirements. If something has slipped past you, it was due to lackluster research.
For regulations and permits, Jon advises to always consult a professional:
“To ensure compliance, you may need to consult with experts and secure the necessary permits or approvals before starting your project.”
Challenge #3: Construction injury risks
Construction is a very risky line of work, so naturally, you want to make sure that your project team is working in conditions of maximum safety.
You want to account for the many types of injuries that might happen throughout development, like:
- Falling — slips and trips can happen at any height. Pair that with misused or faulty safety equipment, and you’re bound to have an injury.
- Electrocutions — construction requires lots of fiddling with electronics. So, make sure your team is properly trained for the equipment they use.
- Hit-by accidents — with heavy machinery, tools, and large physical resources, your team needs to be careful. Without proper communication, one of these might strike an unsuspecting worker.
- Getting trapped — in the same sense, your team members can get stuck between such heavy machinery or construction parts.
Having a safe environment for your team is firstly an ethical issue. That said, it also prevents unexpected delays due to workplace injuries.
How to overcome construction injury risks
PPE — personal protective equipment — is, quite literally, a lifesaver in construction projects. So, make sure all team members are supplied with and using their protective equipment.
Safety signs are also highly important. Falling debris and high voltage notifications are important both for your team and for any oncoming passers-by.
Just like personal safety equipment is necessary, construction equipment must adhere to safety standards and be well maintained. After all, malfunctioning equipment can lead to devastating accidents.
Another thing you could do is hold safety meetings, training sessions, and regular safety inspections to make sure that everything is on par with your safety expectations.
💡 Plaky Pro Tip
What’s the secret to successful project management for construction projects? Learn in our article below:
Tips to improve your real estate project management
And finally, here are some tips to help you become a better real estate project manager.
Tip #1: Hone your communication skills
As a project manager, you are the connection between the outside contractors and your project team. So, it is your duty to maintain a good relationship with contractors, as well as to accurately translate their requirements to the team.
There will also be times when the stakeholder’s wishes are not feasible for the team or the project, whether due to project budget limitations, execution difficulty, or physical restrictions.
In these situations, it’s your responsibility to find a compromise with the stakeholders, for example, by suggesting possible alternatives.
Communication, however, is not only limited to outside stakeholders. You’re also responsible for communicating with the project team, making sure that the tasks are completed on time and according to quality standards.
Enhance team collaboration with PlakyTip #2: Track progress with real estate project management software
Real estate projects are often large-scale, with lots of moving parts, stages, and tasks.
Keeping track of all that would be difficult without a project management tool to help you keep all key information in one place.
In real estate, PM software is best used for:
- Progress tracking,
- Schedule variance and cost variance analysis, and
- Resource tracking.
In Plaky, you can create a board for each of these necessities, allowing you to access all information about your project’s progress in just a couple of clicks.
Tip #3: Hire and consult experts
Jon Sanborn also brought to our attention how important it is to consult experts in different fields:
“Real estate projects require expertise in a variety of areas, such as law, construction, finance, and architecture. Therefore, it is essential to hire the right professionals for the project. This includes experienced contractors, architects, engineers, brokers, and lawyers who can help ensure that the project runs smoothly.”
No matter how skilled you are, it’s impossible to be a jack of all trades. So, you will need to frequently consult with experts in the respective fields your project requires.
Even before you hire any of these experts, in the feasibility study, consulting them will ensure that all information you possess is accurate and comes from a reliable source.
Boost your real estate projects with Plaky
As with any project that requires many moving parts, it’s difficult to keep track of it all.
This especially holds true for real estate projects, as the scope can include tasks that just seem like smaller projects — a residential building may also need a driveway, an underground garage, and maybe even a playground next to it!
So, when keeping it in one place just isn’t enough — you can use Plaky’s subitems to further divide tasks, both visually and functionally.
Sign up for PlakyUse subitems to tie in smaller tasks to one central task, basically sorting them. In larger projects like these, centering tasks around one deliverable makes it easier to:
- Allocate resources,
- Track progress, and
- Organize your timeline.
In real estate, you also want to make sure you have a valid timeline.
You can check that timeline and make sure everything stays on course with Plaky’s Gantt chart. With one quick glance, both you and your team can get an overview of all tasks and their progress throughout the project.
And last but not least, your team can use Plaky to improve their communication. This is especially important in real estate, as miscommunication can lead to delays at best, and even injuries at worst.
Luckily, with Plaky’s task-specific comments and @mentions, as well as file sharing, you can easily keep your team in the loop — no matter how complex or unpredictable your project gets.
Keep your real estate projects running smoothly. Sign up for a free Plaky account today.
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