Real estate is a vast industry. It covers many different projects, all involving plenty of moving parts, tasks, resources, etc.
Practically every real estate endeavor can be considered a project. And every project needs the glue that keeps it together — a project manager.
In this guide about project management in real estate, we will cover:
- What project management in real estate is,
- How to become a real estate project manager,
- Types of real estate projects,
- Real estate project phases,
- Benefits of real estate project management,
- Common real estate project management challenges, and
- Tips for real estate project management.
Table of Contents
What is project management in real estate?
Project management is a field that has experienced rapid growth in recent years, with many industries — including real estate — integrating its methodologies into their workflows.
Fittingly enough, project management was originally developed for the construction industry. It is the process of controlling and harmonizing the project schedule, budget, and quality.
Project management ensures that a real estate project runs smoothly and yields all project deliverables on time.
Real estate projects are often enormous in 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 tasks, resources, phases, 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.
After development begins, you need to coordinate the workers and resources needed to build it, all of whom request attention through schedules and allocation respectively.
So, the project size itself warrants the existence of a project manager.
There are even companies that specialize specifically in real estate project management. So, while some companies manage their real estate projects internally, others hire seasoned professionals specializing in that field.
What does a real estate project manager do?
The main responsibilities of a real estate project manager include:
- Coordination — communication with architects, real estate developers, or government officials. A PM will make sure that all project stakeholders have access to all relevant information at all times.
- Legal issues — securing permits, regulations, or any paperwork necessary for the project.
- Progress tracking — creating a project timeline as well as a work breakdown structure, and making sure that the project team adheres to it during the course of the project.
- 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, if not all, real estate project management jobs, a bachelor’s degree in real estate (or a related field) is required. The most obvious qualification that will boost your likelihood of getting that position is the PMP certification. Combining those 2 will give you a great boost in the industry.
There are many real estate project management courses you can attend as well. 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.
And lastly, UCLA offers 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. They are a gateway into the industry, as well as a way to gain 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
These projects focus on acquiring commercial property for development.
But, you might wonder, isn’t that just the beginning of the development project? While it is necessary to begin development, the acquisition process is so complex that it can be considered its own project.
An outside contractor might also hire a real estate company to specifically 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.
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Development projects can further be divided into:
Subtype #1: Greenfield projects
Greenfield projects are development projects run on undeveloped land.
Ever notice 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 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 offer lower development costs, as someone else has already started the work for you. Consequently, they also take less time to complete.
However, 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.
If it’s possible for you to remedy this in your project, you’ll surely see a successful project completion.
Real estate project phases
A real estate development project can be divided into 4 phases:
- Management, and
Phase #1: Initiation
The initiation phase begins whenever you get the idea for a real estate project. Maybe you noticed a great location for an office building or you recently came into some capital you’d like to invest in real estate.
The main necessities of an initiation phase are:
- An idea,
- A location, and
Having just one of these can push you into starting a real estate project, but acquiring all of them is the goal of your initiation phase.
For example, an idea could be a residential complex with an enclosed playground/leisure area. A location could be the greenery-filled outskirts of a town. Capital includes funds you can acquire yourself, as well as any investors you can attract.
After these 3 necessities are ensured, you should look into securing land for your project, whether by buying it, securing permissions, or through other means.
Phase #2: Research
The research phase includes conducting a feasibility study. Its goal is to show whether your project is likely to produce satisfactory results.
A feasibility study includes the following analyses:
- Market analysis — which will give you insight into the market demand for your idea. For example, an office building project might not bring profit if there is a lack of start-up companies that require that kind of space.
- Risk analysis — which will give you insight into the possible risks that will befall your project. This allows you to create contingency plans to deal with said risks if they become an issue.
- Cost analysis — which will give you insight into how profitable your project will be. For example, the demand for your office building could be high, but if you want to use luxurious, tinted windows, the cost might not be worth the profit.
- Location analysis — which will give you insight into the right approach to your project location. For example, a residential building area might not be the best fit for an office building, as it’s challenging to get a sizable plot of land in it.
- Competitive analysis — which will give you insight into any competition you might want to be wary of. For example, a competitor might be planning to create an office building in that area as well. What can you do to make your project more distinct and thus more marketable when completed?
Phase #3: Planning
Now should be the time to start asking — What project resources do I need? How much time will this project take? What funds will each task require?
At the end of the research phase, you should have enough information to go through all the necessary planning for your project, such as:
- The project plan,
- The project scope,
- The project timeline,
- The project budget,
- The work breakdown structure, etc.
These documents will serve to give direction to all of your team members or outside contractors. You should also refer to all plans before making any decisions in the following phases.
Phase #4: Management
In the management phase, the actual development of your project can begin. Most of your planning should be completed at this point, so what’s left is to monitor the progress of your project.
For tracking an unlimited number of tasks in your project for free, you can use a PM tool like Plaky. With administration over the entire project in one place, Plaky will ensure that your management phase runs smoothly, and without any issues.
Phase #5: Marketing
Once your real estate project is complete, you can focus on marketing your final deliverable and fulfilling its purpose — this is most often a sale or a lease of the property.
Having a marketing team on board is one of the most important parts of a real estate project, as the customers it attracts are the main show of the project’s success.
However, this stage does not necessarily come at the end of the project — it will most often begin with the development phase, selling or leasing the property as it’s being created, so that it can be usable as soon as it’s completed.
Sometimes, this phase will begin as early as the initiation phase. Offering ownership over a part of the finished property to potential investors can be an example of this phase’s early beginnings.
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?
Firstly, real estate development is a complex process. It often involves large investments and mishandling such an expensive project can have disastrous results. A skilled professional is needed to oversee schedules, reports, and government regulations that will ensure the project’s success.
Let’s take a look at some of the main benefits of project management in real estate projects:
- Client satisfaction,
- Oversight of project phases, and
- Risk aversion.
Benefit #1: Client satisfaction
You might be hired by a real estate owner to develop, manage, and market a project they have imagined. 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 project manager 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. The PM will:
- Analyze requests,
- Arrange requests with developers,
- Create a schedule for the requests, and
- Manage any request a client makes.
Benefit #2: 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. Further, the PM will provide oversight during the development and marketing stages of the project.
This means that project management is necessary and brings benefits throughout every phase of the project.
Benefit #3: Risk aversion
As they oversee the project, PMs have exceptional insight into the potential project risks it might run into.
In the feasibility study, a PM will conduct a risk analysis, predicting possible issues for the project. They will also create contingency plans for these risks, meaning that — assuming they arise in the future — 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 conduct an analysis of budget and schedule overruns. They will make sure that the project remains on track if there are any schedule issues.
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.
Dowski is the founder of the We Buy Houses Chicago real estate company, which has existed for over 11 years now. Before that, he was a real estate consultant for more than 5 years.
With that many years in the business, he has seen his fair share of challenges, one of which he brought to our attention:
“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 timeframe, 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.
This can make 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.
A sudden shift in consumer trends or demand can also be an unexpected development influencing your project. For example, as remote work grows in popularity, the demand for office buildings declines.
Sometimes, demand shifts happen so suddenly that even a great feasibility study cannot predict them.
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.
It’s always best to have a contingency fund — a fund that will only be utilized in the case of sudden, unforeseen shifts in the price of development.
After all, construction labor and material costs are the #1 issues in the real estate development market in 2023.
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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 Brotherly Love Real Estate and SD House Guys, has mentioned some legal issues you may run into:
“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 offers advice on how to prevent legal issues:
“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 a lackluster analysis.
For regulations and permits, Jon proposes the following:
“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.
For example, Statista shows that tripping, slipping, or falling has been the leading cause of construction accidents in Great Britain in the last 7 years. This is followed by injuries while handling, lifting, or carrying objects, as well as falling from a height.
Having a safe environment for your team is firstly an ethical issue, but 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. 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. Malfunctioning equipment can lead to devastating accidents.
And lastly, hold safety meetings, training sessions, and regular safety inspections to make sure that everything is on-par with your safety expectations.
Additional tips for better real estate project management
Here are some additional general tips for your real estate project management.
Tip #1: Grow your communication skills
As a project manager, you are the connection between the outside contractors and your project team. 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 budget, 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 itself, making sure that the project tasks are being completed on time and according to quality standards.
Tip #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 that would be difficult without a project management tool to help you keep track of all of the project information in one place.
In real estate, PM software is best used for progress tracking, schedule 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 elaborates:
“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.”
As skilled of a project manager as you can be, it’s impossible to be a jack of all trades. Therefore, 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 with them will ensure that all information you possess is accurate and comes from a reliable source.
Conclusion: Every real estate project requires proper project management to succeed
By now, you should be aware of why project management is the pillar of every real estate venture.
As real estate projects are often highly demanding organization-wise, without proper management, they can collapse as easily as a tower of cards.
Luckily, there are plenty of ways to learn proper project management techniques that will boost your project success rate. From online courses to degrees, education in the real estate PM field is plentiful.
✉️ Has this guide helped you understand project management in the real estate industry? Do you know any tips we’ve missed? Let us know at email@example.com, and we may include your answers in this or future posts. If you liked this blog post and found it useful, share it with someone you think would also benefit from it.