In India, large residential projects are delayed far too often due to several reasons including tedious approval process, flawed budgeting, inaccurate cost management, poor cashflow planning, inefficient resource management, and labour issues.
The delays in construction and escalated cost of completion have adversely affected the buyer confidence in the market and tarnished the reputation of the industry as a whole. Bad planning and poor cash utilization have even caused a few big names to declare themselves defunct in recent past.
It would seem the way the real estate industry had been operating has not proven out to be beneficial for any of the stakeholders be it – consumer, government or the builders themselves. Globally, the real estate sector is notorious for being a laggard, when it comes to structural changes into their modus operandi. India is no different, given the experience of the past ten years, especially in the residential sector, the companies need to get their act together and gear up for some radical changes.
Projects getting completed on or before projected deadlines and in the estimated cost seems to have become the holy grail for the sector. This is what real estate developers and regulators need to aim for if the industry is to revive itself out of the slumber.
Efficient Organisations for Better Coordination & Faster Decisions
Creating collaborative efficient organizations is important for seamless coordination between the various stakeholders, primarily for– cost saving, time efficiency, and higher accountability.
Construction delays and an apparent lack of ownership mean that developers need to proactively work on improving their workflow processes, accountability, and transparency to improve their project’s time-to-market.
Real estate development companies need to identify shortcomings in their current business processes and leverage specialized proptech platforms like integrated workflow management software to break project team silos and encourage collaborative working.
Furthermore, it is crucial for them to embrace newer business models and adopt a fail-fast approach while looking for ways to make faster business decisions. Doing so would help enhance operational efficiency, information flow, and customer experience.
Plan More Comprehensively to Cover the Risks
According to a recent report published by a real estate consultancy, construction of more than 23 lakh houses spread over 16,330 projects across India is significantly delayed mainly due to lack of financial discipline and planning on the part of developers.
Planning is the most crucial part of any project as it ensures that the project is being delivered on time and within the desired budget. In the case of residential real estate, there are just too many factors defining the success of the project other than just the quality of construction and location.
Complete Material Planning with Possible Escalations
The modern construction ERP software can help builders with in-depth project planning. Builders can plan the cost down to the last material with accuracy using the frequently updated list of materials along with their integrated rate analysis using these proptech solutions.
Integrate Technology in Other Essential Processes
Beneficial tech integration in the legacy processes with the existing workforce is a challenge, which has as many failed use cases as there are successful ones. Studies suggest that organizations need to understand and prioritize the most critical functions for digital transformation.
Functions, where transparency and faster information flow would help save costs and avoid unnecessary losses, should be prioritized for digital integration. For example, BOQ, Tendering and Material Management.
While completing the project on time is a challenge; selling the units has also been a pain area. For many residential projects completed units are unsold, even when the sale had started much before the construction.
Vast swathes of unsold inventory point to the faulty placement strategy for the project. Use of market data and modern data analytics can help developers in devising a powerful strategy for marketing their projects.
Word of Mouth – The Question of Reliability
In today’s world of hyper-connectivity and social media, consumers are increasingly gaining more power. The modern customer is tech-savvy and always connected and has a unique journey to a purchase decision which involves a lot of research, especially focused on the digital word of mouth.
For brands, this would mean focusing on building the digital face of the brand and working on building customer experience.
A builder running multiple projects could see all the projects suffer the brunt of one lousy project. That is why, timely delivery and transparent processes, will increasingly wield power to make or break the brand.
In short, the residential real estate sector must transform into customer-focused entities, from traditional builder/landowner entities. With a product as essential as a house, the ability to make faster decisions, and timely delivery will define the leaders in the future real estate market.