Even the most well-connected real estate project managers and property managers find themselves in need of new vendors for their capital and construction projects from time to time. In addition to the savings that competitive bidding practices deliver, owners have to meet the demands of expanding portfolios, new building technologies and stiff industry competition.
Capital, construction and tenant improvement projects are made up of numerous evolving factors, making it difficult to monitor where costs stand in relation to budget—but no less important. One of the best ways to empower your real estate team to diligently audit and control costs despite shifting conditions is to start with a well-structured tracker.
Tenant improvement (TI) projects are pretty common which means most real estate owners can manage them with their eyes closed. No sweat, right?
Well, yes and no.
Often when we run any process over and over we start paying less attention to the details and we’re less likely to look for opportunities to optimize our methods. While most tenant improvement projects don’t cost an enormous amount of money individually, they have a big impact in the aggregate, making it very important that you reflect on how your process can be improved.
There are many ways that bad cost tracking arises, and they usually involve the word “lack:” a lack of continuous planning in real time, a lack of communication among the team, a lack of asking the right questions and learning from past mistakes, and a lack of the proper tools needed to keep costs on track.
Finances on capital and construction projects are typically pretty complicated. It can takes weeks or even months from when project managers know a cost will be incurred to the time when the accounting team cuts the check. So, it’s critical that a real estate owner’s cost tracking process can track a variety of costs and that it’s diligently maintained.
It’s been firmly established that a well-run bidding process drives down costs on capital and construction projects while also reducing the risk of change orders and delays. As billions of dollars in project value have been run through our project management platform by some of the largest owners in North America, we’ve seen where best practices make a meaningful impact and where teams commonly falter.
While capital projects and construction projects can range from a simple painting job to an entire roof replacement, a real estate owner’s goal is always to increase the value of an asset or to make sure tenants are happy with their space. One of an owner’s best tools for making this happen is the ubiquitous bid form.
When you open up your latest construction project for bids, plenty of vendors will likely respond but the quality of their bids will vary dramatically. From finding missing information to reworking line items for easier leveling to untangling crossed lines of communication, you will be responsible for doing what it takes to turn imperfect bid proposals into great construction estimates.
As with most multi-phase processes, commercial real estate capital and construction projects benefit enormously from diligent planning. As a matter of fact, considering the long timelines and large cost of CRE projects, real estate owners owe it to their stakeholders to dedicate meaningful time and resources toward careful preparation.