Integrated teams and plans are a better way
By Josh Quinter, Offit Kurman
Heraclitus was right – “the only constant in life is change”. The inability to find qualified help, the rise in technology-based solutions, and increased specialisation have been forces of economic disruption for some time. Now the COVID pandemic, supply chain shortages, and significant inflation are exacerbating that level of disruption.
The real estate development industry is not excepted from these vicissitudes. Developers have had to improve economies of scale to remain competitive. One of the best ways that these companies have increased production, while decreasing costs, is by using integrated project teams and systems. There are different approaches, but here’s a general outline of an approach that works.
Understand what expertise you need
Jim Collins, the author of the book “Good to Great”, describes it as getting the right people on the bus. It’s more though: you must get the right people in the right seats on the bus. For example, most project teams benefit from the help of a skilled attorney providing guidance on relevant issues. Conversely, hiring teams of lawyers destroys economies of scale.
Identify the mission and the needed skill sets to achieve it. Personnel should provide a unique skill that furthers the mission, and they should have a job description that empowers them to focus on things they do well, while avoiding things that make them ineffcient. Project accounting, project management, and administrative elements are usually handled inhouse by developers. Project teams should also include an accountant, an insurance broker, a banker, and a lawyer most of the time. Technology can also automate some jobs, provide skills humans can’t, or serve as a force multiplier with the right person using it.
Develop solid, long- term relationships
Develop relationships with people who have the needed skills and then get them in the right seat on the bus. The best economies of scale occur when team members understand the company and its goals intimately, so help them understand these things. “Advisors” are ultimately paid for the kind of judgment that comes with a meaningful relationship; properly integrated teams understand how the company’s leaders think about the issues on which they are working, the company’s ultimate goals, and the company’s tolerance for risk. These steps ensure the kind of trust that is essential for success.
Set Goals and Make a Plan That Prioritises Action Items
Next, set strategic goals with long-term objectives. Thereafter, intermediate goals with metrics to measure progress, are established. Communicate the goals and metrics clearly and prioritise them for the team. A failure to clearly convey objectives is more often the root cause of problems than setting the goal. This step is often formalised when project documents are drawn up. Technology like 3D modelling and contract forms requiring a more collaborative approach can be very helpful.
Empower team members to make decisions on the ground
Fully integrated teams of subject matter experts with a clear understanding of the company’s goals are capable of and should be empowered to handle project minutia. People experiencing the project “on the ground” in real time are in the best position to make adjustments in execution. The only restriction should be avoiding changes that conflict with the overall mission. This is where the magic happens with integrated teams; the “experts” will be more effcient in getting things done and it costs less to do it.
Create a feedback loop
Perfect plans (like contracts) don’t exist. Every person in real estate development knows that the plan begins to change on the first day of any project. Plans remain essential because they provide the necessary framework from which adjustments can be made quickly in dynamic environments. Build in a feedback loop so that senior people can keep an eye on whether the larger mission is still the right one and, if so, whether it is being accomplished.
As the world shrinks and economies remain volatile, real estate and construction companies will need to find better ways to reduce cost and improve effciency. The goal is to create more revenue and profit. The role of integrated project teams will continue to grow because they offer significantly improved economies of scale in real estate development. Consider getting ahead of the curve by moving towards this model now. Elite teams and project delivery systems are the key to elite project outcomes.
Josh QuinterGGI member firm
Offit Kurman, Attorneys At Law
Advisory, Corporate Finance, Fiduciary & Estate Planning, Law Firm Services
More than 10 offices throughout the US
T: +1 410 209 6400
Offit Kurman is a full-service law firm that serves dynamic businesses, individuals and families. With 16 offices and nearly 250 lawyers, Offit Kurman provides innovative and entrepreneurial counsel that focuses on clients’ business objectives across more than 30 areas of practice.
Josh Quinter is a commercial litigation attorney, with a focus on construction law. Mr. Quinter actively works with his clients in the areas of business planning, contract negotiation and project consulting, risk management and dispute resolution, and litigation. His client service and professionalism have earned him the distinction of being named a Pennsylvania Super Lawyer, a Lawyer on the Fast Track, and a Rising Star.
Published: Real Estate Newsletter, No. 14, Summer 2022 l Photo: penofoto.de - stock.adobe.com