Managing costs is now top of the agenda for Real Estate firms as they look to weather the economic storm. As the current inflation rate continues to soar, escalating the cost-of-living crisis, businesses are negatively impacted by the rise in their overall costs. Real estate is very susceptible to influences from other industries. For instance, the recent impact of the shift to remote working and the rising cost of energy are both challenges within the property industry. These challenges must be taken into consideration when managing property business. Two experts - Iain Murray & Sarah Musgrove - within Real Estate, who have first-hand experience of the current issues, evaluated the situation in Real Estate. As fu3e., we have compiled key points from the webinar for you.
. What kind of struggles are you hearing right now? / What are the biggest fears in real estate industry?
To make effective decisions, people need to ensure that oversight is provided. Because of existing industry movements, most people consider making decisions in the first quarter. Increasing costs, improving skills in the marketplace, keeping intellectual property within companies and managing it are other struggles the real estate industry faces.
From a digitalisation perspective, the problems are more manifest. Because more digitalisation happens across the whole real estate sector, it is not in a single language. So, you end up with more diversification rather than more convergence.
On the development side, information flows between different design team members in various forms and states. The architects send the largest and most numerous files. With the number of files, people likely end up with buckets of information if they do not name files consistently. Therefore, single-source project management software is needed to aggregate data.
. What are the potential business risks or impacts if a company does not have real-time insight into its projects? (Cost, risk, compliance)
Adaptive management reporting software allows for managing costs appropriately and understanding potential risks in real time. Additionally, the software helps to understand what has happened from a resourcing perspective and how payments are made. In the case of its absence, getting a clear snapshot would be more complex in the entire lifecycle. Thus, the decision-making process would be slower. We have an adaptive management reporting software – fu3e.- supports the business by seeing a level of benchmarking and trends, which keeps F3group competitive in the marketplace.
Projects are funded within a specific budget, and risk is another influencing factor of projects. Mitigation of risks is achieved through the management of it. There are only three ways to deal with risk. Risk management is what businesses strive to do most effectively, so managing the risk that has been transferred or assured is the first step.
Then there is compliance. The businesses must comply with many things on the route, not least of which might be an investor's requirement for companies to provide information timeously. So they know that the risks are managed. So, these are critical things in the modern project environment – fast, well-communicated, and professionally managed.
. What are the pitfalls and cost implications for companies reluctant to digitise their reporting process?
Without digitalisation, companies will encounter pitfalls that make businesses slow, out-of-date, and harder to compete in the marketplace. In the end, companies are less agile and less able to care for their business and clients in terms of risk, cost, and compliance.
Digital information is going to become a fundamental part of Europe. After a building or development is completed, it will have a digital footprint. The digital footprint will also add value to its investment. When a project has an entire digital footprint, and all the data is generated at the construction time, it can answer ESG and compliance questions. So, based on the data, companies can make decisions. Therefore, development operations can be predicted by using technology and data.
. How do you know where you sit with digitisation and how does tech help with this?
Compliance and regulation, along with digital processes that allow a company to manage its business planning and culture, are the most critical points. Through the digital strategy, the company can increase transparency, encourage compliance and regulation to be undertaken daily, and ensure that everyone understands what is required. There is a straightforward way to analyse and process signoff and governance and a step-by-step guide, regardless of whether you bring in a junior or a graduate. In summary, ensuring you fulfil the right requirements throughout a project's lifecycle and protecting the more comprehensive party's interests is remarkably effortless.
It will become more necessary than ever to have more automated and digitised systems in the future due to metrics like ESG. Accordingly, ESG is a top priority for all projects. It will accelerate not only COP 27 but other things as well, like operational accreditations for whole life and environmental projects. The digitisation of information allows businesses to cover the entire life operation of a project, which is traditionally handled by the PCI in the capital side of the company.
. What next for the industry? What are the panellists' predictions of the most significant changes affecting the management of cost, risk and compliance in the real estate sector over the next five years?
People are concerned about increasing costs and shortages in the next three to five years from a general standpoint. A European or global portfolio needs to be assessed succinctly. Systems should be put in place to look across that portfolio and rely on that information. Businesses must be able to depend on that information rather than just on many different, varied pieces of information you are fed across the market regardless of your self-interest.
There are many different management platforms and technologies available. However, it is necessary to aggregate information in the middle to increase working efficiency. The next few years will also be the aggregation of information from various platforms. Technologies that give businesses the single pane of glass view of a project during procurement and operation.
To watch the full webinar video recording, click here.