While the notion of “Development Management” in real estate has become an international best practice in developed markets for successfully delivering projects with solid risk management and sound financial KPIs, the concept remains relatively new and largely misunderstood in developing markets. Development management is usually mistaken for project management in these markets, thus turning it into another form of management of the physical aspects of a project (design, procurement, construction, commissioning, etc.). This reduces prospects for the value creation that ought to be expected from development management, and leads to negligence of the project’s financial aspects.
We have seen too many projects remain a drawing board dream because robustness of the business case and the related funding activities were not given due attention from the idea stage. In many of these projects, the owner would spend significant capital on land acquisition and design fees, only to fall short later of securing debt finance due to weakness of the project’s feasibility.
At STREE, we view our role of development manager being similar to that of a symphony conductor whereby we meticulously synchronize all relevant work streams to ensure that everyone performs according to one unified and value-maximizing business plan throughout the project’s development cycle.
We do not take over the responsibilities of the retained project managers though we have the capacity to assume that role as well when required, such as in small to medium size projects. Though we remain involved throughout the project development cycle, we believe our value creation is maximized when we are engaged as early as the concept development stage, where the client can still have strong influence over the project’s destiny with minimal cost and time implications. We work with the client and all appointed consultants, starting from the idea stage to develop a project with a solid financial model and a viable business case. We believe a project can embrace innovative design meeting the client’s vision and at the same time deliver healthy returns to investors.
In essence we act as the guardians of the business plan on behalf of the client, bridging the gap between the physical and financial aspects of the project. For instance, we ensure that the project’s design doesn’t evolve independently from the financial feasibility and work closely with the design team to come up with solutions to maintain the cost within set targets. Throughout the design progression, we continuously monitor and revalidate all assumptions both on cost and revenue fronts, and conduct comprehensive risk analysis so that the project’s feasibility remains on track at all stages. When the project transitions to the construction stage, we establish change management systems that allow us to review the impact of any major changes during construction.