The Fate of Construction Data: Who Will Own It?
Last week, I met with the CEO of one of the largest retail owners in the world. Our conversation centered around how he gets more leverage from having technology drive his day-to-day processes. But it’s not for the obvious reasons.
The dirty secret about owning buildings is that the cost of repositioning and construction is a black box. The time it takes for projects to get completed is a black box. Even the history of vendors with whom owners have worked can be a black box.
Why? Real estate investors do not truly own their construction data. Legally, the data belongs to them, or at least part of it, but consider the reality:
- General Contractors manage the bidding process and owners often only see the final costs. So, who really owns the pricing intelligence?
- Construction managers control timelines using their in-house software programs and owners receive general updates at weekly meetings. So, who really owns the “time to completion” statistics?
- Project and property managers (internal and external) handle communications with vendors from their email inboxes and mobile phones. So, who really owns the job performance insights?
Owners are the ultimate risk takers in any building project, but without technology that aggregates and unifies insights from across their projects, their buildings and their entire portfolio, they are operating in a black box.
And that’s precisely why the retail portfolio CEO mentioned earlier values technology: unifying his construction data allows him to generate more value from his projects. As he said, "I want to combine technology and data to drive projects to completion faster which will get my tenants in faster and increase NOI. Then I cap that NOI and I've created real value for my investors."
What would happen if all owners took steps to own their data like this CEO?
For one thing, unifying construction data would help owners know as much about pricing as contractors. They would be able to get empirical answers to questions like:
- What should the range of pricing be on a per square foot basis for lobby projects in Washington D.C. office buildings?
- How long does it typically take for a retail tenant in a shopping center in the Northeast to get from demolition to occupancy?
- How often do projects like the one I'm about to launch actually go over budget?
- How are capital budgets in my portfolio tracking against their underwriting plans?
Real estate owners who want to remain competitive need to truly own their construction data in order to drive project budgets and schedules – that in turn drive investor returns.
To learn more about this hot topic, join us for a NEW Precon Event, Construction Summit, that will be held on June 5 at The Cosmopolitan in Las Vegas. This Summit will delve deeper with specific sessions discussing: (1) bid process structure, (2) reforecasting for more robust capital plans, (3) leveraging historical data to drive down future acquisition cost, (4) timeline acceleration, (5) vendor relationships and (6) system integrations. Open to all registered conference attendees, register today!
This Week’s Sponsor
RealFoundations is a professional services firm focused on helping companies that develop, own, operate, service, occupy or invest in real estate make smarter, more profitable decisions. From the building itself to the way it’s developed, operated and capitalized, no firm understands the inner workings of the entire real estate ecosystem as well as RealFoundations. We work hard, we tell the truth, and we do what we say. We Make Real Estate Run Better. www.realfoundations.net
UPCOMING REALCOMM WEBINARS
CRE Tech Innovation Showcase - Uncovering the Next Generation of New Ideas - 7/12/2018
Never before in the history of the Commercial Real Estate market has technology been so prevalent. Since 2009, hundreds—if not thousands—of companies selling tech to the Commercial Real Estate Industry have emerged. Estimates now suggest there are more than 2,000 new CRE Tech companies in the space. The sheer number of new companies makes it almost impossible to keep up and organizations are struggling to establish an effective process to discover, organize, vet, test and implement new technologies. This webinar will evaluate the categories of technologies, best practice criteria, and clarify different solutions that are making their way to the top of the list.