News Point: From cash management to planning & execution, more professional outlook and Project Management System (PMS), the builders have suddenly woken up to the RERA realities to escape from getting penalized.
A developer in Pune recently advertised for a Project Management Team for one of the upcoming projects. On a cursory look, it could have gone unnoticed like many other advertisements of real estate developers.
However, what could not be overlooked is the fact that Project Management System (PMS) that had till now been one of the most neglected areas for most of the developers has suddenly been in demand. Welcome to RERA realities where focus has shifted to compliances!
It seems RERA has suddenly made the PMS as one of the most sought after areas of expertise. The developers can no longer afford to delay their projects due to mismanagement by the execution team. In most of the cases the developer himself and/or his top management was thus far taking care of the execution with no seamless process of execution handed over to the experts.
Today, even those developers who are not hiring an expert PMS consultants are at least inculcating the PMS software into their processes. The idea is to manage estimation and planning, scheduling, cost control and budget management, resource allocation, collaboration software, communication, decision making, quality management, documentation and administration systems more professionally managed.
RERA alignment strategyÂ
PMS being adopted by the developers
Companies going through restructuring to align with RERA realities
Cash management, Planning & execution converted to process driven than ad hocÂ
Cautious approach in promising to the buyersÂ
PMS is just one of the changes that the developers have introduced in order to make sure they fall in line to align with the RERA realities. After all, the developers are conscious of the fact that they have to align their business practices with the stipulations of the RERA Act.
Of course, the developers are facing some initial challenges too. But they are also realizing that they need to adapt sooner than later to equip themselves and their teams about various provisions and its impact over the fortunes of the business. There is hence increasing focus to restructure the organization and streamline the operating processes to ensure compliance.
â€śThe buyers have everything to gain in the process as they can look forward to live in a RERA compliant regime that ensures a far more disciplined regime of developers. A homebuyer can thus be rest assured of the developer keeping his delivery promises. After all, one of the key aspects of the project cycle that the RERA regime focuses on is delivery,â€ť says Arvind Nandan, a leading property consultant.
The developers are also re-working out their marketing offerings to make sure they comply with the committed timelines of project delivery. The usual over-promising features have suddenly gone missing with the realistic promises also being in undertone than over-asserted. The developers have suddenly learnt the business wisdom of under promise and over delivery to not get under the regulatorâ€™s stick.
The new regime has made them realize the importance of documentation as they have to register their projects with all the details by phases, submit the approved plans and meet the completion timeline of each phase to get payments released from the project account and avoid penalties. Any changes to the structural plan now require consent of two-thirds of buyers.
â€śLet us face the fact that we have no other choice left but to comply with the highest standards of construction because now we are accountable for structural defects up to a period of five years from the date of possession. I feel this one area will ensure that the developersâ€™ buyer interface will improve and conflict management or I should say crisis management will be less,â€ť admits Nikhil Hawelia, Managing Director of Hawelia Group.
Another significant change in the operating style of the developers has been with respect to the cash flow management as the Act limits any collections in advance from buyers (on registered projects), and restricts withdrawals from the project account to the accomplishment of delivery milestones.
â€śWhat it ensures for the buyers is the fact that now onwards the project delays would be only due to genuine issues. What has been happening till now is that the developers never focused on building the enhanced delivery capabilities. The project delays was well accepted as part of business cycle,â€ť says Pawan Katara, a property agent in Pune.
Now the developers are suddenly focusing on the quality of the management processes. The developers in their own cost & benefit analysis have evaluated that meeting the stipulations of the Act would require a professional project management where a seamless integration of various departments and teams will offer more benefits than what it will cost to them.
To ensure compliances and meeting delivery timelines the developers are reevaluating their business processes to make holistic changes. PMS hence is being introduced to make sure a system of optimum project management is put in place that would outline the scope of the project, determine the timeline for delivery with the associated cost for effective cash flow management, ensure optimal management of vendors and quality control in the procurement and construction process.
In a nutshell, the developers are now leaving no stone unturned to adopt more structured approach of development. Right from the cash flow management to project planning and scheduling to the final execution, the changes are being made to align with the RERA realities.
Of course, it will take time before these changes are noticed in the collective consciousness of the buyers in the market. However, the strategy to align with RERA compliances definitely indicates the willingness of the developers to adopt the compliances as part of the professional management practices.