For real estate developers and investors, the performance of their real estate investments is not limited to the stages of planning, design, tendering, construction and handing over the completed facilities but also extend to the operations and maintenance stage of those facilities. This is the stage where the real estate developer or investor will realize the benefits of their investments when operating those facilities. Accordingly, monitoring, evaluating and reporting the performance of a real estate investment during the operation and maintenance stage is as critical as monitoring, evaluating and reporting the performance of capital construction project stages.
The article written by Wayne Gretzky titled “Top 17 Real Estate KPIs for Investor Reporting” (crexchange.io/2021/09/28/top-17-real-estate-kpis-for-investor-reporting/) provided a good example of what performance measures that real estate investors would usually be looking for to monitor, evaluate and report on. Those 17 KPIs were grouped under four categories: Underwriting/Acquisition to Current Period, Overall Performance, Leasing and Financing.
A careful review of those key performance indicators will show that to be able to have real-time single version of the truth monitoring, evaluating and reporting of the performance of those KPIs across the real estate portfolio that an investor has, there will be a need to capture a number of data values to calculate those measures. Those include the real estate current valuation, total number of available spaces to be occupied and those actually occupied, details of lease agreements including rent due dates, amount due and collected amounts, rent type whether in-place or concessions, expenses associated in operating and maintaining the real estate assets, total real-estate investment cost and details of loans associated with the real estate investments. In addition, general information associated with the real estate assets such as location and type as well as tenant types.
Although there are a number of applications that are specific for managing real estate investments, nevertheless using a Project Management Information System (PMIS) solution that has asset management as one of its modules like PMWeb can be of great value. Not only PMWeb asset management module can capture all of the needed information listed above, but when PMWeb is used to manage the capital construction project of the real estate investment, then the investor will have an unmatched 360-degree insight of the complete real estate investment life cycle stages.
The budget and actual cost of the capital construction project that produced the real estate asset, actual cost of recapitalization and refurbishment projects as well as the actual cost of work orders to maintain the operation of those assets are all captured in PMWeb. By having the revenue or net income from those facilities along with all direct and indirect costs incurred on the same facilities then the Internal Rate of Return (IRR) and the Multiple on Invested Capital (MOIC) can be accurately calculated and verified. Unlike IRR, MOIC focuses on how much rather than when, meaning that MOIC does not take into account the time it takes to achieve the needed level of returns but just how much the returns are.
PMWeb asset management module will be used to create the complete register of all real estate facilities, capital construction projects, and recapitalization and refurbishment projects. PMWeb assets explorer allows defining all locations that an investor either has or plan to have real estate investments at. For each location, all types of capital construction projects associated with the location will be tagged. In addition, each location will be broken down into the buildings or zones that exists at the location. For example, those could be Residential Tower A, Commercial Tower B, Podium, etc. For each project or building, there is no limit to the data that can be added. For example, those could type, category, geospatial location, boundaries polygon, built-up area, current valuation, etc.
Each building within a location will be further broken down into its floor levels like basement, ground floor, first floor, etc. In addition, each floor will be further broken down into the spaces that exist within a floor. For example, those could be the residential flats, office suites, retail spaces, entrance and elevator lobbies, restaurants, mechanical and electrical rooms, etc.
For each space, PMWeb allows defining all the assets that need to be maintained by the real estate investor. Those could include HVAC, mechanical, electrical, conveying, communication, fire alarm and other type of equipment assets. Work requests and work orders will be issued and captured against the maintenance activities for the equipment. Similarly, work requests and work orders will be also issued and captured against the facility spaces like paintworks, damages tiles, broken windows, etc.
In addition, PMWeb allows capturing the details of occupants of each space. Those could be companies or individuals for which they need to be first defined in PMWeb companies’ module to ensure standardization and accuracy of this important information. For each occupant, PMWeb allows capturing the number of occupants or individuals at each space, scheduled move-in and move-out dates, actual move-in and move-out dates, work order associated with the move-in or move-out and notes.
Further, lease agreements as well as suite of lease agreements can be created for the spaces. The invoices amount due, payments collected and pending payments for all those lease agreements will be also captured in PMWeb. Similar to all other business process templates in PMWeb, there is no limit to the number of user defined data fields that can be created and added to the lease templates. For example, for lease agreements, a data filed will be created to identify if the lease needs to be considered as in-place or concession lease agreement. For concession lease agreements, the values could include the options of Free Month’s Rent, Moving Assistance, Rent Reduction, Security Deposit Reduction and Free or Discounted Amenities.
In addition, PMWeb allows capturing the expenses that could be associated in operating those facilities such as utility fees and other tenant charges. PMWeb allows capturing scheduled charges, recoveries, escalating charges and overcharges to have the grand total of those charges. Of course, PMWeb offers other modules that could be found to be better used to capture all expenses associated with the real estate investments to provide the accurate expenses amount to calculate the net income from the total revenue. Those project related modules include commitments and purchase orders, miscellaneous invoices and timesheets.
To capture the detail of all loan agreements that the real estate investor has used to finance the real estate investment, PMWeb custom form module will be used to capture the details of each loan. The template will include the financial institution providing the loan, loan amount, interest rate, payment terms, loan tenor duration, loan start and end date, etc. In addition, the template will include a table that will show the due loan repayments amounts and dates and actual repayments done. Of course, the template can be designed in any desired format to capture all needed details by the real estate investor.
For all those templates that were detailed above, PMWeb allows attaching all supportive documents and pictures to be attached to each transaction associated with those templates. It is highly recommended to add details to each attached document to better explain to the reader what is being attached and viewed. In addition, links to other relevant records of other business processes managed in PMWeb can be also linked to the records of those change order related business processes.
It is also highly recommended that all those supportive documents, regardless of their type or source, get uploaded and stored on PMWeb document management repository. PMWeb allows creating folders and subfolders to match the physical filing structure used to store hardcopies of those documents. Permission rights can be set to those folders to restrict access to only those users who have access to do so. In addition, PMWeb users can subscribe to each folder so they can be notified when new documents are uploaded or downloaded.
To ensure that the submit, review and approve dates of each real estate investment business processes’ transaction submission are captured, a workflow will be assigned to each one of those business processes. The assigned workflow will map the submit, review and approve tasks, role or roles assigned to each task, task duration, task type and actions available for task. In addition, the workflow could be designed to include conditions to enforce the approval authority levels as defined in the Delegation of Authority (DoA) matrix.
When any of those business processes’ transaction is initiated, the workflow tab available on the relevant template will capture the planned review and approve workflow tasks for each transaction as well as the actual history of those review and approval tasks. The captured workflow data will include the actual action data and time, done by who, action taken, comments made and whether team input was requested.
About the Author
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services and project management information system to over than 200 projects with a total value in excess of US $100 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment, Hospitality and shopping malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training and business development.
Bassam is a frequent speaker in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 40 years he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 550 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the Association for the Advancement of Cost Engineering (AACE) and Green Project Management (GPM).
Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.