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Weekly UpdatesMost of the prospective buyers come from the north of Europe and there is an immediate cultural difference. The north/south division becomes very prominent; the north tries to anticipate all eventualities beforehand and likes control and planning as opposed to the south that carries out some planning and lets things carry on until they hit a problem and embark on its solution. The working practices and trends vary and people from the north invariably find southern standards and methodologies somewhat different to what they are accustomed to. More often than not this usually has a negative effect and poisons the minds of these clients with apprehension and distrust. Given the nature of the Spanish Building Law, traditional single stage selective tendering and contracting would be forced upon them unless they resort to some other means of contracting. The need for change when dealing with Spanish clients is non-existent; they are fully confident in the current system and in fact many regard project management as overkill of such a simple process.
3. REAL STATE DEVELOPMENT PROCESS
Basically there are three stages in a typical real estate development project: a preliminary planning stage, a final planning stage and a project management stage. Initially a developer must own or search for a suitable property. Once it is located, its development possibilities must be checked out with the municipal planning commission. An analysis must be made to ascertain the value of the land. If the situation looks right, a letter of intent or an option to purchase the land may be arranged with the owner. Other activities should be started during this stage: to advise a financial backing of the project and to submit a preliminary development plan to the municipal planning commission for tentative approval.
In the final planning stage, capital and operating budgets must be worked out to determine if the project is financially feasible. By the end of this stage, approvals must be in hand and final budgets in place. If everything continues to appear feasible, the land is purchased (if not already owned). The time limit imposed by municipal regulations on the final plan approval must be strictly adhered.
With all necessary approvals in hand the construction of the infrastructure and the building can commence. A constant control on time, cost and quality are undertaken and the typical project management strategies may be implemented.
Nevertheless, gathering information is essential to be able to get an idea of the type of clients and land. This is a previous stage to the other three previously explained. A basic blueprint, established within the company, is needed for every client. From this investigation enough detail must be found out so as to be able to obtain an initial picture of whether the overall project strategy is feasible. Figure 1 displays a flowchart of the initial process for assessing risk. It is a three-step process. First the company has to assess the risk of taking the client; not only his/her character and credentials have to be taken into account, but also his/her financial possibilities and the feasibility of his/her idea. The second step is focused on the assessment of project: brief, objectives and scope; the planning permission is a fundamental issue to be considered. Finally, the company has to think about if it can be done according to the technical ability of the staff, the infrastructure and, most of the time, the workload that the company has at that instance.
[FIGURE 1 OMITTED]
When a client approaches for advice for the engagement of services, some following preliminary questions should be clarified straight away (see Table 1). This questionnaire may be mailed, but it is essential that a face to face meeting be held, prior to any decisions to proceed be made. Once these initial questions have been asked, a decision should be taken as to whether to proceed or not. Many clients probe for information which they lack, in order to proceed with the project by themselves or with other firms; thus, some inquires of this type may lead down a blind alley.
If the decision to carry on the project is taken, then the next step is to draft an activity schedule for the client outlining the phases and the services that the company can offer. The flow chart shown in Figure 2 could be the first stage within the decision making process to ascertain the risk of the client. It is a very general chart showing the macro stage. The boxes are questions that should be asked; within each box, the project manager develops these issues, therefore there will be another micro chart for each stage. Two are the basic questions that ponder the balance towards a definition of low risk or high risk client: the ownership of land and the financial issues.
[FIGURE 2 OMITTED]
Table 2 details the steps necessary to fulfil the first phase of the flow chart showed in Figure 2, previously to construction. The first step in the pre-construction phase means not only to study the plot but also to assess land difficulties, especially when considering environmental issues, easements, public rights to land, etc. All have a very significant role to play in the urban planning process in order to get a building license. It is very important to ascertain the type of land in relation to the municipal planning regulations, as this will set the project strategy right from the start. It is essential that the client have the deeds of the land in question in his/her name and the certification of the Land Registry.
Regarding the last of the steps, an on-line project management fits the needs of expatriated clients and local companies. A tailor-made friendly interactive web site allows the client, from the comfort of his/her home, and the project team members to access and work with the most up-to-date information on the project. The clients have privileged access to secure pages, permitting exchanges of information with the project, viewing details and a summary of accounts, and keeping an accurate control on expenditure.
The client could opt to contract the company for the entire project or for phased activities. Only in the first case the company is able to implement project management principles and strategies; furthermore, an agreement must be reached and a professional services contract signed. Later on, the steps necessary to fulfil the construction phase follow, as shown in Table 3.
4. PROJECT MANAGEMENT COMPANY SET UP NEEDS
To be able to deal with urban and property development projects, much information and knowledge is needed in many fields of study. The project management company must be set up in such a way as to deal with these issues internally as much as possible. It is true that the project management company can act as a go between and just pass on queries and get the answers. But sooner or later the project management company will be caught out and its reputation will be jeopardised. Furthermore, subcontracting out every bit of information will only increase the fees because as a third party the project management company also has to add its percentage onto of the subcontracted consultants. At the same time the company cannot afford to employ a professional in every field of study. A balance has to be met at some point between the workload and the company investment in personnel and infrastructure.
Four requirements are proposed to meet the overall project strategy. They are the following ones:
* Legal interpretation and assessment.
* Technical expertise in urban and building issues.
* Financial strategy to run all the process.
* Administrative capacity to deliver the desired results.
It is the combination of knowledge in these different fields that is required in order to see through the whole management process.
The architect and the quantity surveyor are the professionals most needed. They can perform any function from costing to execution of the works, quality control, urban planning, setting out, health and safety plans and much more. They also get parts of the design visas stamped at their professional associations. The advantage in having one of these professionals in the company is enormous as well as saving a lot of money on subcontracting. Nevertheless, these professionals are not trained as project managers (Ling, 2003). With time, they may become project managers if they get the experience but in their true sense, they are not. Therefore, project mangers are needed to take the project right from the very start and administer it, advise it and guide it through all the processes and decisions that need to be made.
An office administrator is also needed. There is also a very strong need for an accountant or a financial adviser. The challenge is to find a team member who can carry out all these functions. A full time financial adviser is not required as many projects come with the finances already arranged. The company also needs a director who can carry out the marketing strategy and be a salesman at the same time. The company has to be proactive and go out and get the work as opposed to waiting for it to come. Table 4 shows the relationships between activity stages and professional expertise required.
5. PROCUREMENT AND CONTRACTING STRATEGIES
Taking into account the rigidity of the Building Law and the Contract Law for Public Agencies (Ministerio de Hacienda, 2001), the only way to implement project management principles and strategies in Spain is the company acting as a surrogate client. If the client surrogates the company, then this can act as a project manager for throughout all the cycles of the project with total authority. However, within the Spanish Building Law, no one can override the architect (Garrido-Hernandez, 2002). The way to overcome this is to include clauses, which tie the architect and quantity surveyor in that no decision or alterations can be made on site without the final approval of the surrogate client (the project management company).
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