The Cost and Benefit of Hiring a Real Estate Project Manager

A company that is planning a move, a renovation, or a complete out-of-the-ground construction, and that wants assurance of the project’s delivery by its targeted completion date and within its budget, is more likely to hire a 3rd party project management firm to oversee the whole project from start to finish. Project management should be the core competency of the project management firm you hire since they will have the most direct experience and no conflicts or other interests at stake. The additional cost of bringing in an outside expert will be more than offset by the speed and quality of the project under that expert’s management. Furthermore, good project managers can find competent vendors who can complete projects at competitive prices, they will know typical project pitfalls to avoid, and they can recommend cost-saving processes they have learned over their years in business.

So how would hiring a project management firm cut project costs? In the following ways: Purchasing power. A PM can drive costs down based on their knowledge of the marketplace and can share cost effective purchasing strategies for items such as IT, furniture, and AV. Avoiding pitfalls. By guiding the client through a project’s early planning process, a project manager can help the client avoid the costly mistakes and change orders that frequently occur when the company tries to manage the project on its own without recent and relevant experience.

Thinking outside the box. From years of experience with hundreds of different kinds of projects, a well-regarded project management firm can apply to any future project proven cost-saving strategies that have already been delivered.

Hiring a project manager saves time as well as money. Too often, in-house representatives of projects take on additional responsibilities that are ancillary to their ongoing duties-and often outside their realm of expertise-which not only reduces their needed attention to their assigned tasks, but also poses the risk of mismanagement and oversight in some areas, hence budget-busting reparations later. An outside project manager, however, can act as an extension of an existing department or individual within the organization and can work side by side with the in-house representative. This person/department can even leverage the PM’s expertise so the project can be carried on with confidence, knowing its management is in safe hands.

As that extension, a project manager frees a company from burdensome, distracting multi-tasking in less familiar areas by doing the following, and more: accurately pinpointing architectural, engineering, construction, utility, IT, vendor and other costs in the initial planning phase, including scope of work baseline, project scheduling, risk assessment and environmental impacts; becoming the point of contact for all vendors performing daily/weekly walk through at the construction site, and providing the company with updates as often as they wish; constantly auditing the budget to minimize cost overruns and to make sure all costs are visible to all concerned; and packaging all invoices, comparing them against the contracts, and submitting them to the company for approval in one simple package.

Unless a firm has internal professionals who have the requisite PM expertise as well as the time to dedicate to this huge undertaking, it is best to hire an outside specialist whose core competency is project management. This will allow a company’s employees to focus on their respective areas of expertise, and allow them to get their job done with fewer diversions and distractions. Furthermore, since the average project may require anywhere from 10-40 hours per week of attention, and move-in week entails 24/7 demands, a company is unlikely to have someone on payroll with that much free time. So why not bring in an outside PM to fill that gap?

But if the cost of a project manager is still a concern, a company might consider hiring one willing to charge a fixed fee, based upon a set scope of services, so the client knows the extent of this added investment up front and can budget accordingly. It is also good to ask the project management firm if the fee can be paid in monthly installments, or broken down for each stage of the project, so it can be balanced with the ongoing vendor payments for which the project management firm’s invoices.

Real estate is often a company’s largest investment, which requires astute dedication of the resources necessary to ensure a successful project. An experienced project management firm with a proven track record of efficiency and economy on a wide variety of projects can make this easier, hence assuring the company a greater ROI by helping them save money.