It is not uncommon for building construction projects to experience delays and ultimately end up abandoned. This can be a frustrating and costly experience for all involved. However, there are several key reasons why this may occur that should be examined in order to effectively restart and complete the project. In this article, we will delve into these reasons and provide actionable steps to help ensure successful completion. Ultimately, understanding these causes and implementing the necessary solutions can help prevent future project abandonment and ensure the successful completion of construction endeavors.
Seeds of Discovery: Project Conceptualization and Market Research
When undertaking a building construction project, proper market research and conceptualization are crucial. Market research involves collecting information to identify customer needs, but unfortunately, some builders did not conduct thorough research in building construction projects between 2010-11. As a result, they were unable to properly conceptualize the projects. These builders believed that the real estate market would boom, allowing them to make large profits from bigger housing projects. However, the market became saturated, and many projects became stuck.
Financial closure is also essential in building construction projects as a fixed amount of money is required to complete the project. However, some builders did not make a proper plan on how to secure this money. In real estate, money comes from three sources: the promoter's money, loans from banks or other financial institutions, and customer funds. Some builders rely too heavily on customer funds, and when these funds are not available, they take out large loans from banks. Eventually, these builders are unable to pay back the loans, and the project becomes stuck midway.
Project partnerships are another common occurrence in building construction projects. In such partnerships, the landowner and the builder work together in a joint development. The landowner provides the land and receives a 10% advance and 30% inventory from the builder in return. The builder recovers the money paid to the landowner from the customer. However, if any issues arise, both the builder and the landowner can become stuck, and the project may come to a halt.
Approvals are also necessary in building construction projects, and some cities require stage-wise approvals for such projects. For instance, if a 20-floor building is under construction, an approval may come after every four floors. Unfortunately, approvals can get delayed or may even stop coming altogether, especially if a Public Interest Litigation (PIL) is filed against the project. When a construction project becomes stuck, it affects everyone involved, including the builder, landowner, customer, banker, contractor, and suppliers. For this reason, governments nowadays streamline approvals to ensure that projects can be completed successfully.
Restarting the Project: Rekindling the Flame
In order to restart a project that has become stuck, there are certain steps that need to be taken. Firstly, it is important to have a clear decision maker in place, such as a CEO, who can take responsibility for the project and make final decisions. They should also have the authority to hire a team, hold them accountable, and evaluate and execute the project.
Next, it is important to create a plan that identifies specific points in the project that need to be addressed in order to overcome the issues that caused the project to stall. For example, if a builder has a project to construct 10 buildings but only three are currently being worked on, they should focus on completing those three buildings and allocating apartments to customers who have already purchased them. This will build trust and confidence in the builder and help to restart the project.
It's important to make sure that targets are small and achievable, rather than keeping them too wide open. To convert the plan into numbers, it's necessary to identify the amount of money required to complete the project, determine the amount of money that will be received from customers, and then arrange 20-30% of the required money from savings, loans, or investors. Once this has been done, construction can begin with the money that has been arranged.
The Orchestra of Success: Stakeholder Management
Managing stakeholders in building construction projects is crucial to the successful completion of any project. In order to accomplish this, there are four main stakeholders to consider: customers, financiers, contractors and suppliers, and employees. Each of these stakeholders plays a critical role in ensuring that the project is completed successfully and on time. Therefore, it is important to manage them effectively and communicate with them regularly.
Firstly, customers who have invested money in a project and have not seen a return are understandably unhappy when the project becomes stuck. To regain their trust and confidence, it is important to establish a clear channel of communication with them. Be transparent about the issues causing the delay and explain them clearly to the customer. Take responsibility for any mistakes and explain how you plan to address them. Finally, provide the customer with a clear timeline for when their purchased house will be completed.
Secondly, if there are financiers involved in the project, it is important to manage cash flow in a way that allows for regular repayments. If you are unable to make a payment on the due date, communicate with the financiers and request an extension. This will help to maintain a good relationship with them and ensure that the project can continue to move forward.
Thirdly, contractors and suppliers play a crucial role in completing construction work, and it is important to treat them as valuable stakeholders. When restarting a project, communicate with contractors and suppliers to explain the situation and your plan of action. Provide a clear timeline for when previous payments will be made. Release some payments to allow them to recommence work on the site. By doing this, you will be able to mobilize contractors and convince them to return to work on the site, bringing their equipment, manpower, and materials to restart the work.
Finally, employees are often the most affected by stalled projects, as they must coordinate with various stakeholders. To motivate and reassure employees, explain the plan of action clearly. Provide encouragement and motivation. Guarantee that the project will be completed successfully. Deliver on all commitments made to customers. When employees feel confident about the project, they will communicate this positivity to others, reducing negativity among stakeholders.
In finding, timely delivery and on-site construction are the most important factors for customers in real estate. Therefore, when restarting a stalled project, the first step is to resume construction on the site as quickly as possible. By managing stakeholders effectively, you can ensure that the project is completed successfully and on time.
Building a mutually beneficial partnership
Engage in Bartering with Contractors to Ensure Uninterrupted Project Progress
In some cases, despite meticulous fund planning, there may be a shortage of funds at the crucial time, leading to project delays or halts. To prevent such a situation, it is wise to consider bartering deals with your contractors and suppliers.
One approach is to offer a bartering deal to the contractor, such as giving them a cheque for 8 crore rupees and an apartment worth 2 crore rupees, if the contract is for 10 crore rupees. This makes the contractor both a contractor and a customer, which motivates them to work with more dedication, as they feel like they are building their own home. This increased focus on quality ensures that the contractor delivers high-quality work, and they are less likely to stop the work, as they know that if the work is stopped, the value of their apartment will decrease.
Therefore, a bartering deal is a smart solution to keep the real estate development on track and to keep the contractors aligned with the builders.
Bridging the Distance to Customers: Creating Meaningful Connections
In order to reignite progress on your stalled project, it's crucial to involve your sales and CRM team and engage with your customers. Extend an invitation to your customers to join you for a meal at the project site so that they can witness the progress firsthand. It's important to be prepared to listen and address any concerns or issues that your customers may have after a long period of inactivity.
During your meeting, it's essential to treat your customers and their families with respect and warmth. Clearly explain your plans for the project, including the execution plan and the timeline for completion. It's important to review any necessary documents with your customers to ensure that everyone is on the same page.
Additionally, it's important to keep your customers updated on the project's progress. One effective way to do this is by sending weekly site photos that document the progress being made. This will help keep your customers engaged and invested in the project's success. By building strong connections with your customers, you can create an environment of trust and collaboration that will help your project succeed.
The Diamonds in the Rough So Find the Beauty in Difficult Customers
Handling difficult customers can be a challenging experience, but with the right approach, it can be managed effectively. When a customer wants to end their business with you, it may be due to a variety of reasons, such as changes in their personal circumstances or money being stuck in your project. These customers are referred to as difficult customers, and it's important to handle them with care.
If you are trying to persuade a difficult customer to purchase a house, it's crucial to first assure them that their money is safe and secure. You need to instill confidence in them by explaining your plan to repay their money slowly in installments once you receive payment from other customers upon completion of the project. This way, the customer will feel more secure and may be more likely to reconsider their decision.
Another effective way to handle difficult customers is to deploy two salespeople while the main boss focuses on the execution work. This strategy can help to address the customer's concerns while also keeping the project moving forward. If a customer threatens legal action, don't be alarmed as they may not actually want to pursue it. Instead, explain your repayment plan and reassure them that their money is safe. This approach will help to diffuse the situation and may even prevent legal action from being taken.
It's important to avoid giving refunds to customers as this could hinder the progress of the project. Instead, try to delay refunds for as long as possible while ensuring that the customer feels heard and understood. This way, you can keep the project moving forward while also addressing the customer's concerns. Overall, handling difficult customers requires patience, empathy, and a willingness to work towards a mutually beneficial outcome.
The Seeds of Your Success
As a building construction project nears completion, it's wise to begin the process of collecting payments from previous customers. This influx of funds can be used to further develop the project and ensure a smooth handover process for the first set of completed buildings. Once the initial buildings are almost ready for handover, it's time to shift focus to launching the product in the market. This can attract new customers to visit your site and potentially invest in your project. The timely completion of the project is crucial to increasing sales and generating revenue.
To achieve success in this industry, there are certain actions that should be taken and others that should be avoided. Firstly, it's important to hire a competent leader who can create a comprehensive plan for the project's completion. Secondly, speeding up construction activities and focusing exclusively on delivery can ensure that the project is completed on time. Maximizing work output from minimal personnel can also help to keep costs down and maintain efficiency. Additionally, prioritizing cash flows over profitability initially can help to ensure that the project remains financially stable throughout its completion.
However, there are also actions that should not be taken. It's not advisable to have multiple decision-makers, as this can lead to confusion and delays. Focusing solely on marketing can also detract from the critical work of completing the project on time. Furthermore, working on multiple buildings at once can lead to a lack of focus and reduced efficiency. Lastly, offering refunds can be detrimental to the project's overall financial stability.
Ultimately, the timely and successful completion of a construction project can protect against economic downturns and potential losses. By following these guidelines and prioritizing efficiency and financial stability, you can ensure the success of your real estate project.