Tag Archive for: Development Management

What is the difference between Development Management and Project Management?

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Development Management is often mistaken as the same function as Project Management. The reality is however that Project Management is a component of Development Management. Project Management is a more focused, specialist field that plans and manages the technical aspects within the property development lifecycle. Development Management on the other hand plans and manages all the aspects required during the property development lifecycle, i.e. project management, marketing and the financial management. Strategic planning is however critical within the Development Management sphere of responsibilities and is therefore required from day one to ensure that a well planned and co-ordinated approach are implemented on all aspects required.

To save on costs and overheads, some developers tend to expect the Development Manager and the Project Manager to be the same person. This can be achieved when the person has exceptional skills and experience and only on smaller projects that has limited variables. It is however essential that when it comes to larger, more complicated projects that the functions be split.

Project Managers tend to be sucked into the day to day problem solving required on any project, which leaves little or no room for the strategic management of the long-term goals and objectives and co-ordination between the technical, marketing and financial management required.

RedCubed Consulting is a Development – and Project Management firm specialising in providing professional services to prospective property developers. We will consult with you and find the best solution based on your specific development needs.

Contact RedCubed Consulting – we look forward to hearing from you. info@redcubed.co.za | +27 (0) 82 923 4812

Understanding the interdependency of a project’s budget, program and cash flow:

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Any property development project should always start with a comprehensive project feasibility that is converted into a project budget. The project budget determines the financial parameters within which the project must be delivered to be considered a financial success.

The project program or schedule is a time, task and resource-based representative of what needs to happen practically within the legislative framework(s) to turn the project budget into tangible objects, i.e. infrastructure, buildings, etc.

The project cash flow is the financial representation of the program expressed in terms of expenses and income generated to achieve the bottom line as determined by the project budget.

However, compiling a cash flow for any property development project is much more involved than just converting the budget items into the project’s program.  A proper formulated cash flow has a critical impact on the project’s ability to deliver on milestones as determined by the program and thus will have a major influence on the project’s program.

Also Read: When do you achieve the optimal Return on Investment in a property development?

Understanding that a delay in month 5 of a project might only have an impact on month 12 of the cash flow and thus could have a critical impact on the project’s ability to achieve the desired bottom line and subsequent program and cash flow from month 6 onwards is critical.

Understanding the interdependency of a project’s budget, cash flow and program is thus critical in any property development’s success. Contact RedCubed Consulting if you want to avoid the pitfalls of not understanding and appreciating the constant interdependency of a project’s budget, program and cash flow.

RedCubed Consulting is a Development Management and Town Planning firm specialising in providing professional services to prospective property developers. We will consult with you and find the best solution based on your specific development needs. Contact RedCubed Consulting – we look forward to hearing from you. tinus@redcubed.co.za | +27 (0) 82 923 4812

Property Development – Achieving the Optimal ROI

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When do you achieve the optimal Return on Investment in a property development?

Development Management is often mistaken as a project management function only. Development Management actually entails a wider spectrum of expertise required to ensure that the processes required from a project management, marketing/sales and a financial management perspective of a development is optimally synchronised to ensure that:

·        the development is completed on time;

·        within budget;

·        the full scope is completed;

·        at the desired quality; and

·        the financial and non-financial returns are achieved.

Development Management ensures that all five goals are planned and managed from a holistic approach and not in isolation as is very often the case.

As the legal and approval processes associated with all development applications can become very complicated and costly in South Africa, the associated timing of investment into a development’s infrastructure and top structures becomes critical for a project’s success.

Albert Einstein said: “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” If you are on the wrong side of compounded interest it will diminish your return on investment substantially in a very short time frame.

Completing a development on time can sometimes mean that half of the battle is won. Completing a development in a shorter time frame than expected can more often than not have a more positive impact on a development’s ability to provide the desired return on investment from a financial perspective than the negative impact that budget overruns can have.

Achieving the desired return on investment is, however, not always linked to the shortest possible time frames. If managed holistically, it becomes clear that in certain circumstances it is more beneficial to delay an investment (i.e. into infrastructure) or to delay an approval than to expedite the matter.

The question is, however, how do you manage to achieve this? And the answer to this question is: Development Management from a specialist that not only understands what should be done, but also understand when not to do it until the optimal time has arrived.

RedCubed Consulting is a Development Management and Town Planning firm specialising in providing professional services to prospective property developers. We will consult with you and find the best solution based on your specific development needs. Contact RedCubed Consulting – we look forward to hearing from you. tinus@redcubed.co.za | +27 (0) 82 923 4812