The Evolution of Real Estate Project Due Diligence

All, Miscellaneous, Project Management & Advisory

With the evolving real estate markets the real estate project due diligence have evolved to a great extend. Project Managers have been involved in the construction of complex buildings for centuries, although in that period it was the architect himself overseeing the entire construction of the ancient structures such as the pyramids in Egypt and the aqueducts of Rome and more. The technical guideline to project management began to formulate in corporate America around World War II and by the 1950s they had become an integral part of all civil construction and corporate projects. Post World War II a Project Management Consultant (PMC) began to follow two methods of managing projects:


1. Program Evaluation Review Technique (PERT) -


A statistical tool that is designed to analyze and characterize the tasks involved in the completion of the project undertaken within the timeline set for it. This is followed by a number of project management companies in India.


2. The Critical Path Method (CPM) –


This was a detailed project managing technique that gave step after step planning with the descriptions of the critical and non-critical tasks involved in the project in order to complete the project without hindrances.


Next came the era of computers from 1980 to 2000, that played a major role in connectivity and forming a communication channel. As technology progressed in the 1990s, some of PMC’s created project management systems and processes to calculate risks and execute projects. Although it was only in the latter part of the 19th century that the era of technology in project management truly began. Today (Post 2000) a construction project is monitored more digitally through the internet of things (IoT), artificial intelligence, etc. considering that technology has become a huge part of the verticals with the usage of project management applications, database software, wide ERP systems. etc.


In 2018, a Project Management Consultant’s roles and responsibilities comprises of Project Management Planning, Cost Management, Time management, Quality Management, Contract Administration and Safety Management. Let’s elaborate it through different phases of the project: -


1. Evaluation –


Before the commencement of a project, a PMC must evaluate if the project is feasible and worth taking, post that a due diligence test needs to be conducted to support the feasibility concluded. The project must be executed only and after all the stakeholders have mutually agreed to the strategy required to execute the project.


2. Project Management Plan -


This is a guideline for execution, control and a baseline for scope, cost, and schedule. This includes:


Scope statement and documentation – Needs, objectives, benefits, deliverables, and milestones


Work breakdown structure – A breakage of the scope of projects in various phases and delegation of phases as per the expertise


Communication plan – An outline of the project plan that acts as a common base for communications in order to avoid conflicts and miscommunications


Risk management plan – This is an initiative to identify risks beforehand that includes costs, timeline and budget evaluations, alternate and immediate requirements; and unavailability of dedicated resources.


3. Execution –


This is where the actual work begins. Execution of the project management plan, monitoring systems, and quality, controlling the timeline, completion, and alignment of tasks, updating the schedules and altering the project management plan as per the requirement. The monitoring is to ensure that all the tasks are in line as per the overall project plan.


4. Completion –


This is the final phase of the project management plan. Once it's established that the project is carried as per the plan, the project manager then has to make a list of pending tasks, conclude a final budget and accordingly construct the final project report.


Efficiency in project management has been raised to a higher level in order to stay on par with the competition. Every project today is exclusive from others in terms of demands, quality, timeline, and other factors and it’s the PMC’s responsibility is to ensure that the project is executed as per the plan.


The Indian real estate services sector is one of the most recognized sectors globally; it is also the second larger employer in the country and is slated to grow 30% in the next 10 years. By 2020, India will need to generate 400,000 project management professionals (PMSs) every year in order to handle the ongoing and future projects, especially in infrastructure and power, said Project Management Institute (PMI) hence establishing the evolution of Project Management Consultancy in last 150 years.