With project delays mounting in Saudi Arabia, the need for clear vision and targets becomes ever more urgent
Real estate in Saudi Arabia is driven by the government’s commitment to the welfare of its people and the private sector’s response to pent up demand. Despite the relative volume of projects however, something is clearly missing.
Reports about project delays come all too frequently. Land owners worry about cost overruns or quality issues. Investors and bankers speak about the mismatch between their investment appetite and the types of project opportunities that they are offered.
There is no shortage of technical vendors in the market. Architecture, engineering and project management firms – both domestic and international – have established themselves in the Kingdom. But real estate development is about more than putting up a building.
“Holistic thinking about real estate projects means that a clear vision and business target have to be part of the planning process. It’s not enough to decide to simply construct new property” said Naveed Siddiqui, CEO Capitas Group International, CGI. He went on to add that the “the planning, design, funding, legal structuring, project management and so many other factors require detailed analysis and coordinated thinking”.
To achieve this, development management should be the discipline that drives and guides real estate projects, large or small in size and public or private sector. This ability to integrate the commercial and technical execution of the projects is critical to delivery of successful projects in the Kingdom.
Limited development management expertise has been a pitfall for the way real estate has been developed in the Kingdom. Across the Kingdom, cities are littered with assets that are either vacant or partially occupied, lack basic services or where work has stopped due to lack of funds.
Too often sponsors do not understand the development process, have no clear vision for the project, don’t have sound financial analysis and have limited control over execution.
Developments are often passed by default to the architect, project manager or, all too frequently, the contractor, who has little time or need to think through the key development decisions as they arise. The project ends up being lost in the numerous complexities of managing its delivery.
“Development management is not project management and it is not construction management. It is about making projects technically and commercially feasible and sustainable – beginning with concept, through design, funding, construction and operations”, said Wahid Sarij, Executive Vice President and Head of the Development Management Service, DMS Practice at CGI.
Development managers streamline and align the decision making process. At the onset, the development manager is able to devise a commercially viable and technically pragmatic development plan that is based on development know-how rather than desktop research.
Moving ahead with the development, the development manager can ensure that the technical works map to the development plan. As investment is needed, the development manager can build confidence with investors and financiers that the plan is financially sound and its execution will be well-managed.
And as construction and handover proceed, the development manager ensures that delivery details are managed for quality and quantity.
Such an approach requires development professionals that have integrated expertise across the real estate value chain – marketing, design, engineering, legal, financial and operations.
A single team that can manage an entire development across all stages of the project using a standardized, unified management thought process over various disciplines can help address the issues that challenge the success of projects in Saudi Arabia.