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By Efrain Gutiérrez Gonzálezkarg
Real Estate Development Manager at Scotiabank Mexico
- The current economic crisis of the United States that has infected all markets in the world, was originated mainly by the subprime mortgages consisting in mortgage loans without backup or overvalued.
Firstly this is due to the lax policies on which the rating processes of financial institutions allow a person access to credit for which is not financially qualified. Secondly, many mortgages are guaranteed by properties whose real value is due to the lack of technical controls, to poorly applied appraisals, to speculation, and the inflationary bubble, which in turn generates a vicious circle.
The case in Mexico is different. Despite the international crisis has been extended to the country, its causes are different. The crisis in Mexico has not originated by housing or bad given mortgages. The financial institutions are governed under a strict and limited regulatory framework. The financial institutions, mainly banks, are required to have technical controls over the financed property and deposited as guarantee.
Technical controls are carried out in different ways, depending on the institution and the level of participation and control desired. Some of these schemes are project management, supervision of work, investment monitoring, administration of construction, management consulting, and many others with different names, but common characteristics.
Parts of a construction project.
The phase of building and construction, along with the design, is the critical process of a real estate development. The work should be planned in detail to comply with a time schedule and cost. A construction project is formed by a multidisciplinary team composed mainly of three groups: the owner, the designers (architects, engineer designers), and the constructor (builders, suppliers and subcontractors). Each one has a special function and therefore, quality process is different from others. The probability that each reaches its goals necessarily depends on the involvement of other parties and the support it receives. You must work together if you want to achieve the project goals, as opposed to the old principle of antagonism, coordination and communication are essential to a principle of order. The owner has as main responsibilities:
- Establish project requirements and communicate to other team members.
- Weigh the cost-performance, form and function.
- Adequately fund the project and make payments on time.
Nevertheless, speaking of the owner, it is important to distinguish the component parts. For example, there is the developer, the landowner, shareholders and investors, financial institutions, etc. Everyone is involved in the project in different ways and therefore requires specific controls. The developer is responsible that all project activities are developed according to plan at the highest level of detail and is supported by the figure of project management (project manager), in the supervision of work, and in the project coordination.
The project management and supervision of work are key activities to ensure that the work is executed under the program schedule, with the specified quality and within the investment budget.
Project management
Project management represents the owner (mainly the promoter) and is responsible for coordination and comprehensive management of the project. Among its functions, it sets and monitors the work program, takes management control at each stage of the work, managing resources and the controlling costs, monitoring of contracts and provides information to the owner. At every moment, the customer is informed of project development, both the work and the financial performance of his investment. It is responsible for the project planning and programming, so it must formulate an effective project approach and pass it to all team members. As a result, the project schedule is adjusted and refined, setting milestones and deadlines. The project budget is revised and corrected. In short, the project manager establishes the rules or the game.
The qualities of a good project manager include the ability to:
- Develop the project management processes
- Lead the members of the team project to work properly.
- Plan the activities considering the results desired by the owner.
- Advise the owner in the selection of the best designers and builders for the project.
- Facilitate and promote communication among team members.
- Making decisions on time and ensure they are met.
Supervisor of work
Supervision of work represents the owner in the construction site. The supervisor’s functions include:
- Coordinating with contractors, subcontractors and suppliers.
- Controlling specific work programs of each contractor and each provider supply.
- Managing materials and equipment.
- Directing the work of the construction.
- Checking the quality and fulfillment of specifications.
- Reviewing estimates and payment of contractors and suppliers.
- Enforcing security programs and regulations.
- When the project has no project management, the supervision of work covers part or all functions of the first, as agreed with the landlord. For instance:
- Develops and coordinates concourse and contracting.
- Controls the general work program.
- Is responsible for purchasing and procurement.
- Receives the work.
- Directs the implementation or operation.
- Criteria for measuring progress of work / traditional schemes. There are various approaches and methodologies to determine the progress of a project.
- Emphasizes the control of the physical progress and the control of the financial advance, each with its variants.
Physical advance
It refers to the percentage of progress of activities including work relating to each particular activity. Your advantages: easy to assess, only count the constructed elements, allows to group the work in packages for measurement, and when each activity is well paid for, it gives a very rough idea of the amount invested, provided that the builder will pay what is running.
Disadvantage of physical progress
- It does not recognize advanced payment for it is not executed work.
- It does not recognize unfinished activities, unless previously established which activities can be divided and how.
- When the constructor differ payments of the work performed, further progress is reported.
To determine a particular progress, one can divide the number of completed items between the total element numbers. For example, if in a building of 20 levels, 8 ceilings have been cemented and the ninth is getting ready, the advance is 8,20 = 40%. The partial advance of the ninth ceiling can be taken into consideration as a percentage or be excluded for not being a finished element.
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