COVER STORY, DECEMBER 2009

IT TAKES A TEAM
Know how to get the most from your consultants & contractors.
Marc D. Grayson

In today’s market, getting the biggest bang for your buck is more than just a catch phrase, it’s an economic necessity. With sales slowing and margins eroding, it is imperative that every dollar spent is deployed with the highest degree of effectiveness. This is particularly true in real estate where the costs of mismanagement can escalate rapidly given the size and scale of the product. Proper stewardship of available resources can be the difference between profit and loss, success and failure.

In real estate, as in most industries, the cost associated with the professional services necessary to develop and produce a product is one of the largest budget expenditures. What are some ways to effectively manage those services to maximize output? It’s important to compare the level of influence on cost vs. time. As time progresses, the amount of influence you have over cost diminishes and the relative cost to influence those changes increases. In other words, you wield the most influence on cost in the beginning of a project while the relative cost impacts are at their lowest, whereas, at the end, you have the least amount of influence on cost and the relative cost impacts are at their greatest. Finishing strong is important, but how you start can be the difference between success and failure. What follows is a list of recommendations to help you take full advantage of this influential time in the project:

 • Define the task

It seems like an obvious step, but it is very often not given the attention it deserves. If you have been through this process a number of times, beware. That familiarity has the potential to create complacency. This is especially true if you’ve done work with the same firm in the past. This is your opportunity to call on that experience and provide specific information regarding expectations, tasks and timeframes. List them out and ask the consultant or contractor to identify potential gaps in scope — better to flesh everything out in the beginning than to be negotiating down the line.

• Investigate references

Do your legwork when it comes to investigating references. Many times you’ll learn things about the firm and their employees that could have a significant impact on your project. Don’t be afraid to ask questions. Did they perform? Who would they recommend? Who would they avoid? In what areas did they excel? What would they have done differently? Would they work with that company again? This information can help guide you during your vetting process and may influence the contract language to protect against or ensure similar results. 

• Have measurable goals

These are important for quantifying performance. Without them, there is no tangible confirmation that you’re receiving the service for which you paid. Generally speaking, major milestones will be established in the base contract while more immediate goals will be established at various intervals throughout the life of the project. No matter the significance or size of the task, it is very important not to leave it open-ended. Come to an agreement as to when the work can and will be completed. This provides buy-in on both sides and an environment where performance can be measured. This benefits the client and the company providing the service because the expectations are clear.

• See the big picture

In many cases, you are the quarterback on the project and need to be keenly aware of what your players are doing on the field at any given time. In order for plays to develop as designed, all participants must execute or the play breaks down.  Similarly in project management, many times you’ll have multiple consultants and contractors working on a given project. If one falls behind, it creates inefficiencies for all that can result in increased costs and delays to the project, which is why, as a manager, it’s crucial to see the big picture. Continuously survey progress and do your best to make sure your team is operating at its highest level of efficiency. If one appears to be falling behind, it’s important to focus your attention on accelerating that task before it has a ripple effect on the project. The other consultants and contractors are depending on you to manage the project to meet overall efficiency and quality goals. 

• Be an active participant

Management is a two-way street. By taking an active role in the management of your consultant or contractor, you can significantly reduce time and money expended on non-productive pursuits. Do not make the mistake in thinking that because the firm is under contract and you’ve sufficiently discussed your expectations that the remainder is on autopilot. Consistent and clear feedback is required to ensure they continue to function efficiently and effectively. Without that direction, you run the risk that they will head down an unintended path that could take time and money to undo.  Be available and communicative, even to the point of being obvious. This will have the mutually beneficial result of greater efficiency and avoidance of costly misunderstandings.

Every company must depend on external resources to operate their business. Real estate is no different in that it depends on an extensive list of professionals to deliver a project. Those companies that are most effective at managing these resources have a competitive advantage over those that do not and, in turn, have the greatest chance of sustaining themselves through these challenging times.

Marc D. Grayson is a managing director at Realty Resolution Advisors LLC, an Arizona-based real estate consulting firm.

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