The Woes of the Property Business
Building and selling houses is a difficult and challenging business, any developer can tell you that, whether they are big or small. Most buyers and members of the public only see the friendly side of things – the polite salespeople, the IKEA-furnished show units, the snazzy advertisements and brochures everywhere.
But the process of acquiring land, getting the approvals and permits (the holding cost of this step alone has bankrupted many a developers), dealing with neighbouring landowners and residents, administrating the contractors, subcontractors and suppliers, and pressure from management and buyers – all in all, so complex that one mistake can result in millions lost.
My friend works as a contractor, he told me this tale of a mid-sized developer’s semi-D project somewhere in the Klang Valley. The job itself isn’t hard, but it had it’s fair share of problems behind the scenes. According to my friend, this project had just been handed over to buyers in its proper time, and mostly everyone is happy and the developer looks to made a decent profit.
But this 4-year project (right from the land acquisition) went through 5 project managers under the employment of the developer. The first one was made to resign the lengthy period of getting all the approvals to start work on site. Apparently, the management was disappointed in the delays to launch the project.
So stepped in second guy. Under tremendous pressure on the earthworks and the milestone dates, he was transferred out immediately after the first launch. He barely lasted a few months, although nobody knows why he was repositioned.
Enter project manager #3 and #4. These two guy lasted an impressive year and a half between them. But both, too resigned.
Then the fifth and last guy finished the project, but the word on the street is that the management is royally unhappy with his style and no ones knows where he will go after this.
This is not to mention the main contractor changing 3 project managers in the same time.
Like I said, property development is a difficult business.
Agree, the most important element in the success of a development is good project management and supervision. I suppose successful property developers like SP Setia and Sunrise are good testaments. Bad examples would be those starting with M and T.
Comment by preacher — July 19, 2006 @ 11:56 am
it cant be that difficult
anybody who is somebody is jumping into this bandwagon of building houses-colossal profits to be had for developers
look at the new entries to tis lucrative business-u have got stockbroking firms, garment manufacturers,trading firms etc
companies or business concern remotely related to the art of building houses entering the fray-why?
money must be easy and good for the builders-so dont harp on the permits project managers completion dates etc
anyway the entry fee to be a developer is just a 2$ company and some land -thats why lots of JV in tis country-nothing wrong as long as the builders complete and delivers the houses.however the plethora of abandoned projects whenever theres a looming crisis makes it a good practice to enforced some form of protection for end users-thats why the build and sell concept should be adopted
it will ineveitably removed an element of speculation in the property market which cam make it a dull place for investment.
Comment by lazy — July 19, 2006 @ 2:11 pm
That is why the current STB System has to be changed. A total BTS System may be too big a change and that’s why the Govt announced the approval of the 10:90 System and that the 10:90 System will run parallel with the STB for 2 years and a final decision, at the end of the 2 years period.
What we need are commited, financially capable and experienced developers and not those fly-by-night developers.
Comment by preacher — July 19, 2006 @ 3:32 pm
But then pricing will definately increase by atleast 20% or more..But I believe it is worth paying as it has eliminated the risk & create more healthy & innovative competition.
Comment by Yee Haa — July 24, 2006 @ 12:36 pm
Hi everyone,
there need to be practical approach to solve problems in the building industry, and one cannot expect miracles from project managers. Owners should face the problems themselves so as not to expect the impossible.
Some contractors subout the building contracrt quietly
and the sub contractor re subout the works until the last receipient sub contractor cannot make end meet and the works suffer.
the goverment need to be proactive like responding to enquires through the intenet, and not to delay response/ or never response.
Comment by pk lim — August 3, 2006 @ 6:09 pm