Putting the Integrative Process to Work in CRE
Many real estate development, improvement, and management projects face predictable challenges on the journey from first thought to project exit. What the most successful operators and sponsors have in common is collaborative planning and operations throughout the project lifecycle to address potential obstacles and embrace opportunities.
Let’s look at how the integrative process unifies teams to support operational efficiency and positive outcomes by reducing construction costs, waste, and budget overruns, keeping development on schedule, promoting robust returns, and elevating the owners’, investors’, and tenants’ experience.
1. The integrative process and how it works
The integrative process is a term and methodology rooted in sustainable design. The U.S. Green Building Council uses it as a framework for construction, design, and operations projects working toward LEED (Leadership in Energy and Environmental Design) Certification.
However, the concept applies equally well to the process for all real estate projects. Moreover, every business initiative can benefit from organized, collaborative planning, implementation, and monitoring.
At its heart, the integrative process is about the teamwork of every party involved in each phase of a project’s lifecycle. While this seems like an obvious approach to adopt, cooperation and collaboration are often limited to a few teams participating in one or two disparate phases of a project.
Some potential participants include owners, operations teams, tenants/users, investors, community stakeholders, construction staff and architects/engineers, property and asset managers, building/planning/zoning officials, and anyone else involved in the project.
The integrative process includes three phases:
- Discovery and pre-design
- All the team members/organizations meet and coordinate to look for opportunities to create synergies that reduce cost and waste and increase efficiency/returns.
- The building owner, investors, and potential users share their objectives and requirements, and all team members work together toward the specified goals.
- Schematic design and construction
- The project is planned and designed to meet identified objectives.
- The development is built accordingly, managing costs, time, and exposure.
- Occupancy, operations, and performance feedback
- The asset is continually monitored for performance, and the parties involved in the operation of the asset collaborate to optimize efficiency and returns.
2. Advantages for CRE firms
We’ve alluded to the benefits, but let’s dig further. When everyone understands the underlying objective of a project, i.e., the owners’, investors’, users’, and asset managers’ intended outcome, accomplishing them is much more likely.
For instance, if the owners’ and users’ goal is maximum efficiency to achieve optimal NOI — by reducing operating costs and maximizing appeal/rents — the teams involved will prioritize these points in designing, constructing, and managing the project.
Likewise, if sustainability and occupant health/comfort are top of the list, teams will emphasize these components in planning and operations. The same follows for most goals throughout the project’s lifecycle, including exit, where teams may need to coordinate to secure the best outcome of a sale or other exit strategy.
One of the primary benefits is reducing risks, of which there are many in commercial real estate development and management ventures. As noted, the integrative process effectively manages cost and time constraints. With realistic expectations shared among all parties, and the teams working together to achieve them, the potential for project delays and budget overruns is significantly reduced.
Similarly, this process can mitigate legal and financial risks, including those tied to financing, debt management, onsite liability, and regulatory compliance. And perhaps of most significant value, the coordination and teamwork improve the investors’ and tenants’ experience, keeping the owners’/sponsors’ enterprise viable and on the path to new projects, capital inflows, and increasing returns.
3. How to apply it in your organization
If you’re considering pursuing a green building certification for your project, it’s prudent to hire a LEED AP, an accredited professional trained in the integrative process as it applies to sustainable design, to oversee the project from cradle to grave (conception to exit/demolition).
Otherwise, for general business and efficiency/value-generation purposes, a skilled project manager on the asset management team can direct the relationships, communication, and collaboration among the various groups involved. Select a project manager that understands your asset class, has relevant education, and has demonstrated experience aligning and coordinating multidisciplinary stakeholders to achieve OKRs (objectives and key results).
Technology is tremendously valuable in facilitating the integrative process. Some of the most useful platforms include asset management software. Asset and data management platforms help operators and investors gather and analyze all the data required to monitor and optimize performance and facilitate data and insight sharing across the organization for collaborative decision-making.
Project management software is also crucial. When a project involves dozens or hundreds of personnel, and many different organizations/vendors, managing processes via email and spreadsheet is inefficient and impractical.
To achieve design and efficiency objectives, BIM (Building Information Modeling) is imperative in the design phase to help all the stakeholders visualize the finished product and model performance. And on the operations side, Facility Management (FM) software tracks usage, user behavior, maintenance, and operational expenses to support informed management decisions and optimization.
If your organization needs more support or doesn’t require a full-time person to oversee the process, there are consultant and advisory organizations, such as Thirty Capital and its branches, that have the on-the-ground experience as active CRE operators and investors to provide guidance throughout all phases of development and the project lifecycle.
When every party involved in the development and operation of a project is on the same page, the design and implementation process is much more cohesive, efficient, and less prone to risks and unexpected challenges. Work as a unified team and appoint someone with project management experience or consult with advisors to kick-start your initiative, oversee the process, and generate ideal experiences and outcomes and for stakeholders.