The building industry is divided into two separate, but equally important groups: property owners who make investment decisions and AEC professionals who turn concepts into reality. For the longest time, these disparate factions have relied on one another to drive development, but despite their alignment of goals, challenges arise due to their different languages and scopes of work. At the AEC Hackathon last October in San Francisco, there were a lot of interesting approaches on how to solve problems faced by building industry professionals. One in particular dealt with “hacking the process,” essentially working to develop a framework which encapsulates the development process to find areas of overlap and drive projects forward. The industry is in dire need of tools to connect decision makers around project specific and public property data to eliminate asymmetries of information to bring projects on line more efficiently and to ensure that economic and community goals are aligned.
With a variety of new technologies brought to market to aid in the design and analysis of real estate, it is the crossover between design, construction and economics that deserves more attention. More often than many outsiders realize, the decision to purchase or develop a property is made based on anecdotal information and back of the envelope math. Developers are anxious to put capital to work on projects that appear to “check the boxes” and meet their investment criteria. Once a project is green-lighted, tools such as email, Sharepoint, and the telephone remain the dominant way in which this analysis is shared and processed.
It is here where hacking the process has the greatest impact, in being able connect knowledge bases from various functional areas at the onset of concept validation. We are now able to use various technologies to build a baseline level of understanding across project teams, providing critical insights into design feasibility, cost & schedule impact, and investment value. AEC professionals have long been using model-based estimating and quantity takeoffs to compile budgets more easily, but the totals typically just end up being handed off to developers who use the information to fill out a couple of cells in a spreadsheet. Developers similarly aggregate market and financial information to assess the project’s viability, but there is little insight as to how specific design & construction choices impact the bottom line.
Fortunately, technology is quickly bridging the gap between bricks & mortar and dollars & cents, allowing all members of a development team to look at projects in terms that they understand. Soon, when architects make design changes or GC’s get bids in from subcontractors, that information will be fed into the project’s financials to inform developers and investors. The development process has been established through many generations of practice, yet only now is technology being developed to shepherd project information throughout the life cycle of a real estate asset.
The silos that exist between the owners and the AEC professionals they employ are quickly being torn down in favor of an integrated planning and design process. This is accomplished through the refinement and integration of the tools that are already in use. It is through integration that real value is unlocked, as real estate decision makers at all stages are able to more effectively align a project’s design, economic, environmental, and community goals. Movements in the industry toward crowd funding and design collaboration are indicative of the need to democratize the real estate process from concept through funding and execution. Ongoing developments in the real estate and AEC technology space that continue to “hack the process” will forever change the landscape of the industry by bringing stakeholders together by using data and automation of the industry’s best practices.
Stefan Martinovic is a Co-Founder of Create, an enterprise technology platform for real estate investment and development. Previously, he was the lead analyst at a major real estate developer in Washington DC where he led the underwriting of several large scale mixed-use projects ranging from affordable housing to luxury hotels.