Thursday, March 6, 2014
Tuesday, March 4, 2014
‘Client Should be at the Core of Construction Process’ : Emaar MGF
Real Estate major, Emaar MGF is in the process of reinventing itself with restructuring of its senior management in order to achieve its twin objectives of speedy delivery and high quality, by focusing on project management. DR. K. RAMAYANA, Chief Executive Officer, Projects, Emaar MGF and a project management expert, in an exclusive interview with VINOD BEHL, shares the Vision 2020 of Emaar MGF and company’s business growth plans, focussed on maximizing real estate asset value and delivering superior value to customers with a view to re establish the iconic brand and attain sustained market leadership. Excerpts:
Dr. K. Ramamurthy, CEO Projects, EMAAR MGF
Q: Emaar MGF is currently in the process of reinventing and restructuring itself with the aim to attain sustained market leadership. What are the key elements of your strategy to achieve end goals?
k To begin with, I would like to share a small story with you. My first job as a Supervising Engineer required me to look after the construction of the Channel International a Airport. I was overseeing the pavement strengthening. It was a working airport, with aircraft landing at regular intervals. I had to get the compaction levels right — even in the first time around as otherwise the pilots would re use to [and the airplanes. The job required excruciating accuracy and meticulousness. My mentor, a well known American architect, Joseph Allen Stein, demanded high levels of workmanship from me as even the slightest er or would amount to dismantlement. The experience taught me a lesson — do it right the first time and this set the right type of thinking in me. To answer your question now, I have realized, in my four decades of experience in the Industry, that the key drivers to success in Construction Management are people, processes and strategy. We would like to deliver superior value to our customers. Our end goal is to create the best and most favorable product with our customers’ interests and satisfaction in mind. We shall need to have a unique approach with unparalleled results. I want great emphasis on honesty, integrity, passion, service and professionalism in not only how we interface and work with our clients but also how we work with each other as a team.
Going forward, we will be emphasizing on the following things:
Focus on the customer Bringing in all vendors! contractors at an earlier stage as opposed to the relatively later stage that is applied by a full procurement/tendering process. This makes all parties work from the starting stage to deliver a project, besides keeping in mind the nature of the prolonged contractual relationship.
Integrated processes and teams: This involves assembling the full delivery team - contractor and designer, at the inception of a project to negate any fragmentation of the design and delivery process.
Quality driven agenda: With zero defects, delivery on time and as per budget, innovation, waste reduction and prompt aftercare as essential elements.
Commitment to people: By re-investing in the training and development of our prime asset, our staff in order to maintain and develop the business. We need to give both time and importance to performance management and employee development. We shall need to believe that our people are our greatest strength and competitive advantage. 9th ANNIVERSARY ISSUE I REALTY PLUS I 83.4
Q: Today, the real estate sector is facing the twin problems of question Able quality and delivery defaults. How does Emaar MGF on its part, tackle these two serious issues? A We will be focusing on our contractors, who shall be selected on the basis of achieving long term sustainable value for money and not just the lowest price. The lowest tender price alone wilt not guarantee value for money over the full life of the building. Consideration also needs to be given to the quality of the design, the proposed method of construction and the likely implication for the costs of operating the completed construction over its whole life and meeting the health and safety performance needs. With evaluate ion of tenders, we are now going to give different weight age to the quality and price depending upon the complexity of the project. Oliy contractors who have demonstrated that they can construct buildings of the ‘right’ quality and within given budget, will be selected.
Construction design should not be a separate process but be integrated with the whole construction process so that the design team can take more responsibility for the implication of their designs including cost, quality and health and safety. We are keeping the crucial asp ect in mind for optimizing the value of a building to its end users.
Q: What’s Emaar MGF doing to put project management systems in place to check any time and cost overruns and maintaining quality standards? A: Project Management entails planning, organizing, securing and managing resources. A combination of all these brings about a successful completion of the project. I have identified five core processes for streamlining the projects which include design and change management, planning, contracting and procurement, cost control and project review and tracking.
We are going to create responsibility matrices for the different people at different levels in the projects. We are putting in place a ‘cost management system’ that enables cost estimating processes to start at the concept stage itself. We would like to work closely with contractors of the highest quality, grooming them as construction partners in the process. We would like to set tough expectations from our contractors and explain our methodology and thinking to them. We would like to pick contractors who truly understand the challenge and are able to understand projects from our point of view. Contractors must be held accountable and the attitude should be that ‘we are in it together’. Safety has to be accorded the pride place in our working.
The need of the hour is to change the paradigm. Quality will be given the highest importance and documentation will be put in place to ensure we achieve quality. We have already put in place a strong and well-qualified ‘in-house’ PMC team, besides setting up a central procurement cell.
Dr. K. Ramamurthy, CEO Projects, EMAAR MGF
Q: Emaar MGF is currently in the process of reinventing and restructuring itself with the aim to attain sustained market leadership. What are the key elements of your strategy to achieve end goals?
k To begin with, I would like to share a small story with you. My first job as a Supervising Engineer required me to look after the construction of the Channel International a Airport. I was overseeing the pavement strengthening. It was a working airport, with aircraft landing at regular intervals. I had to get the compaction levels right — even in the first time around as otherwise the pilots would re use to [and the airplanes. The job required excruciating accuracy and meticulousness. My mentor, a well known American architect, Joseph Allen Stein, demanded high levels of workmanship from me as even the slightest er or would amount to dismantlement. The experience taught me a lesson — do it right the first time and this set the right type of thinking in me. To answer your question now, I have realized, in my four decades of experience in the Industry, that the key drivers to success in Construction Management are people, processes and strategy. We would like to deliver superior value to our customers. Our end goal is to create the best and most favorable product with our customers’ interests and satisfaction in mind. We shall need to have a unique approach with unparalleled results. I want great emphasis on honesty, integrity, passion, service and professionalism in not only how we interface and work with our clients but also how we work with each other as a team.
Going forward, we will be emphasizing on the following things:
Focus on the customer Bringing in all vendors! contractors at an earlier stage as opposed to the relatively later stage that is applied by a full procurement/tendering process. This makes all parties work from the starting stage to deliver a project, besides keeping in mind the nature of the prolonged contractual relationship.
Integrated processes and teams: This involves assembling the full delivery team - contractor and designer, at the inception of a project to negate any fragmentation of the design and delivery process.
Quality driven agenda: With zero defects, delivery on time and as per budget, innovation, waste reduction and prompt aftercare as essential elements.
Commitment to people: By re-investing in the training and development of our prime asset, our staff in order to maintain and develop the business. We need to give both time and importance to performance management and employee development. We shall need to believe that our people are our greatest strength and competitive advantage. 9th ANNIVERSARY ISSUE I REALTY PLUS I 83.4
Q: Today, the real estate sector is facing the twin problems of question Able quality and delivery defaults. How does Emaar MGF on its part, tackle these two serious issues? A We will be focusing on our contractors, who shall be selected on the basis of achieving long term sustainable value for money and not just the lowest price. The lowest tender price alone wilt not guarantee value for money over the full life of the building. Consideration also needs to be given to the quality of the design, the proposed method of construction and the likely implication for the costs of operating the completed construction over its whole life and meeting the health and safety performance needs. With evaluate ion of tenders, we are now going to give different weight age to the quality and price depending upon the complexity of the project. Oliy contractors who have demonstrated that they can construct buildings of the ‘right’ quality and within given budget, will be selected.
Construction design should not be a separate process but be integrated with the whole construction process so that the design team can take more responsibility for the implication of their designs including cost, quality and health and safety. We are keeping the crucial asp ect in mind for optimizing the value of a building to its end users.
Q: What’s Emaar MGF doing to put project management systems in place to check any time and cost overruns and maintaining quality standards? A: Project Management entails planning, organizing, securing and managing resources. A combination of all these brings about a successful completion of the project. I have identified five core processes for streamlining the projects which include design and change management, planning, contracting and procurement, cost control and project review and tracking.
We are going to create responsibility matrices for the different people at different levels in the projects. We are putting in place a ‘cost management system’ that enables cost estimating processes to start at the concept stage itself. We would like to work closely with contractors of the highest quality, grooming them as construction partners in the process. We would like to set tough expectations from our contractors and explain our methodology and thinking to them. We would like to pick contractors who truly understand the challenge and are able to understand projects from our point of view. Contractors must be held accountable and the attitude should be that ‘we are in it together’. Safety has to be accorded the pride place in our working.
The need of the hour is to change the paradigm. Quality will be given the highest importance and documentation will be put in place to ensure we achieve quality. We have already put in place a strong and well-qualified ‘in-house’ PMC team, besides setting up a central procurement cell.
IN ORDER TO MAINTAIN CASH FLOWS, DEVELOPERS HAVE STARTED ABSORBING PRICE HIKES AND THEY ARE WORKING ON LOWER MARGINS : Emaar MGF
Q: How wilt Emaar MGF create different iation to stand out in this crowded and highly competitive real estate market?
Thirdly, we are making efforts to see that contractors are remunerated in a way that incentivises them to deliver good quality construction on time and within prescribed budget.
Q: One major reason for property buyers’ growing disenchantment is that developers are not offering value to their customers. What’s Emaar MGF doing in this regard? A: Property buyers’ growing disenchantment is due to the fact that they are not able to ‘reap’ the benefits of ‘better construction’ from builders, which is largely missing in the recent times. According to us, there are five key drivers which need to be put in place for ‘better construction’. These include committed leaders hip, focus on the customer, integration of process and team around the project, quality driven agenda and commitment to the people.
Emaar MGF is targeting to meet the expectations of ‘end-users’ / ‘property buyers’ by reducing capital costs by 10 per cent, construction time by 10 per cent, reducing defects, and accidents by 20 per cent, besides increasing predictability of project costs and time estimates by 10 per cent and finally, increasing productivity by 10 per cent.
Q: Lack of transparency and growing fraudulent transactions especially in the absence of a real estate regulator, seriously calls for restoring the confidence of customers/investors. What’s your comp any doing in this regard?
84 REALTY PLUS 9th ANNIVERSARY ISSUE
www.realtyplusmag.com
A: First of all, we welcome ‘Real Estate (Regulation & Development) Bill’. 2011 and the provisions contained in that. The Real Estate Bill as approved by the Union Cabinet is a pioneering initiative aimed at delivering a uniform regulatory environment to protect the consumer by way of quick resolution of disputes and by ensuring systematic growth of the sector.We are going to ensure that all p reconstruction approvals are in place before we even go for soft —launch. We are actively working towards improving ‘cons traction performance’ by putting emphasis on quality while at the same time aiming to reduce costs.
We are promoting ‘good business practices’ and initiatives have been taken in this regard. Not only that, we are putting in place reliable systems for monitoring and measurements of these benefits esp specially in terms of ‘cost-savings’. We are on the mission to train more staff to be effective construction client.
Q: What’s the ‘Vision 2020’ of Emaar MGF and going forward, what are your business growth plans? A: Our vision is to become the most admired real estate company in India. We want to focus on creating market driven products with well trained and highly motivated real estate professionals, who continually work on providing top quality service for our clients and customers. We would like to earn the loyalty of our customers and maximize the real estate asset value, thus achieving greatest ope rating efficiencies and realizing highest profit—performance.
Emaar MGF’s mission in India includes creating value added, master-planned communities that meet the full sect rum of lifestyle needs as contained in the vision of Emaar-Dubai. This we hope to achieve with the finest real estate services in the region, based on highest standard of ethics, value, professionalism and client care, while at the same time respecting and complying with safety, environmental and legal requirements. We thus hope to earn the loyalty and trust of our buyers and enlarge the ‘market-leadership’ with diverse products and by serving our customers’ unique needs.
Our ultimate objective is to run a profits be business through goal-setting, planning and superior service to our clients through honest pricing and marketability of our property.
Q: What do you think are the inherent strengths of Emaar MGF which you would like to Leverage to achieve the company’s goals? AWe are associated with Emaar, an coni c brand delivering world class products and world class customer service, while MGF is a formidable, established and reputed name in the Indian market. We have some of the best professionals on board, with international and national expertise, working for us in the senior management, under the leadership of our Executive Vice Chairman and Managing Director, Shravan Gupta. With tremendous individual expertise and a legacy to carry forward, we would like Emaar MGF to set benchmarks for quality and delive ry, for its customers.
Q: How do you Look at the current real estate scenario of slow sates, high unsold inventory and Low sentiment of property buyers and investors. Do you attribute it entirety to the global economic downturn or believe that real estate companies them Selves are largely to blame for this? A: The answer is a combination of both:
Builders have not done adequate assessment of market dynamics and expectant ions, nor have they done proper assessment of project risks. The critical concerns include inability of the builders to synchronize project plan and execution. Also, project management in India is not implemented in letter and spirit by all the stake holders- be it the employer, contractor or the Project Manager. That is why delays, litigation and cost over-runs etc occur.
Q: What policy prescriptions you think are needed to put the real estate sector on the path of sustained growth?
A: I think the need of the hour is that the client should be at the core of the cons traction process.Besides, we as builders need to understand the inefficiencies o traditional methods of procuring and managing Maj or projects - in particular the fallacy of awarding contracts solely on the basis of the lowest price bid only.
We need to communicate better with contractors to reduce conflict and disputes. We also need to establish a single contact point for the construction industry to resolve problems common to a number of stake holders. We need to give more attention to the training of the staff from the view point of procurement and risk management.
More attention to design and early involvement of the whole construction team could also improve the operational efficiency of completed buildings resulting in greater savings over the whole life span of the building. And last but not the least, we will be disseminating good practice more widely.
A: We are getting into three major areas to make a big difference. Firstly, we are putting in place Reliable Project Mana gement, which entails a comprehens ive understanding of the stages in cons truction, a detailed knowledge of risk management, regular monitoring of key milestones and effective coordination of all those involved in the construction supply chain.
Secondly, we are developing a system by which construction projects will get measured to assess whether costs, time and quality requirements are being met. This will also aid learning to disseminate lessons for future.
Secondly, we are developing a system by which construction projects will get measured to assess whether costs, time and quality requirements are being met. This will also aid learning to disseminate lessons for future.
Thirdly, we are making efforts to see that contractors are remunerated in a way that incentivises them to deliver good quality construction on time and within prescribed budget.
Q: One major reason for property buyers’ growing disenchantment is that developers are not offering value to their customers. What’s Emaar MGF doing in this regard? A: Property buyers’ growing disenchantment is due to the fact that they are not able to ‘reap’ the benefits of ‘better construction’ from builders, which is largely missing in the recent times. According to us, there are five key drivers which need to be put in place for ‘better construction’. These include committed leaders hip, focus on the customer, integration of process and team around the project, quality driven agenda and commitment to the people.
Emaar MGF is targeting to meet the expectations of ‘end-users’ / ‘property buyers’ by reducing capital costs by 10 per cent, construction time by 10 per cent, reducing defects, and accidents by 20 per cent, besides increasing predictability of project costs and time estimates by 10 per cent and finally, increasing productivity by 10 per cent.
Q: Lack of transparency and growing fraudulent transactions especially in the absence of a real estate regulator, seriously calls for restoring the confidence of customers/investors. What’s your comp any doing in this regard?
84 REALTY PLUS 9th ANNIVERSARY ISSUE
www.realtyplusmag.com
A: First of all, we welcome ‘Real Estate (Regulation & Development) Bill’. 2011 and the provisions contained in that. The Real Estate Bill as approved by the Union Cabinet is a pioneering initiative aimed at delivering a uniform regulatory environment to protect the consumer by way of quick resolution of disputes and by ensuring systematic growth of the sector.We are going to ensure that all p reconstruction approvals are in place before we even go for soft —launch. We are actively working towards improving ‘cons traction performance’ by putting emphasis on quality while at the same time aiming to reduce costs.
We are promoting ‘good business practices’ and initiatives have been taken in this regard. Not only that, we are putting in place reliable systems for monitoring and measurements of these benefits esp specially in terms of ‘cost-savings’. We are on the mission to train more staff to be effective construction client.
Q: What’s the ‘Vision 2020’ of Emaar MGF and going forward, what are your business growth plans? A: Our vision is to become the most admired real estate company in India. We want to focus on creating market driven products with well trained and highly motivated real estate professionals, who continually work on providing top quality service for our clients and customers. We would like to earn the loyalty of our customers and maximize the real estate asset value, thus achieving greatest ope rating efficiencies and realizing highest profit—performance.
Emaar MGF’s mission in India includes creating value added, master-planned communities that meet the full sect rum of lifestyle needs as contained in the vision of Emaar-Dubai. This we hope to achieve with the finest real estate services in the region, based on highest standard of ethics, value, professionalism and client care, while at the same time respecting and complying with safety, environmental and legal requirements. We thus hope to earn the loyalty and trust of our buyers and enlarge the ‘market-leadership’ with diverse products and by serving our customers’ unique needs.
Our ultimate objective is to run a profits be business through goal-setting, planning and superior service to our clients through honest pricing and marketability of our property.
Q: What do you think are the inherent strengths of Emaar MGF which you would like to Leverage to achieve the company’s goals? AWe are associated with Emaar, an coni c brand delivering world class products and world class customer service, while MGF is a formidable, established and reputed name in the Indian market. We have some of the best professionals on board, with international and national expertise, working for us in the senior management, under the leadership of our Executive Vice Chairman and Managing Director, Shravan Gupta. With tremendous individual expertise and a legacy to carry forward, we would like Emaar MGF to set benchmarks for quality and delive ry, for its customers.
Q: How do you Look at the current real estate scenario of slow sates, high unsold inventory and Low sentiment of property buyers and investors. Do you attribute it entirety to the global economic downturn or believe that real estate companies them Selves are largely to blame for this? A: The answer is a combination of both:
Builders have not done adequate assessment of market dynamics and expectant ions, nor have they done proper assessment of project risks. The critical concerns include inability of the builders to synchronize project plan and execution. Also, project management in India is not implemented in letter and spirit by all the stake holders- be it the employer, contractor or the Project Manager. That is why delays, litigation and cost over-runs etc occur.
Q: What policy prescriptions you think are needed to put the real estate sector on the path of sustained growth?
A: I think the need of the hour is that the client should be at the core of the cons traction process.Besides, we as builders need to understand the inefficiencies o traditional methods of procuring and managing Maj or projects - in particular the fallacy of awarding contracts solely on the basis of the lowest price bid only.
We need to communicate better with contractors to reduce conflict and disputes. We also need to establish a single contact point for the construction industry to resolve problems common to a number of stake holders. We need to give more attention to the training of the staff from the view point of procurement and risk management.
More attention to design and early involvement of the whole construction team could also improve the operational efficiency of completed buildings resulting in greater savings over the whole life span of the building. And last but not the least, we will be disseminating good practice more widely.
Value for Money in Gurgaon’s property market: Emaar MGF
Buying a good property is the dream of
every person, and getting the best one at the most appropriate price
brings in the joy to a buyer. Gurgaon has great potential to provide
a value-for-money asset to property buyers. The real estate market
here enjoys the proximity of a large pool of corporate houses which
are located in the city. With a large pool of corporate houses which
are located in the city. With a large number of blue chip corporate
shifting to Gurgaon. The numbers are increasing and there is a
healthy demand for premium housing. Also, it is benefiting from a
shift in buying preferences in Delhi, where young home buyers are
choosing to relocate closer to their place of work. And choosing
projects that offer a good
“Amit Sethi says that more and more
people are choosing to live in Gurgaon rather than investing in the
city due to its well-planned and dedicated fabric of infrastructure
and logistics”
What is Value for Money in Gurgaon’sproperty market?
Mix of lifestyle amenities at the
doorstep.
The onset of well-planned and dedicated
fabric of infrastructure and logistics has accrued in an increasing
number of projects, which has led to higher circle rate and on
opportunity for commercial, residential. IT park and retail
developments, luxury housing. Etc.
What is Value for Money in Gurgaon’s
property market?
Ashish jerath, head, Sales (North).
Emaar MGF, says. “The key word for selection should be value and
not price (price is what you pay, value is what you get). In our
view, the customer should focus on the long-term potential for value
creation of the asset. A project that will be a good home for its
residents/new buyers will always create more value for its Investors
in cost but is an average home. Today, with a growing economy and
rising income and expectations. There is a trend of the buyer
choosing high-quality projects”.
Experts believe more and more people
are choosing to live in the city rather than just investing. And this
is the biggest factor which makes gurgaon real estate market stand
out. It will be imprudent for the industry to say that there are no
effects of the economic slowdown, but with strong fundamentals and
good policy framework, gurgaon market has been better prepared that
the rest. Infrastructure projects like Dwarka expressway are near
competition, and once operational, will add value to properties in
the area.
“The price of residential properties
in Gurgaon has grown substantially in the last 3 years. For example,
the projects which were launched 3-4 years back at about Rs 2000 per
sq.ft, is now sold at a price of Rs 6500 per sq ft. It is experted
that in the next few years. The property will amplify to about 20
percent. According to reports, it is seen that rate of appreciation
of property is higher in a developing area as compared to an already
developing area as compared to an already developed area due the fact
that developing areas have a lot of scope for development. Since
Gurgaon has developed three-fold in the last few years and there is
more scope of development. Investing in Gurgaon around this time is
determined to get good returns. Moreover, as it is emerging as a
worldclass city. It will be wise to invest in properties in the area
and get value for money.” Opines Nikhil Jain. CEO, Ram PrasthaGroup.
Gurgaon property has reached a niche
which seemed impossible a few years back. Now, for purchasing a house
in Gurgaon. One has to loosen his pockets a bit more. Apart from
commercial property. The residential sector too, is witnessing an
equal rise in its values. The existing population of Gurgaon is
considered to possess a large purchasing power which has further
created a huge demand for housing. Thereby giving a boost to the
property prices in gurgaon.
P Sahel, vice chairman, Lotus Greens,
puts his view, saying. “To a large extent, prices are dependent on
the location. A comparison between similar projects within the same
micro market should give a buyer a fair idea about the prevailing
prices, while comparing the projects, one should also look at the
specifications and amenities being offered in the project for an
apples-to-appies comparison.”
Preferential factor: style,
location, brand or amenlties?
People looking to buy property in
Gurgaon have a large bouquet of choices in hand ranging from style.
Location brand and amenities. A well-established developer will
provide all the factors like style. Location. Brand and amenities as
a complete package, So, it is important to choose the right developer
to get the desired kind of mix.
“Gurgaon today has three micro
markets each with a large number of options i.e. Glof course
Extension road. National highway and Dwarka expressway. Each location
has a mix of developments that offer a good combination of location
and amenities, After location, the next most important factor in
choosing a property is the brand, as it assures the customer of
standards, amenities and quality of construction that the brand
stands for onc can see the effect of the brand by comparing the
current prices of two different brands of a similar location. The
difference that you see is the premium that buyers give to be part of
be part of a renowned brand. One can find such examples on the Golf
Course road and Golf Course Extension road. In our opinion. A mix of
location and brand creates lasting value in the asset, “ adds
Jerath.
Experts suggest that amenities provided
in the projects can be listed as exquisite gardens, tier-II security
system, 24*7 power back up. Rainwater harvesting and engery-efficient
buildings. Etc. The integrated townships also enjoy the benefit of
modern amenities like school, hotel, hospital, shopping mail,
multiplex, golf club (golf swing training), post office and temple.
Harindra Nagar, MD, Paras Buildtech,
Say, “When we talk about Gurgaon, the next thing after the IT”
hub, which clicks to our mind is the location, the brand and the
amenities of Gurgaon, Gurgaon has a number of brands and all the
illustrious brands are congruent to the population there, Being and
IT hub. The location is posh and competent for the mass people living
there.”
“Is it a time to add more property
in the portfollo?”
Buying decidion should be based on the
requirement and market conditions for the particular buyer segment.
This is agood time for customers purchasing the properties for end
use. The prices have been stable for some time now and it is widely
believed that these will see an upswing as soon as the general
elections are through. Real estate investments should be made with a
medium to long-term perspective.
“Until March, this is not the correct
time for the investors to add more property in Gurgaon, because
financial year is closing and elections are coming. Which may result
in budget change. The right perspective for the builders should be
speculation. Introspection and monitoring the market dynamics hased
on the social, political and economic fallout of the budgets and the
upcoming elections.” Added Nagar,
Experts see risk if an investor is over stretched in his investments
with a trading perspective. The best way to benefit from real estate
investments is to do the homework at a time of making purchases and
then hold on to the investments for it to mature and to give the
desired results. “While buying a property, either in Gurgaon or in
any part of the country, one should take into consideration the facts
so that risk can be avoided. These include checking of credentials
like the ownership of land, clearance certificates from various
authorities and approval of building plains,”concluded Jain”
Subscribe to:
Posts (Atom)