This article has been republished from the June 2023 edition of Your Investment Property Magazine.
Project managing your own build doesn’t necessarily mean constructing a home single-handedly, brick-by-brick (unless you want to be Bob-the-Builder). But, it’s also not an easy job to undertake either.
With the recent collapse of Porter Davis Homes, investors and owner-occupiers alike have become increasingly fearful of putting all their trust and money into builders. This has driven the emergence of a well-known (but not-so-new) trend, project management.
Director and Group Acquisitions Manager at Apollo Investment Nic Alessio said with too many building companies going broke, mum and dad investors who want to grow wealth through property are looking into project managing their own builds.
“People are fed up having to place their trust and funds in building companies that take their money and then go broke only to reappear a few months later under a new brand name,” Mr Alessio told Your Investment Property Magazine.
“Many people have had bad experiences with builders so it makes a lot of sense now that people are engaging, essentially project managers to handle their investments for them.”
Undertaking a building project can often be a demanding and complex journey if you’re unsure how the process works. However, you don’t have to project manage the build alone - you could enlist the help of an experienced professional if this is the path you’re willing to take.
A rundown of the project management process
If you’re planning on going down this route, there are generally two options you can take: do it yourself (you are the project manager) or hire an experienced expert to take care of the build for you. Neither option involves hiring or putting all your trust in a building company to do all the work from A to Z.
Instead, you or an experienced project manager are completing all the necessary roles to complete the build the construction company would usually do. This includes, but is not limited to:
- Managing/supervising the site
- Seeking the required council approvals
- Ordering materials
- Sticking to the budget
- Ensuring the work meets building regulations and standards
- Obtaining and complying with a building permit
- Providing a safe work environment
- Hire and supervise any contractors working under you (make sure they’re licensed and insured)
- Finding a block of land
- Construction drawings
- Design process
- Job site progress updates
Managing timelines, budgets, approvals, contracts, and tradespeople can take its toll if you’re doing it alone and, depending on the size of your project, may even require taking time off your regular job.
You may also need to obtain an owner-builder permit if you want to undertake or supervise a building project (depending on the state you live in). For example, if your project is valued at more than $11,000 in Queensland, you must have a permit approved.
So, if you prefer a more hands-off approach, it may be worth hiring a project manager to oversee your entire build.
What does a project manager do?
For those investors who are wanting to do developments that have gone and tested the waters and realised, ‘oh hang on, this is a bit more than I can chew’, you can hire a professional.
Mr Alessio said the first conversation he has with a client is notifying them they are completely hands-off with the process.
“A project manager should manage the entire process from start to finish. This includes coordinating the involvement of all third-party service providers including managing the builder, finding the most ideal block of land, managing planning approvals, and arranging the finance to fund the project, to name a few,” he said.
“When sourcing a builder for a client, I reach out to the 200-plus builders in my network to see who has what in their range and whether they will be the right fit for the client or not. As long as the build is going to represent great value for money for the client, that’s who will be assigned the build.
“From there, a project manager will ensure everything is on track for success.”
One thing that is still required from the client's perspective is engaging a solicitor to handle all the legal steps involved when purchasing a property. A solicitor will generally review all necessary documents to successfully complete the transaction and minimise the risk of deadlines and key dates being missed.
When explaining the role of a project manager, Mr Alessio used a simple analogy. A project manager is like the sun, while all the people they work with such as builders, land developers, and tax agents are planets in the solar system that revolve around the sun. Essentially, a project manager is a facilitator.
What is the benefit of having an experienced expert to assist you in this process?
After successfully appointing a project manager for his first investment property, Philip Fourie stuck to his guns when building his second investment in Wyndham Vale, Victoria.
“When we first moved to Australia, we went to the banks and got shut down as unfortunately, they just look at you as a number,” Mr Fourie told Your Investment Property Magazine.
“From there, we decided to have a chat with a project manager and it seemed like the dream was reachable.
“Within four weeks, they had a block of land for us, got us a competitive financing deal, and got the ball rolling.”
Here’s a rundown of how a project manager may benefit the build of an investment property:
- Industry knowledge: With a wealth of industry knowledge, a project manager’s sole focus is to deliver the best possible outcome for your build. They can recommend the type of investment property you should build by conducting market research, focus on the ‘big picture,’ and also keep the project on track.
- Easy communication: Act as a liaison between developers and contractors. They provide a point of contact for questions/concerns for you and all those connected to the build.
- Control build costs: They will work on your behalf to ensure the project stays within your allocated budget and monitor this throughout different stages.
- Keeps your project on time: Manage timelines, hours, and deadlines to ensure the project is on target. This is not to say the project won’t experience any delays. However, a project manager will ensure you’re informed and work out the best way to get the build back on its original timeframe.
- Manages problems that may arise: A project manager should have solutions ready for both expected and unexpected problems.
Mr Fourie said hiring a project manager provides you with a personal one-on-one experience you wouldn’t otherwise receive with a big building company.
“It is an extremely stress-free and easy process,” he said.
“A project manager takes everything into consideration about what your needs are as a client and how they can accommodate you. They give great advice on how not to overextend yourself.”
Mr Alessio said a project manager is there to get the best deal and outcome for the client.
“Project managing your own build is not difficult, it just requires having the right support and assistance from experienced people,” he said.
The 6 questions investors should be asking a project manager before hiring
When sourcing a project manager, you could ask potential candidates the following questions:
- How are you paid? Are you paid a commission or are you charging me a fee for service?
- How many projects have you completed before?
- What is your experience? How are you qualified to be a project manager to manage the build on our behalf?
- Have you ever experienced any problems with projects you’ve managed? If so, how have you dealt with them?
- How much contact do you have with your clients? How accessible are you in terms of communication?
- How do you prioritise tasks on a project?
