Govt. of India has introduced the Real Estate Regulation & development Act (also known as RERA) to protect the home buyers from potential malpractices in the Indian real estate industry. The act also aims to boost investments in real estate industry, bring more transparency, curb tax evasion etc.

The real estate and construction industry in India has traditionally been highly fragmented and it is largely an unorganized sector. All this has resulted in very low transparency in how real estate construction projects are executed.

This lack of transparency has severely hurt home buyers in the past. Home buyers have borne heavy losses due to delayed construction projects, resulting in idle investments.

Indian Parliament has enacted RERA to curb this industry wide trend and to protect home buyers.

In summary, RERA requires real estate developers and builders to –

• Register real estate projects with a regulatory authority.
• Any sales can be made only after registration of a project with the RERA authority.
• Regular construction progress updates have to be submitted to the regulatory authority.
• Costs incurred in different construction activities have to be reported regularly.
• Planned project completion date to be reported to RERA authorities and same is communicated to the home buyers. Builders have to then respect this completion date committed to the buyers.
• Any delays in the final completion of the project will result in penalties for the real estate developers and builders

Impact of RERA for builders

• In light of the new RERA regulations, builders and real estate developers now need to be more careful than before when starting up new projects.
• Each project needs to be registered with the RARA regulatory authority. Then only project can be opened for sales.
• The final completion date of the project and ‘possession date’ for the buyer needs to be carefully determined, as missing these dates will attract heavy penalties.
• Home buyers will be making payments only against actual construction progress reported to RERA authority. Hence developers need to properly plan the cash flow during the life of a project to balance the project costs with customer payments.
• Regular updates regarding project progress and costs need to be submitted to the RERA authority.
• So it is a good idea for builders and developers to establish a project management office and encourage good project management practices and stricter project controls.

Impact of RERA for construction project managers

• Any new real estate construction project needs to be carefully scheduled to arrive at a project completion date which can be realistically met. As missing this date will attract heavy penalties. Sophisticated project planning and scheduling tools can help in this regard.
• Construction project progress must be regularly tracked and reported for all activities. This is required to be reported to RERA authorities.
• The actual progress of construction activities must be factored in project schedule to forecast any potential delays in the project and its impact on the final completion date.
• Similarly, actual costs incurred on different project activities must also be regularly tracked and reported to RERA authorities.
• Project manager should define key project milestones against which payment will be claimed from the home buyers.
• Further, project managers should regularly update the forecast dates for these milestones. With this information, builders and developers can then assess future cash flow.
• Project managers should empower the project execution team with mobile-based project progress tracking software. So that they can submit progress data, photos, issues etc. directly from the construction site.
• Furthermore, it is a good idea for the project managers to integrate the project schedule with this progress tracking system. So that actual timeline can be directly compared with the planned schedule. And actual delays can be factored into the schedule to forecast important milestone dates.
• Similarly, it is also recommended to track the actual material and labor costs using mobile based apps and integrate this data with ERP / Accounting Software. So that actual costs can be compared with the project budget.

Project Controls and Management Software

In light of the new regulations, real estate developers and builders have to emphasize on stricter project controls and real time project tracking.

Consequently, construction project managers are going to have their hands full. But they can find help in technology. A number of project management and progress tracking software solutions can help construction managers.

But be careful not to overburden your project team with too many software tools. Try to integrate planning, progress tracking, cost monitoring and document management on a single platform.

WorkPack is one such platform that can help you in effectively managing the RERA compliance challenge. WorkPack connects project schedule with document management, mobile-based tracking and cost tracking spreadsheets.

WorkPack has already helped project managers handling engineering and construction projects from different industries, including real estate.

Can it help your team as well? Find out by creating a free account.

And let us know in case you need any help or if you would like to schedule a demo session for your team.