Most of the building construction projects get stuck mid-way and never get completed. Ultimately, these projects have to abandoned. In this article, we will discuss how can you restart such projects and complete them. ### **Reasons for Incomplete Building Construction Projects** Broadly, there are four problems due to which a building construction project remains incomplete. These problems are: # **1. Project Conceptualization/Market Research** In a building construction project, market research and conceptualization plays a crucial role. **_Market research is a process of collecting information to identify the needs of the customers._** In some of the building construction projects of 2010-11, builders did not conduct proper market research. Also, they were not able to the conceptualize the projects properly. Rather, builders were of the view that real estate market will boom and they will be able to make greater profits by making larger housing projects. However, the market saturated and most of the projects got stuck! # **2. Financial Closure** In a building construction project, a fixed amount of money is required to complete the project. But, most of the builders did not make a proper plan on “how this money will be arranged”. In real estate, money comes from three sources , viz., Promoter’s money, Promoter borrowing it from banks or other financial institutions, and Customer’s money. Some builders are dependent on the customer’s money. But, when they do not get the customer's money, they take a huge amount of loan from banks. Ultimately a point comes, when they are not able to pay the EMIs and project gets stuck in the mid-way. # **3. Project Partnership** In a project partnership, the landowner does joint development with the builder. The landowner gives his land and in return gets 10% advance and 30% inventory from the builder. On the other hand, the builder recovers the money paid to the landowner from the customer. If some issue arises, both - the builder and the landowner - get stuck and the project stops. # **4. Approvals** In some cities, the government gives stage wise approvals to the construction projects. For example, if a 20 floors building is under construction, one approval comes after making four floors, next approval comes after making another four floors, and the process goes on. After a certain stage, approval gets delayed or stops coming and project stops. You may also not get approval if a Public Interest Litigation (PIL) is filed against your project. When a construction project stucks, it affects the builder, landowner, customer, banker, contractor, and suppliers. Therefore, nowadays the government streamlines the approvals so that the project gets completed. ### **Restarting the Project** To restart a stuck project, you need to take the following steps: ### **1. Select or Hire a Decision Maker** A project may also get stuck if there are several decision makers. So, it is important that you should have a single decision-making point or a person like a CEO, who takes the final decision. The CEO should have complete responsibility to hire its team, accountable towards his team’s work, responsibility to take the decision and authority to evaluate and execute the project. ### **2. Make a Plan** You need to identify the points in the project that will help you to come out of the problem by doing minimum work. For example, a builder picked up a project of constructing 10 buildings and sold apartments in these buildings even before the construction started. The construction was going on in three buildings and the project suddenly stopped. Now, the builder wants to restart the project, what should he do? Does he/she need to construct all the 10 buildings? No! He should first complete the construction of three buildings and allot the apartments to the customers who have already bought it. After that, he can start the construction of remaining seven buildings in accordance with the space sold. When a customer gets his home, he is satisfied and his trust in the builder increases. **Make your problems small.** **Do not keep your targets wide open.** **Make your targets small and achievable**. ### **3. Convert Your Plan in Numbers** To convert your plan in numbers, perform the following steps: (i) Identify the amount of money required to implement your plan completely (ii) Determine the amount of money you will receive from the customers (iii) Arrange 20-30% of the required money from your savings, by taking loans, or by involving an investor (iv) Start construction with the money you have arranged ### **Stakeholder Management** There are four main stakeholders in a building construction project. Let us study how to manage these stakeholders while restarting a project. ### **1. Customers** A customer is not happy with a stuck project as he has invested money in it, but did not get return from it. So, when you restart your project, take the customer in confidence by: (i) Building a communication channel with him. (ii) Making the customer understand your problem with transparency. (iii) Accepting your mistake and make the customer understand your problem. (iv) Telling the customer the exact time when you will allot his purchased house. ### **2. Financiers** If you have financiers in your project, then manage your cash flows in a manner that you keep on repaying them some part of their money so that they also are happy. If you are not able to repay on the due date, then request the financiers to increase the due date. ### **3. Contractors and Suppliers** Contractors and suppliers are the people who help the builder to complete the construction work. They are as important as customers. When you restart the project, you should: (i) Call the contractors and suppliers to explain them the whole situation and your plan of action. (ii) Tell them when you will be making their previous payments. (iii) Release some part of their payments and ask them to start the work again on the site. **4. Employees** When a project gets stuck, the employee is the most affected person because he is the one who is coordinating with the customer, bankers, contractors, and suppliers. So, when you restart your project, call the employee and: (i) Explain him the whole plan (ii) Motivate him (iii) Give him the guarantee that the project will be completed (iv) Deliver all the commitments made to the customers When the employee gets confidence in the project, he will communicate the same in the market. As a result, negativity among the different stakeholders decreases. In real estate, marketing is only about on-time delivery and on-site construction. When construction is going on the site, the customer gets confidence that the work is in progress and he will get his house soon. So, the first thing that the builder should do in a stuck project is to start construction on the site. The work should be done at a pace that the complete city knows that the work has started on the site again. For this, you need to mobilize the contractor, which means you need to convince the contractor and bring him on the site to work. In 7-10 days, the contractor will bring his machines, manpower, materials, and make an investment into the site and restarts the work. # **Barter Deal with Contractors** Sometimes, despite the fund planning, the funds are not available at the right time and the project stops. To avoid such situation, you should start practicing barter deals with your contractors and suppliers. For example, if the contract is of 10 crore rupees, then you can make a deal with the contractor that you will give him 8 crore rupees in Cheque and an apartment of worth 2 crore rupees. When you make him contractor plus customer, he will work with more dedication with the motive that he is making his own house. This increases the focus of contractor on quality. Moreover, he will never stop the work because he knows that if the work is stopped, then the value of his apartment will also decrease. Thus, a barter deal is the best solution to keep the development of real estate fast and keep the contractors aligned with the builders. # **Connect with Customers** To restart the stuck project, gear up your sales and CRM team and communicate with the customers. Invite your customer on lunch or dinner on the site so that they can see the work going on site. Be ready to listen to the complaints of the customer when you connect with them after a long time. On the meeting, treat the customer and his family well. Explain the complete plan to the customer, tell them how you will execute the project, and when you will complete it. Revise the documents with customers (if required). Update the customers about the project progress by sending them the photographs of the site every week. # **Difficult Customers** There are some customers who do not want to be with you anymore because of various reasons like their circumstances have changed; their money is stuck in your project; etc. **_These are called difficult customers_**. You need to convince a difficult customer to buy the house. If he is not ready to take the house, then assure him that their money is safe and secure. Tell the difficult customer that you will pay back his money when you get payment from other customers on completion of the project. Tell them that you will repay his money in installments and slowly. Deploy two sales people to handle the difficult customers so that the main boss keeps on doing the execution work. Do not get frightened, if a customer warns you to take legal action against you because actually, they do not want to go to a legal forum. Just make them understand that you will repay their money slowly. If you start giving refunds to the customers, you will not be able to invest money on the construction and the project will stop again. So, try to postpone the refunds as much as possible. # **Collecting Money from Customers** As soon as your building construction is about to complete, you should start collecting money from your old customers. This money is used to take the development work further. ### **Launching the Project** You should launch your product in the market when your first set of the building is almost ready for handover. This will attract new customers to visit your site and convince them to purchase your apartments in your project. As your project is completing on time, the market will become receptive. It will start giving money to you, and your sales will increase. In this manner, your cash flow cycle will also start rotating. ### **Things to Do** (i) Hire a good leader and ask him to create a plan. (ii) Make your construction activity fast. (iii) Focus only on delivery. (iv) Take out maximum work from minimum people. (v) Do not focus on profitability initially but focus on cash flows. ### **Things Not To Do** (i) Do not keep multiple decision makers (ii) Do not focus on marketing (iii) Do not focus on multiple buildings (iv) Do not give refunds **_In real estate, if you can deliver the project on time, then recession or any downturn cannot affect you._**