The role of project management and its importance for RERA in India
The Real Estate Regulation and Development Act (RERA) 2016 was passed by the Indian Parliament in March 2016, paving the way for a formal governance authority for India’s real estate sector. The RERA Bill mandates the registration of real estate projects and directs developers to delineate functions and duties of promoters and sets out penalties for non-compliance.
The Act is a definite step towards bringing in greater transparency to the realty sector. The industry is likely to have teething issues with the Act coming into force; but a regulator will bring in credibility for the sector in the long run, which is likely to open up funding avenues and bring down lending costs. This is expected to come with a pinch of salt as the sector is likely to witness some changes such as consolidation of players, and increasing incidence of joint ventures for development of projects.
All in all, with a few modifications, the Act could prove to be a landmark legislation, resulting in a radical shift in India’s realty dynamics.
RERA intends to bring about the much-needed efficiency and transparency in Indian Real Estate via uniform regulation. With RERA being implemented across the states, developers are likely to focus on the timely delivery of their ongoing projects and also remain increasingly flexible on pricing and payment structures. The Act shall directly impact the traditional and generally adopted approach to launch or complete Projects.
For example, Projects shall have to be registered launched constructed and marketed in phases with only those common facilities which can be completed within the promised timelines. Developers shall have to strictly adhere to sanctioned plans and committed specifications.
They shall have to manage their cash flow much more wisely, tightly and with transparency as they would be required to put aside 70% of project funds in a dedicated escrow account linked to the project. Developers shall be required to submit details like project plans, approvals and sanctions, land title status, date of completion and particulars of Project promoters, contractors, architects, with the State RERA.
While the advent of RERA is being heralded as a “gamechanger” and a “great enabler” for the India Real Estate industry in the long run, it is also being seen a disrupter in the short term.
The ability to subscribe to and sustain the requirements of the Act by various quarters of the Industry is of concern. This is where Project Management shall prove to be a perfect solution to overcome any short-term challenges that Developers and various other stakeholders may face.
Project Management is a discipline that uses People, subscribes them to a well-regulated and transparent Process, thus enabling the achievement of the desired Performance on any Project. A well written and fully adopted Project Management process, formulated in accordance to the desired Project goals helps override the inefficiencies that are brought about due to human errors, unrecognized risks and lack of planning in any Project.
More than ever, it is extremely important now for development companies to institutionalize the discipline of Project Management.
A comprehensive Project Management Plan, which brings together all Project activities to synchronize towards a timely, cost effective and quality delivery of a Project will enable guiding Project developers to plan, construct and deliver a project with certainty, transparency and inl ine with the guard-rails of RERA.
RERA aims to bring in greater transparency in the realty sector.