Prodigal returns to fill gap in property software
Copyright: David Lawson
Published Property Week April 2009
When Nick Virr set off to travel the world there was no computer in his rucksack to keep in touch with home and enable him to work anywhere from New York to New Zealand. This was more than 20 years ago, when the hardware he had been dealing with maintaining shops and offices for Mecca was the size of a small wardrobe. Now back in the UK, sitting at a borrowed desk in London, he uses a laptop with the power once needed for a moon mission to run through a Powerpoint presentation wirelessly across the internet.
Technology has advanced beyond imagination since he left to make his fortune all those years ago. But some things have failed to keep pace. Virr was surprised to come home and find gaping holes in software which is an essential tool for every facet of business.
Everyone has a favourite moan about the complexity, clunkiness or sheer incompetence of some of the most widely used business programs. Virr is specifically interested in software for property developers – or more accurately, the lack of it.
Developers have not been left out of the revolution. The process of creating buildings is 70% construction, so software designed for this part of the process plays a major role, and developers have ‘made do’ with that. The remaining 30% is shared between finance, lettings, management and maintenance, although the last few often stand aloof until space is occupied.
A lot of work has gone into linking construction and finance but the end result is still a series of roughly assembled units. Most development companies use a mishmash of stand-alone applications focusing on areas such as costing and task management which are cobbled to financial reporting software. Various Excel spreadsheets hang off the edges to provide management reports, says Virr.
Developers are richly served at the early, feasibility-testing stage by established names such as Circle [now part of Argus] but links need to be created with corporate accounting systems. Next in the development process comes spreadsheet-based forecasting, some of which can be done by financial software but still needs specially written interface software.
During construction, project management is often done by standalone systems which track involvement of consultants like planners, lawyers, builders. Construction software usually connects seamlessly into project management documentation programs but has few, if any, links back to key areas such as feasibility, he says. A change in construction schedules, for instance, causes delays which are not instantly fed into financial and feasibility programs. This has to be done manually, costing time and money and raising the potential for mistakes.
And none of this takes account of post-development matters such as sales, leasing and legal conveyancing, which can have a huge impact on feasibility and forecasting. ‘Developers have accepted this because they got 70% of the job via construction based software,’ says Virr. But the area of greatest danger is towards end of each project, when borrowing is at its highest and delays can have a big impact on feasibility.
Project, enterprise and management information is delivered late and prone to double or treble handling, says Virr. ‘This puts developers at risk of missing opportunities, acting too late on mission critical issues and unable to expand quickly enough as major projects come on board.’
He cites examples of problems such as:
Delays and wasted costs can almost always be traced back to poor coordination and lack of accurate and timely information, with architects, engineers and construction firms confirming that close to 45% of profits can be lost on write offs.
Virr believes he came up with an answer more than 15 years ago when the firm he set up in Australia, Zavanti, was commissioned to write software specifically for property developers by the Prudential, then a major developer in that country. It spread to other developers and is currently used on 350 sites involving more than A$1bn of development. When he returned and found that no-one appeared to have created a similar unified program in the UK, he saw a new market for Zavanti, and is currently going the rounds of developers here.
‘Because it is a single system, development managers can see the cash flow effects of a released contract, finance managers can see borrowing levels and cash needs, management can see all indicators real time,’ he says. ‘More timely information allows businesses to know exactly how they are operating in real time. And there is no need for costly updates to interfaces and no need to get caught between vendors.’
But is it a good time to be selling software when recession is rife? Virr believes the current havoc means that such a system is even more attractive because it can deal with the fast-changing circumstances.
More details: http://www.zavanti.co.uk