Accurate cost forecasting is the cornerstone of a successful real estate development project. For family offices, hedge funds, private investors, and developers, clear and reliable financial planning ensures that projects remain viable and profitable from concept to completion. Without accurate forecasting, unforeseen costs can strain resources and lead to project delays.
At CRE Construction Partners, we advocate for our clients, providing clarity and insight into every development phase. By focusing on proactive planning and accurate cost forecasting, we help safeguard your investment.
Pre-development expenses, such as land surveys, legal fees, and environmental assessments, can significantly impact your overall budget. Ensuring these costs are accounted for early in the process sets a strong foundation for your project.
Market conditions can shift quickly, affecting material costs, labor rates, and financing. Proactive cost forecasting that includes real-time data helps mitigate the risks of unexpected market changes.
Unexpected challenges are inevitable in any project. Incorporating contingency funds (typically 10-15% of the total budget) ensures flexibility to address unforeseen events, such as regulatory changes or supply chain disruptions.
Steps to Ensure Accurate Cost Forecasting
Accurate forecasting begins with thorough feasibility studies. These studies provide clarity on site conditions, market demand, and cost comparisons, allowing for well-informed financial planning.
A budget that evolves with your project ensures that unexpected changes are addressed promptly. Regular reviews and updates are essential to keeping your financial plan aligned with the project’s scope and goals.
Local contractors and consultants bring essential knowledge of labor rates, material availability, and regional building codes. Working with experienced local teams helps ensure your cost projections are grounded in real-world conditions.
A developer and sponsor client working on a mixed-use condo hotel development in New York faced potential challenges due to outdated labor cost data in their initial budget. The equity capital for the project had been raised from family offices, making accurate forecasting essential to maintaining investor confidence.
During our review, the CRE Construction Partners team identified this discrepancy and recalibrated the budget using current market rates. This proactive adjustment enabled the client to secure additional capital without triggering an unplanned capital call, avoiding surprises for investors. The recalibrated budget ensured the project remained on schedule and within scope while still meeting financial expectations.
The client and their investors were pleased with the outcome, as the project continued to move forward with revised hard costs that maintained its viability and profitability.
“Therefore everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock.” – Matthew 7:24 (NIV)
Proactive planning and accurate forecasting are essential to building a solid financial and spiritual foundation.
Accurate cost forecasting is vital for the success of real estate development projects. By anticipating costs, accounting for market fluctuations, and developing contingency plans, you can avoid common pitfalls and set your project up for success.
Would you like to discuss your next project and how we can support your goals? Let’s talk.
Waikiki Paulino has led the development and construction of large scale commercial real estate projects for investors since 1998. He graduated from New York City Technical College with a degree in Structural Engineering and Architectural Studies. He earned his bachelor’s degree in Construction Management from Pratt Institute. He has also completed real estate masters’ courses at New York University. Mr. Paulino worked for several New York City based union and non-union CM firms such as F.J. Sciame Construction Co., Sordoni Construction and Tishman Construction / AECOM where he managed select high-profile projects as a senior manager in various markets. His extensive experience in multi-family, office and hotel high-rise development as well as retail, education and museum new construction and restoration facilitates deal negotiations for owners. He successfully helped owners reposition assets during the market crash in 2008 and during the COVID-19 Pandemic. Mr. Paulino’s analytical background in engineering combined with his tolerance for high stress, high profile management at a fast pace has proven to be a solid foundation for opportunity evaluation, investment control and project team leadership. Mr. Paulino is committed to and motivated by helping solidify the investor’s purpose for wealth building, community enhancement, generational improvement, and legacy perpetuation.
Clients: Hines Development, Sterling Equities, Starwood Capital, Tribeca Associates, Ian Schrager Company, GFP Real Estate, Sorgente Group of America, ABS Partners Real Estate, Assa Properties, Google, Jack Reznick & Sons, Toll Brothers City Living, MRA, New York Public Library, The New York Botanical Garden, and the Jewish Theological Seminary.
Alan Meyer has provided value to Commercial Real Estate Investors, Institutions, Fortune 500 Companies, and Tenants for over 30 years. As an expert negotiator and cost assessment leader, Alan oversees all major project preconstruction, estimating and procurement efforts to mitigate investor’s risk and maximize their investment returns. Alan’s professional experience extends throughout the Northeast market. He serves investors by providing support on Core Plus, Value-Add and Opportunistic projects. He develops accurate conceptual and schematic estimates for both hard and soft costs, analyzes and confirms project budgets, creates project schedules, value engineers design and material selections to reap maximum project costs savings, negotiates general contractor GMP and lump sum proposals, provides redline reviews on all construction documents as well as on tenant lease work letters and remains engaged during the construction phase to provide strategic project course correction when needed.
Clients: Accordia Realty Ventures, Alessi Hotel, Alliance, Alpine Development, AM Best, Amazon, American Dream, Argus Ellison, Avision Young, Barclays, Brookfield Properties, Catalyst Capital, Cedar Realty Trust, Center City Partners, Collier’s, Columbia University, Cornell University, Cornerstone, Culver Properties, Forbes Design Group, Forrest City Ratner, GVK Capital, Hilton Cardinale, Kushner, Largo Land Development, Legion Investment, Lennar, Madison St. Capital, NattoPharma, North American Properties, NRIA, Pfizer , Regency, Sarana Development, Saxony Development, Seton Hall University, Spartan Properties, Stamford Church, Thor Equities, Toll Brothers City Living, Urban Edge, Winn Development
John Paul Basa has demonstrated his commitment to excellence throughout his career, making him an excellent fit to represent CRE’s clients across multiple sectors. John Paul’s experience extends beyond task completion. He has proven to be skilled at analyzing and enhancing organizational project processes. John Paul oversees CRE’s systematic approach to project management. His ability to systematize CRE’s project cost reporting and project schedule tracking creates significant efficiency for the client’s benefit. Mr. Basa enables CRE’s team to ensure consistency, mitigate errors, and expedite services rendered to CRE’s clients as part of CRE’s many deliverables. He also supports our budgeting, estimating, bidding, and procurement team. John Paul’s dedication to serving private investors, families and executive leaders in the commercial real estate space allows his administrative gifts to thrive resulting in smooth, efficient growth for all.