By Jack Stubbs
In the constantly-evolving commercial real estate industry, companies are continually striving to bring new platforms to the table to streamline the workflow of construction projects.
We recently spoke to Riggs Kubiak, CEO and co-founder of Honest Buildings—a company founded in 2012 in New York—about the platform, how it allows members of the AEC (architecture/engineering/construction) community to manage and track their projects and broader trends within the growing construction industry.
What can you tell me about Honest Buildings? Who within the commercial real estate industry does Honest Buildings serve, who are some of the company’s clients and where does the company operate geographically?
Honest Buildings is the only project management platform built for owners and backed by owners to ensure capital and construction projects are on time and on budget. Honest Buildings allows real estate ownership teams, including asset managers, property managers, project managers, heads of construction, COOs, CTOs and CFOS and their teams a way to streamline project management processes, increase revenue through faster project delivery, reduce project costs and make data-driven decisions on projects portfolio-wide. This replaces a process that previously entailed several calls, emails and visits to construction sites to understand where projects stood.
Clients include industry leaders like Brookfield, Oxford Properties, Beacon Capital Partners, Invesco, SL Green, The Durst Organization, Silverstein Properties, JBG Smith, Harvest Properties, Parkway Properties, Rudin Management Convene, WeWork, QuadReal, AltusGroup, First Realty Capital, just to name a few.
To what degree does the platform strive to streamline the process and workflow of project timelines? In the current tech-based era, what is the added importance of expediting the project timeline, both in terms of timing and financial benefits?
Honest Buildings is continuously working to accelerate urban progress by creating value for owners through empowering collaborative, data-driven decision making. There are four main ways real estate owners utilize Honest Buildings to create more value at their assets: project management for construction jobs, from tenant improvements to capital projects to ensure that individual projects finish on time and on budget; streamlined approvals processes to speed up project delivery; centralized capital planning that leverages historical data and real-time reforecasting; and integrations with other technologies to streamline insights across all teams and systems.
In terms of cost savings, this comes from centralized bidding, closer tracking of costs as they are incurred and having a better handle on timeline progression. With a modern Request For Proposal (RFP) process, owners are empowered to incorporate a higher number of bidders in every RFP. Studies show that moving from 3 to 5 bidders may yield an 11.6 percent drop in the lowest bid—which is a lot of cash when you’re talking about dozens or hundreds of projects across a portfolio.
Adopting these methods can create value in reducing rework (any task that has to be done more than once, usually as a result of an error but sometimes because of changes in scope). Rework accounts for 2 to 7 percent of project costs and about 52 percent of all cost overruns. Fifty percent of rework comes from design errors and 40 percent from construction errors.
Managing bids through a bid management platform rather than email allows any errors in estimates made by one bidder to be communicated to all bidders, which reduces the likelihood of mis-estimation and rework later in the project. A better understanding of the scope of work from the beginning of a project also reduces the need for change orders from misunderstandings later down the line with awarded contractors.
Given the currently-booming construction industry (which has led to higher construction costs, shortage of skilled labor, more pressurized job sites, etc.) how is Honest Buildings striving to make an impact in this ever-active sector?
Centralizing all projects across multiple buildings in multiple geographies can create economies of scale. Having all cost data in one place allows owners to negotiate volume-based discounts and gain visibility into risk of working too heavily with a single vendor across multiple projects.
Reducing administrative time and increasing employee productivity is one of the most talked about benefits cited by the owners who have adopted better project management, approvals, capital planning and integrations processes. Using a platform that streamlines administrative tasks like RFP distribution, cost tracking, reporting and invoice processing, is estimated to save about 2 hours per project per week. Overall, cost savings on a project applying these methods are estimated at 6.3 percent savings.
How do you think the adoption and successful implementation of technology will continue to play a role in the evolving construction industry? Do you think strides are being made when when it comes to mitigating project delays and increasing project productivity?
These methods and processes of better project management—approvals, capital planning and integrations applied to the ways that owners deploy capital—changes the trajectory of progress for urban areas all over the world. That affects every single one of us in the real estate industry, and every single one of us as people who live, work and play in urban areas.
With the increasing prevalent adoption of technology across the board, what, specifically, will be the importance of data-driven decision making? How are industry professionals approaching the construction industry differently now to how they were 2 to 3 years ago?
The global urban population is expected to reach 6.3 billion by 2050. This is up from 3.6 billion in 2010. With such an influx of people into urban areas, buildings will need to be repositioned. Urban centers as big as NYC to small suburban downtowns all over the globe will need to meet the changing needs of people to live, work, and play. As this large influx of people is happening, institutional investors will see assets under management swell to $101.7 trillion dollars by 2020, up from $64 trillion four years ago. (PricewaterhouseCoopers).
With this increase in institutional investment, owners will experience increased demands from these investors, especially around reporting and the use of data, resulting in higher competition to secure these investments. Given the shifting demands of both urban dwellers and institutional investors, owners will need to find new ways to create value for their tenants and their investors over the next 10-20 years.
In the current era of CRE tech, there are many platforms that look to provide the same services as Honest Buildings. What makes Honest Buildings unique from other platforms, and how will the company ensure that it is implementing the most up-to-date technology in its software moving forward?
Honest Buildings takes a partnership approach to the market and believes the future of real estate tech requires a deep collaboration and integration between real estate owners and the technology companies themselves. The company works closely with many of the largest real estate owners in the world to develop the product, which not only brings more value to them as owners but to the whole real estate industry.
One of the biggest differentiators of Honest Buildings is the company’s deep dedication to user experience and design. The product team spends countless hours working directly with customers, watching them use the product and looking for ways to make this business software as intuitive, or even more so, than many of the consumer applications that people rely upon in their personal lives.