What can be learned from the world of software development and applied to the business of real estate investing? More effective project management!
One of the most overlooked and potentially frustrating areas of real estate investing is planning and managing construction projects. With so many uncontrollable and interdependent project variables, it can seem impossible to complete a rehab project on time and within budget. The industry is notorious for unreliable contractors and hidden surprises that will surely throw off your scope, budget and sanity.
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Come to Term With the Facts
The first step is admitting you have a problem! The reality is that managing rehab projects is very difficult. The countless variables and interdependent tasks make project management a huge headache for professionals and a seemingly insurmountable task for newbies. It does no use to ignore the fact that projects can and will go off the rails.
A solution may be found by looking to a relatively new method of project management: Scrum. Scrum project management acknowledges these difficulties up front and focuses on preparing the team to adapt and continue moving forward.
Scrum encourages you to admit to and plan for the following:
- Your project will go over budget
- Your project will go over its planned timeline
- Your project will increase in scope
Too many project managers are killing themselves fighting the uphill battle of keeping a project on track. No project is perfect, and your idea of timeline and scope is almost always far from what will become reality.
What is Scrum?
Scrum (often bundled under the umbrella of “Agile Project Management“) is a method of project management that embraces a lightweight and interactive approach to achieving project goals. The Scrum methodology was first introduced in the early 1990s and has recently exploded in popularity in the world of software development. While many developers in Silicon Valley think of Scrum as a way of life, the strategy also has very practical applications to the world of rehab project management.
Contrary to more sequential methods of project management (also called “Waterfall“), Scrum focuses on rapid client feedback and an ability to adapt to changing project scope.
4 Steps to Get Started With Scrum
1. Establish your project team.
It’s unrealistic to try to get all of your subcontractors to buy into an agile methodology. The construction industry is such that contractors typically have their own way of doing things. That being said, your internal team can and should embrace the agile methodology.
For starters, you need to identify at least two roles within your team: The Scrum master and the product owner. The Scrum master is responsible for driving the team to complete each sprint (more on sprints later). The product owner has the final say on changes to the scope. If you are a general contractor working for a homeowner, you would act as the Scrum master, and your homeowner client would be the product owner.
2. Define your backlog.
In scrum, the backlog is simply the list of tasks to complete (often called the “product backlog” for new product and/or software development). The backlog is another way of looking at your project scope. At the beginning of your project, the backlog will be quite large. As you work through your scope, your backlog will decrease. However, it’s essential to note that your backlog is never set in stone. The Scrum methodology recognizes that project requirements change. Your backlog will grow and contract as you move through your project and your make adjustments to scope.
Backlog tasks should be specific. Don’t confuse specificity with planning your project to the nail and screw. We recommend you split tasks by the tools you use and the location of work. As a general rule, we will typically not split tasks if they can be accomplished in a 4-8 hour period and without a major switch in tools and/or setup.
Below is an excerpt of a potential backlog of project tasks:
- Prime bedroom walls & ceiling
- Paint bedroom ceiling
- Paint bedroom walls
- Paint bedroom trim
- Prime kitchen walls & ceiling
- Paint kitchen ceiling
- Paint kitchen walls
- Paint kitchen trim
As you can imagine, the backlog for a full rehab can get quite large. We recommend using some sort of organizational tagging system to help you organize your backlog. Project management software like Asana and Podio make this very easy to set up.
3. Define your sprints and allocate your backlog.
A sprint is a defined period of time during which work is to get done. It’s important to understand that sprints are never shortened or extended. You define the timeline of a sprint at the onset of the project, and it doesn’t change. For rehab projects, we typically work in one-week sprints.
Once you’ve established your sprints, begin allocating your backlog within these various sprints. At the onset of the project, your allocation of work into sprints will be a guess. You must come to terms with the fact that you will not necessarily complete all the work in a given sprint. This is okay! Be sure to document your sprint allocation so that it is easy to change — because it will certainly change!
Your backlog should be allocated to sprints based on priority, with an proper amount of weight given to dependencies. The focus on priority ensures that your project team is making the best use of its time. Imagine the possibility that your project can be drawn to a complete halt at any moment. Your goal should be to have the closest thing to a completed project at any given moment. That means you should save the “nice to haves” for last. Focus on delivering a functional unit, house, apartment, etc.
4. Iterate: Work the backlog, moderate and adjust.
One of the key attributes of utilizing a Scrum methodology is that you will begin to understand your team’s “velocity.” The velocity is simply the speed at which backlog tasks are accomplished. Within the world of rehab project management, different subcontractors and trade areas have a differing rate of task completion. As you work through many projects, you will gain a stronger understanding of this rate of completion.
This understanding of your team’s velocity will help to make your sprints more accurate. You will hone in on the appropriate amount of time required to complete a set of tasks. It is typical for Scrum projects to speed up as they progress and for estimates of completion to become more accurate.
I highly recommend reading the book Scrum by Jeff Sutherland. The book is written by one of the co-founders of the scrum methodology and has a focus on the application of Scrum in areas other than software development.
Don’t try to be perfect. I admit that it is extremely difficult to execute a purely Scrum project. However, implementing the key principles of scrum will certainly help to maintain your sanity and complete higher quality projects in less time.
Investors: Have you tried using the Scrum method to manage your projects?
Let me know your experiences with a comment!