How Commercial Real Estate Developers Minimize Technical Debt

When it comes to avoiding long-term technical debt, it’s about playing chess, not checkers. It is imperative to plan many moves ahead in order to minimize quick solution fixes and maximize tech’s potential to improve quality and reduce cost.

Technical debt, in essence, is the price paid in extra work and lost time by trying to power through using an outdated solution or a solution that hasn’t been properly calibrated for its current best use.

Erik Frederick defines technical debt as, “the incremental cost and loss of agility to your company as a result of prior decisions that were made to save time or money when implementing new systems or maintaining existing ones.”

In other words, a band-aid fix that will cause problems down the line in lost time and reduced quality.

Lost time lasts forever

The problem with lost time is that it is an ongoing deficit. Until the root cause is addressed, time will continue to be wasted. In order to minimize technical debt, the cost of technical components must be weighed against the amount of time they take to use and the quality of the product they produce.

As software developers know, the problems encountered while preparing for go-live can be myriad. And almost all of them have to do with the ever-present time crunch, which is exacerbated by tech advancing exponentially and software requiring constant updates.

Technical debt rears its ugly head whenever shortcuts are taken, whether out of necessity or failure to prepare … or both. The pandemic underscored technical debt across many industries worldwide because it shined a light on all those areas that have been pushed to the backburner.

Take a hypothetical: Technical debt in a popular teleconferencing solution doesn’t just affect the vendor, but all of the companies that utilize the solution. Consider all of the businesses that would be caught in its wake.

Defining technical debt

According to Forbes, “For nearly three decades, the term ‘technical debt’ has been used in software development. It describes the real costs a business incurs when it opts to upgrade existing code with a few new lines of code instead of spending the time or money it takes to develop the right solution. The software might perform most of the function but doesn’t deliver on the expectations of the users. The gap between the user’s expectation and what is actually delivered is the debt that always gets paid sooner or later. Today, we attach technical debt to any tech initiative that falls short of delivering the user’s expectation.”

The best way to combat technical debt is by utilizing a state-of-the-art solution appropriately customized for its industry and purpose. Systems should be set up to be resistant to technical debt, and keep a close watch to ensure innovation enhances both quality improvement and cost control.

Let’s take commercial real estate development as an example.

Project and finance perspectives deserve equal weight

In the commercial real estate development industry, developers are very dependent on project budgeting software. The best solutions in this space should give the project perspective as much attention as the financial perspective. All the software modules or functionality should be project aware, with each module providing the necessary project perspective to complement the general ledger perspective.

Independent perspectives are the key to addressing the real estate developer’s needs and reducing technical debt. In this way, the project perspective permeates the software design, and the developer gets to see the project from the top-down. Since most developers hire a general contractor and subcontractors to implement projects, top-down financial control is more critical than bottom-up details.

Nearly all job costing software emphasizes the subcontractor or general contractor perspective where the detail level drives the reporting. But success in the developer market comes from its ability to go beyond the details and show management top-level project status and the various detail levels that support it. The software solution must address the complete life cycle of a real estate asset: from project inception to project completion, and from pre-development to property management, in order to minimize budget debt and maximize profit, efficiency and client satisfaction.


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