Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?

I have over 30 years of experience as a mechanical engineer, working across a wide range of industries. I am a member of the Royal Institution of Chartered Surveyors (MRICS). Throughout my career, I have delivered industrial, hotel, retail, residential, and commercial projects, gaining comprehensive expertise in cost estimation, budgeting, and project delivery.

I have held key roles in both project management and cost management consultancies, allowing me to develop a strong foundation in all aspects of project execution. For around 12 years, I worked with Lodha Developers and currently, I am with Godrej Properties Limited.

My experience spans optimizing costs, value engineering, identifying and rectifying design deficiencies, standardization, digitization, automation, and process improvements. These initiatives have resulted in significant cost savings—amounting to several crores of rupees—for the organizations I have worked with.

Q2. In your experience, what are some cost management strategies that can directly mitigate rising construction expenses while maintaining project quality and boosting project-level margins with quantifiable outcomes?

The current market faces two major challenges: pricing inflation and cost inflation, both of which result in significant pricing pressures across the industry. As a result, the industry is under considerable pressure to maintain costs, ensure high quality, and deliver the best possible product to customers. Additionally, maintaining project profitability remains a critical concern.

To address these challenges, proper cost monitoring is essential across all project packages, including civil, façade, and finishes. Continuous cost control throughout the entire project lifecycle, with careful tracking of all potential variations, is vital.

The second key aspect is the digitization and standardization of material specifications, which brings consistency and greater transparency to the process.

Third, ensuring the completion of projects within the stipulated timelines—or even ahead of schedule—enables earlier revenue realization.

Fourth, maintaining high quality standards is crucial. Customers primarily evaluate a product based on the quality of finishes and the façade. Any compromise in these areas can lead to customer dissatisfaction, as visible aspects significantly influence purchasing decisions. 

Other critical aspects include civil engineering and mechanical, electrical, and plumbing (MEP) systems. Customers expect the structure to be stable and durable, lasting more than 50 years. From an MEP perspective, systems should function seamlessly—lights should work as intended, and plumbing should operate reliably. Customers focus on the performance and reliability of these systems, rather than the specific materials or quantities used in construction.

Therefore, cost optimization efforts should focus primarily on civil and MEP packages. The savings achieved in these areas can then be invested in enhancing finishes and the façade, directly improving the customer's experience and satisfaction. Ultimately, customers are influenced by what they see and experience first-hand. 

For civil and MEP, the cost has to be optimised. This includes optimizing construction materials, sizing, and indices for steel and concrete within civil and MEP works. Throughout, rigorous cost monitoring across the project lifecycle remains essential.

To summarise, five key elements are vital: cost monitoring across all packages, digitisation and standardisation, timely project completion, maintaining high quality—especially in finishes and façades—and cost optimisation in civil and MEP works. By focusing on these, cost targets can be achieved without sacrificing quality.

Q3. How have sustainability initiatives and green building requirements been integrated into the budgeting process to enhance project valuation and deliver measurable financial benefits?

Currently, every developer is highly focused on achieving net zero carbon emissions and implementing robust sustainability initiatives. As a result, most competitors in the market are offering similar sustainability specifications, with a strong emphasis on achieving at least silver or gold green building certifications.

From a sustainability perspective, this typically results in only about a 1% increase in overall project cost. Given the widespread adoption, nearly all developers now incorporate such sustainability measures as a standard practice. Therefore, there are no significant drawbacks from a sustainability standpoint, as the cost increase is minimal. Moreover, investors are increasingly evaluating companies based on their sustainability initiatives. They show a strong preference for organizations with high sustainability ratings—often considering those with ratings above 50%.

Q4. What procurement or budgeting innovations are successfully applied that led to documented cost savings and demonstrably increased overall project profitability and investor returns?

There are several factors to consider when determining the most effective procurement and budgeting strategies to increase profitability.
One important consideration is the location and type of market—whether the project is in an A-grade or B-grade city, and whether the developer is entering the area for the first time.

To maximize profitability, one of the most effective procurement strategies is to adopt a labor-only contract model. In a labor-only contract, the developer supplies all materials directly to the contractor, thereby reducing overhead costs associated with material procurement and generating substantial savings.

However, this approach comes with both advantages and challenges. The main advantage is the significant cost savings. The primary challenge is the need for much stricter supervision of labor to ensure quality and productivity. When a developer is entering a new market, it is advisable to initially engage an A-grade contractor. This helps establish the brand, ensures quality, and manages the risks associated with unfamiliarity in the new environment—both with the workforce and contractors.

While this may initially impact profitability, as the developer gains experience and maturity in that market, a transition to labor-only contracting can then be considered. Switching to a labor-only model—where materials are supplied by the developer—typically leads to savings of approximately 10–15% on overall project costs. While supervisory costs do increase, there is still a net cost reduction of around 10% with this approach.

Another potential contracting strategy is the design-build approach, which requires the entire design to be finalized before tendering. However, in practice, designs are rarely fully frozen at the initial stage, often resulting in cost overruns. Therefore, my recommendation is to utilize labor-only contracts in mature markets, while opting for full material and labor contracts in new markets during the initial years. Once the developer is established in the new market, transitioning to a labor-only contract can yield cost savings of at least 10%.

Q5. What role does technology-enabled financial forecasting and cost control play in enhancing budget accuracy and contributing to better-than-expected project profitability?

The real estate industry is predominantly labor-oriented, with numerous variables affecting execution, quality, and, most importantly, cost.
In my opinion, the digitization of the budgeting process and adoption of technological enhancements are still at a relatively early stage of implementation. While some projects have begun to leverage these advancements, the industry as a whole is just beginning this transformation.

Over the past three years, there have been significant improvements in digitization, particularly in increasing cost predictability and helping to ensure that project profits remain intact through completion. Numerous digital software solutions are now available for budget preparation, variation tracking, and providing early warnings for potential budget overruns. However, these tools are still in the early stages of maturity and adoption. Many developers are experimenting with various platforms, with mixed results across different projects and segments.

In my experience, I have seen two or three software platforms perform well in certain sectors, but not as effectively in others. Nevertheless, digitization helps reduce human errors, allows for automatic comparison of budget versions, and significantly accelerates budget preparation with improved accuracy.

While these technologies have not yet achieved full accuracy or adoption, I believe that within the next couple of years, the industry will reach a much higher level of technological sophistication. This advancement will be a significant advantage for real estate companies, as it will reduce reliance on individual judgment and minimize the risk of costly mistakes impacting profits.

Q6. Which emerging construction technologies or advanced materials have been adopted that have delivered clear, measurable cost reductions and boosted ROI in your projects?

In terms of technology initiatives, the primary focus has been on simplifying site operations, reducing labor dependency, and accelerating project timelines. While these measures may not directly reduce costs, they contribute to significant savings by shortening project durations, which in turn reduces overall expenses.

One notable example is the adoption of aluform (aluminum formwork) technology—a modern shuttering system. This technology has delivered clear, tangible results, offering both cost reductions and faster project completion due to improved construction efficiency. In summary, aluform technology stands out as a proven solution that has measurably reduced both timelines and costs on our projects.

Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?

As an investor evaluating companies in this space, I would approach the assessment from both a technical and a layman's perspective.

From a technical standpoint, I would ask detailed questions regarding the quality of finishes and materials used—for example, whether marble or tiles have been provided in the rooms. I would also inquire about whether the layout meets other important design standards. Questions about quality would include the type of waterproofing technology implemented and whether specifications are maintained at optimal levels. I would also want to know about the contractor's credentials and track record.

Regarding mechanical, electrical, and plumbing (MEP), I would ask about the number and type of electrical points and the quality of switch sockets used. For finishing, I would inquire about the CP sanitary fittings provided in the building. From an infrastructure perspective, I would ask about the amenities offered. Additionally, I would seek details about the expected monthly maintenance (or society) charges after handover, as well as the legal status of the land. Finally, I would ask about the process and timeline for handing over the property to the society or resident association.