I would like to know the main reasons behind project delays. What are the benefits do builders get when project is delayed. I can think of a few reasons for project delay like
1-Cash Flow Crunch
2-Over commitment and over leveraging by launching multiple projects
3-Labor issues
4-Authority issues like NOC, Clearances, transfers, corruption etc
5-Greed to make more money through unit transfer charge etc

Point 1-4 can be avoided away with normal project management and every builder have executives, PM’s to do that. Don’t they? Then why are the project delayed. Because of point no 5. Can the money gathered through transfers etc be so significant that builder would risk damage to image due to non delivery? If builder completes project on time or at least it looks like to be on track it enhances their image and they reap benefits in future launches.

I m not able to understand benefits builder gets with not giving possession to users or delay project. Please help me understand this game.
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  • 90% of money he has already got.
    Only 5-10% balance for real delivery.

    During this time main profit already cleared. So why he will be so tight with his management team???? He can still enjoy with that money.
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  • Originally Posted by planner
    90% of money he has already got.
    Only 5-10% balance for real delivery.

    During this time main profit already cleared. So why he will be so tight with his management team???? He can still enjoy with that money.


    Yaar, I m talking about builders like DLF, Ansal, Unitech, Omaxe etc as well as BPTP. They can't linger on by taking 90% of the money and forget the project. This cannot be the business plan. Unless someone plan to do rest of the 10% development on unit transfer money, internet earned on dues not paid to govt etc. (which seems like the case with BPTP :) )

    On average how many times a unit changes hands before registery ?
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  • Why builders delay projects

    Hi
    Greetings

    Just adding to the list above

    6] Non fulfillment of Licensing conditions,
    7] Cost of super structure cost only 30% while payment schedule is tilted to extract 90%+ payment from buyer, the difference is used by builder to finance expansion
    8] Builder waits for govt to approve further relief in Payment of dues to govt.,
    9] Builder waits for govt to tinker with the act to relax licensing conditions,
    10] Builder waits for passing a part of internal development cost over to govt. (HUDA Developed 2 full sectors in Ggn while the land was privately owned!!!)
    11] Wait for govt to relax FAR, EWS norms etc.,
    12] Builders know that investors cant get together due to lack of ambition, knack and wisdom to fight their might.,
    13] Some have loans tied against portion of assets, these loans need to be paid back before tittle can be transferred.,
    14] Builder+ Politician+ administration working hand in hand.
    15] In anticipation of developing more towers in the same area.
    16] There is no penalty on builder enforceable as he can easily use force majure clause
    17] Builder gets "reputed" status even without delivering even a single project completed by Illegally keeping govt revenue. As a reward he pays a DISCOUNTED penalty of 12% while buyers pay him 18% compounded annually for any delay
    18] Gives builder a chance to increase Super area one more time
    19] Gives builders a chance to exploit the highly one sided BBA once more by raising frivolous demands...
    20] Gives builders a chance to Sell common area to International schools, clubs, hospitals etc.
    21] Mis-selling by builders and focus on easily sale to investors than to actual endusers. This leads to large unpaid Demands and hence toxic assets


    Other Important Reasons
    1] Company may make an unfruitful/unrelated investment
    2] Dispute amongst Directors
    3] Family strife- death, divorce, accident, disease, fraud etc
    4] Depression in economy, recession
    5] Hyper inflation

    Major land banks involving 100s of acres worth crores change hand through tranfer of title with the knowledge of govt at below par/circle rates without even a simple inquiry.. Eg DD land sector 77 admeasuring 130+ acres bought by BPTP in 2010 for less than Rs 1Cr per acre, whereas nearby sector 78 taken over by Omaxe from SN realtors 11 acres for 45 cr or Rs 4 Cr per acre appx. and that to in 2009!!!

    Hope that reflects the true state of affairs.

    Cheers
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  • Originally Posted by BlessU
    Hope that reflects the true state of affairs.

    Cheers


    I just can't thank you enough for this post. All the points that you have made are facts. Now i really understand why possession are delayed by almost all the builders.

    Unless all the buyers understand these facts and come to single platform to voice their concerns all they can do is pray for delivery date to come soon or continue to be miserable even after having paid life time earnings/savings.
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  • Hi
    Greetings

    The Politician+administration+builder nexus is clearly visible in the land deals not being investigated. Such land deals are causing high loss to the state land revenues as many such large chunks of lands have transferred hands at a fraction of the market cost.

    This is duly being facilitated by the administration.. Singular indicator is the high frequency of transfers of senior bureaucrats and administrators in Faridabad

    New appointment as Huda Administrator is the 5th change in one year for this position.

    high time this is highlighted in Media and the coercive practices of builders and administrators be put to a halt.

    Hope RWA work on the lokayukt route to highlight these abnormalities and loss to the state revenues. Ultimately its the common man who has to bear the price of non development and increase in costs as circle rate, edc, municipal taxes etc.

    Cheers
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  • Why builders delay

    Hi
    Greetings

    Really interesting debate and amazing depth presented by lawyer Mr. Vinod Sampat. Must watch the NDTV debate.

    Very clearly builders are positioning approvals, labour, material as the reasons. This is really sad.

    Cheers
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  • BPTP Park 81 Project Faridabad Over sold causing allotment problem

    Hi
    Greetings

    Another interesting explanation for non delivery of projects..

    It is alledged that during the depression in 2008-2009, BPTP Park 81 Project in Faridabad, probably, sold flats as FLOORs beyond the available quantity with them..

    Now many are struggling to get an allotment. Its unfortunate for those who paid a premium in resale but sadly find latter that there is no Floor allotted!!!
    They are infact being asked by BPTP to take refund or get fresh allotment in other projects without justification for a higher price.

    Due to over sold position in projects, companies are finding it hard to deliver

    Cheers
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  • One of the reason of delaying the projects.

    Builder get lots of money after delaying the projects.

    1. If projects will delayed then original buyers will sell the projects(depression,lot of interest, Rent etc.) then builder will get transfer money from new buyers only for small paper work.

    2. Only original buyer can take penalty charges. New buyer can not take penalty charges but new buyer will have to pay full transfer charges to builder.

    In short more delay more revenue from transfer charges and no penalty.

    After possession builder can not take transfer charges.
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  • Originally Posted by BlessU


    Now many are struggling to get an allotment. Its unfortunate for those who paid a premium in resale but sadly find latter that there is no Floor allotted!!!


    how could someone buy an un-alloted unit in resale ?
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  • Garg ji aren't you aware about Parchis of DD motors & Triveni plots where people lost huge money and those plots actually used to sell at very high premium
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  • Originally Posted by pgarg2000
    how could someone buy an un-alloted unit in resale ?


    When someone buy a flat in pre-launch, they dont get any unit number allocated at that time.

    Once porject gets officially Launched, than only unit gets allocated to buyer.
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  • Originally Posted by Karrish
    One of the reason of delaying the projects.

    Builder get lots of money after delaying the projects.

    1. If projects will delayed then original buyers will sell the projects(depression,lot of interest, Rent etc.) then builder will get transfer money from new buyers only for small paper work.

    2. Only original buyer can take penalty charges. New buyer can not take penalty charges but new buyer will have to pay full transfer charges to builder.

    In short more delay more revenue from transfer charges and no penalty.

    After possession builder can not take transfer charges.


    Other than this i can understand one more reason for delaying project:

    Commercial property loan comes on higher interest rates, let say around 14-15% interest.

    So builder dont go for that interest rate, and put your money on the other project, because even if they pay penalty to buyer that will be Rs 5/sqft, and in case of 1000 sqft, only Rs 5000 will be penalty but the real interest on that amount is almost triple.
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  • I know many personally who after paying installments for 2 years were not allotted a plot by BPTP. They are still being asked to either wait or take money back at an interest of 9% per annum. Sometimes its really hard to believe the kind of businesses we have around us!!!
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  • Originally Posted by Avishnoi
    When someone buy a flat in pre-launch, they dont get any unit number allocated at that time.

    Once porject gets officially Launched, than only unit gets allocated to buyer.


    Can we select the unit at the time of booking in pre-launch or is it allotted based on the availability?
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