Flag Luxury Properties Case Study
Post Date:3/7/2008
Flag Luxury Properties Gains Cash Flow Control on $610M Resort Project by Integrating Prolog
Flag Luxury Properties, headquartered in New York City, was founded in 1946 with a commitment to owning and developing branded world-class hotels, residential properties and gaming assets. Through strategic partnerships, innovative architectural execution and unparalleled locations, Flag Luxury has become a leader in its industry. The firm currently has more than $5B under design, development or operations, including The Ritz-Carlton South Beach; the Baccarat Temenos Resort Anguilla; The Ritz-Carlton Golf Club & Spa in Jupiter, Florida; an 18-acre development on the Las Vegas Strip and the first Jack Nicklaus designed championship golf course in New York City, the Ferry Point Park Golf and Conference Center.
In early 2003, Flag Luxury Properties broke ground on a multi-phase, 280-acre destination resort, golf course and residential community on the tiny Caribbean island of Anguilla. The island’s white sand beaches, crystal clear waters and breathtaking landscape provided the ideal setting for the first Flag Luxury development outside the United States. The company hired a construction management firm to handle project management and construction.
By early 2006, it was evident that outsourcing construction management, with delivery on a cost plus basis, wasn’t the most efficient way to get things done on an island inhabited by just 12,000 people. This approach proved to be inefficient and costly. Flag Luxury decided that, to meet the challenges of managing international contractors, labor and materials acquisition, it needed its own project management team to execute construction on a conventional fixed cost, at-risk basis.
In April of 2006, the new Flag Luxury team took over construction of phase I of the Anguilla project, an 18-hole, Greg Norman-designed championship golf course and a 28,000 square foot clubhouse that was eight months from completion.
According to Kesh, Prolog Manager from Meridian Systems was the ideal choice. He and the Project Director, Geoffrey Blake, had used Prolog for more than 10 years and were well aware of the program’s capabilities. In addition, the former project management firm used Prolog for information management (not cost control) and had data available for migration into the Flag Luxury system.
Flag Luxury purchased Prolog in January 2007 through Intuitive Systems, a Meridian Global Reseller based in Miami, Florida. Intuitive had the experience and resources to expedite Flag Luxury’s Prolog implementation, data conversion, training and, most importantly, its custom programming requirements.
The revised project budgets, however, were being managed in Microsoft Excel by the Flag Luxury team and took more work to import. “We had over seven thousand budget line items in our Excel databases.” says Kesh. “The transfer to Prolog was a huge undertaking.”
To ensure that Flag Luxury’s project team was up-to-speed on Prolog, Intuitive scheduled a series of 16 half-day training sessions in Anguilla. Additional one-on-one training was provided for the staff in charge of cost control.
By March 2007, Prolog was live at Flag Luxury and all 50 employees were trained and utilizing the program for tasks such as budget management, document control, drawing logs and meeting minutes. In addition, work on developing a customized cash flow projections module was underway.
“I was surprised how well Intuitive understood our unique cost control and cash flow requirements,” says Kesh. “They analyzed our needs and came back with suggestions based on their knowledge of the construction industry and their software expertise. They’ve been extremely helpful.”
By September 2007, the custom cash flow projections reporting piece was complete and the benefit to Flag Luxury was immediate. “The moment our budget is overrun on any single line item, I know exactly which one of our 8,000 line items is the problem,” states Kesh. “When an item is overspent or has a surplus balance left over in another, we make an internal budget control adjustment so that the bottom line project budget total doesn’t change.”
Even with Prolog in place, keeping a $610 million construction job on track isn’t easy. To make things more manageable, the Anguilla development was divided into smaller projects within Prolog. For example, infrastructure, landscape and hardscape all have unique job numbers (60 - 70 different jobs in total) and are managed independently as well as part of the whole budget.
“Prolog gives us complete control over our costs,” states Kesh. “Since we’ve put the system in place, we’ve had our budgets under control with no cost overruns. Except for scope changes, we have yet to go back to our corporate office to ask for more money.”
Using Prolog WebSite, investors, bankers and consultants access various reports and, depending on security settings, cost information. And the Timberline integration makes the information in Prolog truly complete. “With the financial reports and cash flow projections available in Prolog, we can produce one reconciled information sheet from both the corporate office and the project site instead of separate statements with different sets of numbers,” explains Kesh.
“We have corporate executives, investors and bankers that all need to be confident in our cost control process and budget reports. Prolog puts everyone on the same page financially, whether they operate on a job accrual basis or on an actual dollar basis,” concludes Kesh. “By integrating Prolog with Timberline and using Intuitive as our Prolog administrator, I think we’re using 250 percent of Prolog’s capabilities!”
Estimated Cost:
$610MResults:
With its breathtaking beaches and gentle blue-hued waters,Anguilla, provides a natural backdrop for the tranquil Baccarat Resort and Residences, Temenos Anguilla. When complete, this tiny Caribbean island, which is just 16 miles long and three miles wide, will be the perfect getaway for those seeking solitude, privacy and five-star accommodations.Article Source: