Securing Management Rationality with Real Estate Controlling

Due to the current dynamics of real estate business, the requirements for efficiency and transparency in real estate management are rising. Real estate markets are characterized by uncertainty and distrust. Proprietors, shareholders, partners and lenders require more and more detailed information and institutional real estate managers have to meet these requirements. Managers have to justify every decision and underpin them with hard figures. However, their purposive rationality is not guaranteed because they see themselves confronted with loads of unstructured information, inconsistent data, unclear corporate objectives and uncertain future. The need for information, planning and control systems (controlling) becomes evident.'Securing the rationality of management' is the definition of one special concept of controlling. This concept was developed by Jürgen Weber and Utz Schäffer. From their point of view, it is easier to explicate problems from professional practice and embed them into a theoretical framework with this concept. Rationality is here defined as purposive rationality.(*)In the field of real estate controlling, there is no consistent and accepted theory. Therefore, it might happen that in practice controlling fulfills the position of a stopgap, which means that functions that are not covered by any other organizational unit are assigned to it. Consequently, a lot of isolated applications are developed so that the bureaucracy increases. Meanwhile, the flexibility of the company decreases and the management is not promptly supported with the required consolidated data and facts.This paper investigates if this concept of controlling is able to support and secure the rationality of the real estate manager. The article first reviews the general real estate literature and summarizes special requirements and problems of the real estate sector. After the discussion and delineation of this special concept of controlling, its limits and potentials in the context of real estate management are shown. Finally, it is discussed from a theoretical and holistic point of view, what is needed to secure rationality and analyzed where this concept of controlling should be adjusted to the special needs of the real estate industry.(*) Weber, J./Schäffer, U. (1998): Sicherstellung der Rationalität von Führung als Controlleraufgabe, Vallendar/Rhein 1998