Brownfield risk communication and evaluation

Abstract

Brownfield development is a risky business requiring specific knowledge and sensible judgement in order to create valuable real estate capital. This paper approaches brownfield risk in a multi-criterion, multi-actor interactive framework, taking into account the risks perceived and communicated by key actors. The paper begins with the development of a generic risk evaluation model using the analytical hierarchical process; this is followed by a primary purposive survey of experts’ stated-preference for weighting, ranking and scoring of risk factors developed earlier by the authors. The risk evaluation leads to a consistent hierarchy of risk factors influence brownfield decisions in the Melbourne context. Results indicate that site specific and project risks are the most important in brownfield development decision-making. Financial and market and planning risks are moderately important. Political and legal and socio-economic risks are relatively less important. The findings also indicate some inter sub-group variation in the relative importance of the risk factors. Developers rate financial and market and site specific risks most highly. Least of the developers’ concern is the socio-economic risk. Planners and consultants rate site specific and project risks highly. The AHP-based risk evaluation model is a new addition to the literature, and the findings may help improve explicit evaluation and communication in brownfield project financial decision and value reporting.