The main causes of risk in residential real estate projects

Abstract

In the recent years, the Portuguese Real Estate Market has been increasing exponentially. This growth, has generated, in the real estate companies, the need to implement effective project management tools and frameworks in order to provide important metrics of budget control, deadlines and increase risk management. This study aims to understand the different causes of risks in real estate projects and to measure the risk factors that provoke deviations, in terms of cost, time and quality in the real estate market in Portugal. To measure these risk factors, a new methodology has been implemented, namely a new real estate risk plan model for predicting the risks inherent to new construction projects. This methodology aims to produce new and more accurate strategies and plans so as to effectively respond to potential risks and thus achieve the proposed objectives through the desired success. This methodology allows companies to effectively implement a project in a timely manner in order to reduce and mitigate the probability of risk failure based on risk management tools and techniques. The results of this case study have shown that implementing a risk management project is crucial to highlight and measure the risk of project failures and that Companies must implement risk indicators or triggers that give visibility to potential risks/losses that impact company objectives and, on the other hand, establish metrics that translate the organization’s appetite and tolerance into critical risks.