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.

Budget participation and employee performance in real estate companies: the mediating role of budget goal commitment, trust and job satisfaction

“…The industry also suffers from other shortcomings, e.g. poor quality, overdue deadlines and budget overruns (Pereira et al, 2020). This means that to be competitive and to fulfil customers' needs and construction obligations, managers should handle properly good governance principles (Gross and Zr obek, 2015).…”

“…The industry also suffers from other shortcomings, e.g. poor quality, overdue deadlines and budget overruns (Pereira et al. , 2020).…”

“…In this study, employee performance is interpreted as the achievements perceived by individuals in their attempt to reach the established objectives. Highly performing employees can contribute to mitigating or addressing real estate quality issues and time deviations (Pereira et al. , 2020).…”

“…Although the Portuguese real estate market has increased exponentially, there is still a deficit of new construction due to recent years' crises. Because of this high demand and lack of supply, it is important for prices not to become speculative, which has generated in real estate companies the need to implement management tools that provide important metrics for budget control (Pereira et al, 2020). Budgets constitute one of the tools that support the fulfilment of objectives.…”

“…While they have been subjected to criticism due to the costs of preparing budgets, the increased budget gaming and the increasing environmental uncertainty that organizations are facing (Sandalgaard, 2012), they are still recognized as means to attain internal effectiveness and to communicate information to shareholders and other parties (Derfuss, 2009). This is particularly important for the Portuguese real estate industry which has not yet been able to turn into a product of excellence among other reasons, because of cost overruns (Pereira et al, 2020). Therefore, the budgeting process is of great importance and must be included in the management control functions as it supports the prediction of the needs of an organization.…”