Risk analysis in the real property development process: a conceptual framework and a computer simulation model

Real property development is an interdisciplinary field that produces interesting time-risk questions for the various participants. The conceptual framework of the process is a normative staging of activities and related decision points. The framework provides the theoretical foundation for the application of management science techniques to this complex environment. The computer simulation model is a straightforward quantification of the conceptual framework. The equations incorporated in the model are common to financial and appraisal literature with alterations designed to encompass the unique aspects of the real property development process. The model is a tool for use in the application of sensitivity analysis to development period decision making. At various decision points in the process the decision maker can evaluate alternative risk control techniques on a cost-benefit basis using the model.