A risk assessment model with analytic network process in commercial real estate development projects

Abstract

Risks and uncertainties are of rapidly growing concern in commercial real estate development (CRED) projects, a ect all stages of the projects from feasibility, conceptual design to handover period. All the risks and uncertainties may in uence projects' objectives by leading to cost and time overruns, schedule delays and poor quality. The decision-making processes in which developers, investors, and related team leaders and members involved are a ected by these risk and uncertainties. In this study, the main objective is to identify and prioritize the risk criteria and introduce an Analytic Network Process (ANP) model to assess the risk criteria in CRED projects in Turkey. It aims to provide some perspectives to increase the e ectiveness of the decision-making process. Within this purpose, risk criteria related to CRED projects are de ned and categorized. The criteria list is provided based on a literature review and opinions of experts. Subsequently, identi ed risk criteria are categorized under \PMEP" groups as Political, Monetary, Environmental and Project risks. Interrelations and relative importance rates data are gathered with the help of the expert team. Then, the priorities and importance weights are calculated using ANP. Findings of this study focus on the importance of \Exchange rate and in ation rate uctuations" in \Monetary risks" category; \Political instability" in \Political Risks" criteria and \Location selection risk" in the \Project risks" category. Case studies are used to test the e ectiveness of the proposed model. This model provided a perspective for decision - makers or stakeholders of the projects in the CRED industry to evaluate the risk criteria and they may bene t from the developed model to assess the risks of their projects and to take proper actions.