Risk Assessment and Lean Implementation in Real Estate Development Projects

Real estate development projects are risky due to many characteristics such as the unique end-product, complex processes, and large number of stakeholders. One of the most significant and increasing concerns with real estate projects is that they are behind schedule, over budget and show unsatisfactory performance in terms time, cost, and quality and also customer and stakeholders satisfaction. However, the complexity and the constant changes in these projects lead real estate development and construction companies to find inadequate monitoring of the ongoing process in order to ensure that the project finishes on time. They must find a way to look ahead by predicting the possible activities that may delay the project and alarm the stakeholders about them. Project Risk Management is the process of identifying, analyzing, assessing, processing, monitoring, and revising project risk. The objective is to decrease consequences and probability of negative events and increase consequences and likelihood of positive events. There are different, highly similar theories for risk management. In addition, over the past several decades, the construction industry has succeeded in improving quality and productivity, using the concepts of lean thinking. The thesis explores the relevance of lean concepts in risk management and how these two concepts can improve the success rate of projects. The objective of this thesis is to help project managers and decision makers understand and mitigate the wide risks of real estate development projects by developing and implementing strategies of risk management and lean construction, before they turn detrimental to the firm. In order to identify the risks and assess their impact on the project scope, an application of risk management and lean problem-solving tools is chosen as the methodology as well as highlighting the wastes caused by the critical risks to eliminate before they occur. A real estate development project in Brazil has been considered as a case study for this research. Following the PMI standards, risk management is applied, starting with a risk initiation plan which defines the main scope and objectives of the project. This step is followed by the risk identification process in which all possible risks are identified using various techniques and registered in the risk register. Then, a risk breakdown structure (RBS) and a qualitative risk analysis and quantitative risk analysis is applied. All risk data and the project's Gantt chart have been imported into RISKYPROJECT Professional to apply Monte Carlo simulation. When critical risks are defined from the assessment, Five-Why technique is applied to them for developing the most sufficient action plans. Finally, the analysis of lean thinking principles integration is done through the risk control process by determining wastes that are critical risk sources and suggest most practical lean techniques. To successfully deliver housing units to clients, it is recommended that developers continuously identify and analyze possible risks and the wastes which could cause to cope with the dynamic nature of the business and relevant projects.