Abstract
Risk and the management thereof play an ever increasing role in modern engineering project management. This is also true in residential property development. International developers have seen growing opportunities for investing in foreign developments as a direct result of globalization. Yet the anticipated profits are not necessarily concomitant with the risks experienced. These risks are apparently increasing with increasing foreign investor in residential property as there is often a significant difference between the developer’s country of origin and the country in which the development takes place. Residential development as a process requires developers to invest substantial capital with an expectation of a reasonable return on investment, but the sources, forming processes, potential damage mechanisms, and political impacts of the project risk are extremely complex and difficult to document. No single management process, engineering technique, financial engineering, or organizational management design is fully effective in the development of such a risk management framework. It is proposed that the unifying nature of Systems Engineering may provide a reasonable approach to manage the related complexity.
The process of developing the risk management model using the systems engineering approach is discussed and important items are highlighted. The systems complex of the project and associated risk management system are divided into sub-systems that are discussed at the relevant level of detail and the risks associated with each sub-system are analyzed.
There is an old Chinese saying: prevention is better cure. There are many ways to deal with the identified project risks, for example, risk avoidance, risk prevention, risk decentralization, risk retention, risk transfer, risk control and risk utilization. The most important thing is to identify risks early on in the project and take possible preventative measures thus enabling project re-engineering. A method of preventing risks by system thinking is introduced and discussed.
An unsuccessful international residential property development project in South Africa is analyzed within the systems engineering context.
It is the emphasis of this thesis that engineering risk management should be regarded as a system and that the achievement of an optimal level of risk for a particular participant cannot be realized without making use of the methods of systems engineering.
Prof. L. Pretorius