Project risks can either be positive or negative, depending on the impact that they have on the project. The most common risks in any project are those that have a negative bearing on the project implementation and require prompt intervention measures to prevent them from stalling the project. However, it is also essential to identify the positive risks in a project which if not well managed, could also have a negative bearing on the project (Bonander & Ulriksson, 2016). The discussion analyses some of the positive and negative risks in a real estate project.
- Delay in approvals
Delays in obtaining the necessary approvals, including permits and licenses for various contractors, could derail the project implementation. Furthermore, such setbacks could lead to stakeholder frustration e.g., financiers who may pull out of the project, creating further uncertainty to its implementation.
- Failure to meet project timelines
One of the most significant risks in the implementation of real estate projects is a failure to meet the necessary completion timelines. This risk is contributed by many factors which are not limited to delays in various aspects of the project implementation. Delayed financing to a project could result in the extension of project timelines.
- Adverse weather
Project schedules should have time contingencies for adverse weather. Regardless of the considerations that the project design team may have in place, it is almost impossible to predict the number of lost days due to adverse weather. Poor weather may not only slow the pace of project implementation but derail works completely.
- Insolvency of the project sponsor
The project sponsor relates to the party financing the project, and any illiquidity issues from his part could lead to delaying the project. Lack of funds leads to a stoppage of works and hence delays of the project.
- Poor quality workmanship
Poor quality workmanship affects the integrity and quality of the project. Low-quality employees and lack of proper supervision in a project usually lead to poor quality workmanship, which may lead to accidents, injuries, or even fatalities. Furthermore, poor quality workmanship could also lead to increased costs due to increased repair costs.
- More than expected sales for off-plan units
When the uptake of off-plan units in a real estate project, then the firm has more pressure to develop new units faster than scheduled. In this regard, the project team may be forced to change its delivery timelines while the marketing team may need to relook at the unit pricing.
- Faster-paced project delivery than expected
The case where the project team or contractors delivers the project at a faster pace than scheduled could be termed as a positive risk. In this case, the project timelines would be shortened, and consequently, allowing investors to obtain an early return, and clients can occupy the houses earlier.
- Favorable weather
In the case that the weather is more favorable than anticipated, then it would mean that there would be working days for the project personnel. It is therefore expected that such a risk would shorten the project completion timeline.
- Positive press coverage
Positive press coverage is likely to enhance the marketing of the project without the use of any resources. Such a risk would likely lead to increased client traffic and interest in the project, and consequently increased sales.
- Project being over-budgeted
Cases, where a project is deemed to be over budget, are taken to be positive risks. Overbudgeting of the project may result in the re-allocation of funds and improvement of project aspects where resources were constrained.
In conclusion, the project manager needs to put into considerations both the positive and negative risks of a project. Unlike negative risks that result when one fails to achieve or underachieves in a particular task, positive risks relate to overachieving on a particular task or having a better-than-expected outcome (Harrin, 2013). Noting the many positive and negative risks in a real estate project, it is important to ensure that these risks are identified early in the project life cycle and managed adequately to ensure that all project deliverables are met successfully.
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