Professional Education - Executive Series (NEW)
Course: Advanced Real Estate Development: Decision Making
Instructor: Tony Ciochetti
Course Overview
In the increasingly complex world of real estate development, how do you confidently make the myriad of decisions that are required in a complex development project? Science provides a number of tools that are used in other industries that have not been adopted by the real estate industry. Two of these tools are Real Options and Game Theory. Advanced Real Estate Development will explore these tools as related to decision-making in the development process .
First we intend to look at risk and return in relation to the development process. What are the stages of the development process and where are the key decision points? With the development process as a backdrop, we will explore risk and uncertainty. What is the definition of risk? What are the causes of risk and how can the causes be mitigated? Systems thinking envisions the development process as a system with a host of interconnected and inter-dependent relationships. Taking a systems view of the development process, this class introduces participants to “real options” as a tool that allows developers to incorporate and value flexibility into their projects. Alternatively, you can see the development process as a complex game where multiple participants are each trying to maximize their returns. Game theory assumes that participants are trying to maximize their individual returns. Therefore, the question is, which series of strategies will maximize returns for the greatest number of people.
Guest lecturers and case studies will be used to illustrate real world examples of how top developers deal with decision-making issues and how these tools can be applied. This course is designed to analyze the real estate development process primarily from the perspective of the senior level decision makers.
Learning Objectives and Outcomes
- Increased familiarity with real options, game theory, and decision analysis as decision making tools.
- Enable class participants to apply the decision-making tools to real-life development scenarios.
- To improve the utility and industry use of the various decision-making tools based on feedback from class participants.
Instructor Bio
Tony Ciochetti is the Thomas G. Eastman Chair and Chairman of the MIT Center for Real Estate. Professor Ciochetti’s teaching areas of expertise include Commercial Real Estate Development and Real Estate Finance.
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