Toward a Practical Science of Project Development: Maximizing Value Through Design Flexibility
An International Symposium on Real Options and Engineering Systems Applications to Real Estate and Infrastructure Development Projects in a World of Uncertainty
A Symposium to be held at MIT, Cambridge Massachusetts, October 12-13, 2007
- The MIT Center for Real Estate
- The MIT Engineering Systems Division
- The MIT Design Laboratory
- The National University of Singapore Department of Real Estate
For a generation, scholars around the world have been discovering and developing principles, methodologies, and analytical tools in the area of real options and engineering systems analysis techniques that are relevant to design, planning, and decision making regarding large-scale, complex development projects in a world of uncertainty. In addition to real options, related or similar tools and techniques such as decision tree analysis, systems dynamics, and the "design structure matrix," among others, are relevant to these purposes. Scholars have approached this research from two major intellectual perspectives. On the one hand, students of engineering systems have developed practical tools that have found some application or at least serious exploration on the part of practitioners in manufacturing, aerospace, and natural resource extraction industries. On the other hand, financial and urban economists have applied a market equilibrium perspective to potential applications in corporate finance and real estate. In this context, the organizers hope that this symposium will address three related perceived needs:
- These two intellectual communities have had relatively little communication and cross-fertilization. This is no doubt due in part to the departmental structure of most universities. It may also reflect the different cultures and decision paradigms used by engineers and entrepreneurs. An objective of this symposium is to bring these two academic and professional communities together in a creative and constructive way.
- Some of the most promising of these techniques, including real options, have yet to see much adoption and use in actual practice and decision making. Part of the reason for this may be difficulty in communicating in a clear and understandable way the nature and role of these tools. Or perhaps there has been a lack of development and dissemination of simple and transparent tools for a less-specialized or less technical, non-academic practitioner community. An objective of this symposium is to bring together both academics and potential practitioners to explore this issue and to help to develop such communication, transparency, and simple tools.
- Two closely related fields of application that would seem to be particularly appropriate for these tools, large scale real estate and infrastructure development projects, have been notably slow in applying these tools to actual real world practice and decision making. An objective of this symposium is to epxlore why this is, and to promote application to real estate and infrastructure development projects (especially as these two fields of application would seem to be particularly appropriate for bringing together the engineering and economics perspectives on real options and related techniques).
Attending the Symposium
The symposium organizers are looking to create a small-scale conference with a relaxed atmosphere conducive to creative thinking. Invitations to participate will be targeted at the following communities:
- Academics interested in applications of real options or other engineering systems analysis techniques to complex, large-scale development projects in the private and public sectors, especially including real estate and infrastructure projects.
- Practitioners including consultants, researchers, and analysts in fields involving design and decision making concerning large-scale complex development projects in the private and public sectors, including real estate and infrastructure projects.
Call for Papers
The organizers of the symposium are seeking papers presenting original work on the application of real options and other engineering systems analysis techniques (including, among others, systems dynamics and design structure matrix) to real estate and infrastructure development projects. We are also interested in original synthesis and pedagogical papers that would help to communicate, or facilitate practical use of, such tools and techniques within the practitioner community.
Organization of the symposium
The symposium will consist of:
- Presentations by authors and discussants of selected p apers, organized into three to four thematically coherent sessions
- General sessions for keynote or panel discussions including feedback and participation by attendees
- Informal events (such as a New England fall foliage tour) to promote relaxed brainstorming, discussion and networking
All papers and formal discussions presented in the symposium will be published by MIT on a CD distributed to all symposium participants, tentatively titled: Toward a Practical Science of Project Development, to be compiled by the symposium organizers. In addition, it is intended that this symposium will serve as the 2007 MIT leg of the continuing Maastricht-Cambridge-MIT series of annual academic real estate conferences, in which papers accepted for the conference will be eligible for submission in a special edition of the Journal of Real Estate Finance & Economics.