Sensemaking of real estate management using real options and scenario planning

Healthcare across the world is facing many uncertainties. In Dutch healthcare, a recent policy change forces health organisations to deal more efficiently with real estate which makes flexibility more necessary. In order to support real estate managers in decision making in flexibility, we developed a method combining scenario planning and real options. This method is aimed to enhance sensemaking on both the consequences of future uncertainties on the organisation which influences real estate management, and on the types of flexibility needed to enable adapting to these changes. In this way, better real estate strategies can be developed. Through testing the method in one pilot case, this study shows sensemaking had taken place. Based on these results, propositions are developed focusing on the relation between real options, backcasting scenario planning and sensemaking

Applying the real options theory for identifying flexibility in project delivery of health organisations

Healthcare is influenced by many uncertainties. Uncertainties affecting health organisations also influence real estate since this facilitates the primary process. Within real estate management, decisions have to be made today while there is little knowledge about the future. Therefore, flexibility is needed in the process of designing, constructing and operating real estate. A case study has been done to gain insight about how health organisations deal with flexibility. The real options approach is used to show what types of flexibility have been used, and that uncertainty can also generate opportunities. Of the five types of flexibility, only in two types real options were identified in the case study. These were stage, abandon, defer and scale within process flexibility and the options growth and switch within product flexibility. This is partly a result of the fact that the project in the case study is not further advanced than the preliminary design phase. Nevertheless it can be concluded that project managers already act as using real options. Consciously using this concept might create even more real options to be used in project management

Project coalitions in healthcare construction projects and the application of real options: an exploratory survey

OBJECTIVE: Exploring the impact of the type of project coalition on types of flexibility by analyzing considered and exercised flexibilities in separated and integrated project coalitions in the design and construction phase and the operations and maintenance phase of a healthcare construction project. BACKGROUND: Flexibility in healthcare construction projects is increasingly needed in order to deal with growing uncertainties. Until now, little research has been carried out on how and to what extent flexibility is incorporated in different types of project coalitions chosen by healthcare organizations. METHODS: An exploratory survey was conducted among health organizations in both cure and care. Questions were asked on the position of the real estate department within the organization, the type of project coalitions chosen and the rationale behind this choice, and the extent to which flexibility in terms of a real option was considered and to what extent it had been exercised in a project coalition. RESULTS: Integrated project coalitions pay more attention to flexibility in advance in both the process and the product, but exercise them to a lesser extent than separated project coalitions. The economic feasibility of real options is higher in integrated project coalitions. CONCLUSIONS: The study shows that real options thinking is already incorporated in real estate management of healthcare organizations, although more flexibility is considered in advance of the project than is actually realized during and after constructio

Making sense of future uncertainties using real options and scenario planning

Healthcare across the world is facing many uncertainties. In Dutch healthcare, a recent policy change is forcing health organizations to deal more efficiently with their real estate, and this increases the need for real estate strategies that are more flexible. In order to support managers in incorporating flexibility in their decision-making over the design of new healthcare facilities, we have developed a method that combines scenario planning and real options. Scenario planning enhances sensemaking over the consequences of future uncertainties, and real options should help in addressing flexibility in decision-making through weighing the pros and cons of flexibility measures. We illustrate the sensemaking process by applying the method to a hospital, to a forensic clinic and to a care organization for vulnerable citizens. Data collection took place through interviews and workshops. We found that the identity and characteristics of the workshop participants influenced the sensemaking process. The method proved a useful means of making sense of abstract uncertainties that influence an organization, aspects that are normally outside the scope of real estate managers. The real options approach offered a more structured way of balancing the costs and benefits of strategies in dealing with future uncertainties

Real options in project coalitions in Dutch health care: two case studies of construction projects

Uncertainties affecting health organizations inevitably influence real estate decisions since real estate is required to facilitate the primary process in cure and care. Decisions have to be taken when there is little knowledge about the future. Therefore, flexibility is needed in the process of designing, constructing and operating real estate. Real options provide an approach to gain greater insight into flexibility. The aim is to analyse whether real options can be recognized in the real estate strategies of health organizations and what real options are provided by various forms of project coalition. Two case studies reveal that real options thinking can indeed be recognized in specific real estate strategies. The choice of certain real options is partly a result of the type of project coalition applied. Further development of real options thinking in real estate management in cure and care creates opportunities to deal with future uncertaintie