Project Risk: Analysis and Management

Abstract

The development budget represents a statement of the financial value and cost of the project, quantified so as to allow the determination of financial feasibility. Prepared, as it must be, at the earliest stage of the project’s inception, its amounts will be based on, usually almost exclusively, forecasts — that is, informed guesses, estimates or expert predictions of future occurrences. The occurrences which have to be forecast will consist of prices for land and services, revenue from business activities, programme times and economic circumstances which influence these phenomena, such as interest rates and market inflation. The possibility of the eventuality of the forecast of such occurrences being precisely fulfilled ranges from highly unlikely to impossible. This high probability of the non-fulfilment of the precise forecast, budgeted amounts means that development projects have, for the developer, a degree of risk and uncertainty.