Securing rationality withinReal Estate Management

„Rationalitätssicherung im Immobilienmanagement“

Doris GrillResearch Institute for Spatial and Real Estate Economics

Content of the presentation

Presentation of the problem

State of the field Rationality

Controlling

Real Estate characteristics

Articles of the multi-paper dissertation Research questions

Methods

Expected results

Presentation of the problem

Introduction

Paradox:

Demand for more figures, facts and

transparency on decision making

Intuitive decision making and information overload

perfect informationleads to

perfect rationality

bounded rationality

Work experience

Controller position as a stopgap Main function: collecting, consolidating and interpreting data

IT systems and infrastructure Quantity of data versus existing tools

Data quality and information management Excel files and isolated applications

Long lead times due to extensive plausibility checks

Problems with predictability Planning and budgeting in an uncertain market

Major question

How is it possible to secure rationality within

Real Estate Management?

State of the field

Rationality

“reason, common sense”

Max Weber (1921): Zweckrationalität: “purposive rationality”

Wertrationalität: “value rationality”

Business science: Predominant concept: purposive rationality

“As long as there is a good reason it is rational”

Implicit values: maximise utility, financial profit

Perfect rationality is a result of perfect

information not possible in reality

What is Controlling?

A controversially discussed question in literature and also

„In practice, people with the title of Controller have functions that are at one extreme, little more than bookkeeping and, at the other extreme, de facto general management.“1

Management control systems, management accounting and control

1 Source: Antony 1965

Controlling

Concept of Controllingfrom Weber/Schäffer 1999

Definition: Controlling means „Securing the rationality of Management“

Rationality is defined as purposive rationality, measured by the efficiency of utilization of resources. Purposes are given.

Deficits in the rationality of the manager are defined as constraints in willingness and/or ability.

Controlling has to ensure the efficiency of utilization despite the deficits of the manager.

Real Estate Management

on a meta-level

Portfolio Management

Asset Management

Project Management for Real Estate Developments

Real Estate characteristics

Attributes of Real Estate that challenge Controlling:

Different information needs and operating numbers in each life-cycle development, construction, (or acquisition), administration,

renovation, termination (or sale)

No market transparency and heterogeneity of the projects and objects Difficulties to find information and compare them

Problem of valuation

Predictability of events and budgeting is very difficult

Special know-how for different markets needed

Source: a.o. Dasso 1995

Articles of themulti-paper dissertation

Multi-paper dissertationResearch questions and methods

15

• Is this special Controlling-Concept suitable to secure the rationality of the Real Estate Manager?

1st paperLiterature

Review

• Is the existing “Austrian Real Estate Controlling” able to secure management rationality?

2nd paperQualitative

Study

• How does the Real Estate Manager secures the rationality of his decisions in everyday life?

3rd paperQualitative

Study

Securing management rationalitywith Real Estate Controlling

Status of Controlling within AustrianReal Estate Management

Securing management rationality withinAustrian Real Estate Management

1st paper

Securing management rationality with Real Estate Controlling

Requirements and problems for Real Estate Managers within the real estate life-cycle

Securing the management rationality defining the “Controlling concept”

Securing the rationality of the Real Estate Manager bringing the concepts together

Why qualitative research?

There is no strong theory to be tested

Quantitative research excludes social phenomenon beyond the questionnaire

Interest in the subjective view of the Real Estate Manager versus the subjective view of the Controller

Deficits in the rationality of the Manager (constraints in willingness and/or ability) can only be enquired indirect

Qualitative methods used

Data collection: mixture of different qualitative interview methods Expert interview

Problem-centered interview

Narrative interview

Data evaluation: depending on the type of data Qualitative-content-analysis

Narrative analysis

Research process andquality of research

Circular research process

Suitability of the method

Definition of research goals

Documentation of the way of proceeding and the problems

Regular reflection about the concept of the study

preunderstanding

research questions and research goals

concept ofthe study

adjustment of hypothesis

data collection

data evaluation

construction of theory

publication

2nd paper

Status of Controlling within Austrian Real Estate Management

Theory: existing Controlling concepts Interviews: Relationship between Controller and

Manager (two subjective views) Expert: Status of the existing Controlling system Problem: Deficits of the existing Controlling system Narrative: Activities of and cooperation between Manager

and Controller

Analysis if existing Controlling is an efficient system to support management rationality

3rd paper

Securing management rationality within Austrian Real Estate Management

Theory: existing concepts of rationality Interviews: Subjective view of the Real Estate

Manager on the rationality of his/her decisions Expert: Important information for decisions Problem: Missing or uncertain data Narrative: Strategies to secure rationality of decisions

Analysis if the manager is willing and able to secure the rationality of his/her decision and how he/she does it in everyday-life

Expected results

Hypotheses

The Controlling concept is only suitable to a limited extend and should be adjusted to the special needs of Real Estate Management

Existing Controlling is not able to secure the rationality of the Real Estate Manager

The Manager does not secure his rationality with the Controlling outcome but with other sources

A lot of decisions are also not justifiable with data and facts from other sources

Research Institute for Spatial and RealEstate EconomicsNordbergstrasse 15, 1090 Vienna, Austria

MAG. (FH) DORIS GRILL

T +43-1-313 36-5764F +43-1-313 36-705

doris.grill@wu.ac.atwww.wu.ac.at/immobilienwirtschaft

Thank you for your attention!