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

Abstract

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 uncertainties.

Keywords:

• Case study
• health care
• project coalitions
• real estate management
• real options thinking

Acknowledgements

The financial support of this research by the organizations that participated in this research and the reviewers for their constructive comments is gratefully acknowledged.

Notes

1. Unmediated project coalitions, where the client directly contracts a number of suppliers and coordinates these suppliers, are not discussed. Such a project coalition requires a lot of in-house capabilities of the client, and these are often lacking in health organizations. Property developers are more used to this type of project.

2. The Bouwcollege (Netherlands Board for Healthcare Institutions) was a governmental institute established to effect the law related to healthcare provision. Prior to its demise in 2010, its tasks included determining performance indicators for building construction in healthcare, providing permits with relevant conditions for construction projects, and advising the Ministry and health organizations. Before providing any permit, the Ministry had to agree that the building construction was necessary.