Decision tree models for technical due diligence in land development

Abstract

In the design of modern urban systems that consider the needs of different resident groups, technical due diligence (TDD) processes play a crucial role. According to current market practice, these processes precede land acquisition and the commencement of construction projects. As part of this process, the feasibility of the planned investment is verified. Already at the preliminary report stage, potential legal, technical, environmental, social, and economic constraints that may prevent the implementation of the project are identified. If no significant barriers are found, a final report is issued. This article presents a methodology for identifying factors that may block the implementation of an investment at the preliminary report stage. It also proposes a supporting model for the investment decision-making process regarding land acquisition, based on decision trees. Based on completed TDD processes, an algorithm was developed that enables the construction of a decision tree, considering various attributes describing the analyzed building plot. The use of decision trees allows for the early identification of key attributes requiring detailed analysis in the initial phase of TDD. This facilitates more efficient preparation of preliminary reports, considering the interests of different resident groups. In the final report stage, decision tree models can serve as a crucial tool to support investors in making decisions regarding the potential land acquisition.