Issue 20

P. Rezakhani, Frattura ed Integrità Strutturale, 20 (2012) 17-21; DOI: 10.3221/IGF-ESIS.20.02 17 Current state of existing project risk modeling and analysis methods with focus on fuzzy risk assessment – Literature Review Pejman Rezakhani Kyungpook National University, School of Civil and Architectural Engineering, 1370 Sankyuk-dong, Buk-gu, Daegu 702-701, Korea rezakhani@knu.ac.kr A BSTRACT . Risk modeling and analysis is one of the most important stages in project success. There are many approaches for risk assessment and an investigation of existing methods helps in developing new models . This paper is an extensive literature survey in risk modeling and analysis methods with main focus on fuzzy risk assessment. K EYWORDS . Risk modelling; Fuzzy risk assessment; Project risk. risk is defined as the potential for complications and problems with respect to the completion of a project and the achievement of a project goal [1] and as an uncertain future event or condition with the occurrence rate of greater than 0% but less than 100% that has an effect on at least one of project objectives (i.e., scope, schedule, cost, or quality, etc). In addition, the impact or consequences of this future event must be unexpected or unplanned [2]. It is well accepted that risk can be effectively managed to mitigate its’ adverse impacts on project objectives, even if it is inevitable in all project undertakings. The source of risk includes inherent uncertainties and issues relative to company’s fluctuating profit margin, competitive bidding process, weather change, job- site productivity, the political situations, inflation, contractual rights, and market competition, etc [3]. It is important for the construction companies to face these uncertain risks by assessing their effects on the project objectives because a risk quantitative method allows deciding which of the project is more risky, planning for the potential sources of risk in each project, and managing each source during construction [4]. It is noteworthy that risk is distinguished from uncertainty. The one is measurable uncertainty; the other is immeasurable risk [3, 5, 6]. Therefore, managing risks is involved in identifying, assessing and prioritizing risks by monitoring, controlling, and applying managerial resources with a coordinated and economical effort so as to minimize the probability and/or impact of unfortunate events and so as to maximize the realization of project objectives [7]. Project risk management, which has been practiced since the mid-1980s, is one of the nine main knowledge areas of the project management institute’s project management body of knowledge [8]. Effective risk management may lead the project manager to several benefits such as identification of favorable alternative course of action, increased confidence in achieving project objective, improved chances of success, reduced surprises, more precise estimates (through reduced uncertainty), reduced duplication of effort (through team awareness of risk control actions), etc [9]. Systemic project risk management has an effect on the project success. It is found that there is a strong relationship between the amount of risk management efforts undertaken in a project and the level of the project success [10]. Several project risk management approaches are proposed as follows; i.e., PRAM [11], RAMP [12], PMBOK [13], RMS [14], etc [15]. Existing approaches may be summarized into a four phase process for effective project risk management, i.e., Identifying risks, assessing risks, responding risks, and monitoring and/or reviewing risks. Identifying risks is the first step which determines which risk components may adversely affect which project objectives and documents their characteristics [3]. Construction risks are classified in many ways by risk types (i.e., natures, and magnitudes, etc), the sources and/or origins, or project phase [16-19]. Some of the existing researchers propose a hierarchical structure of risks which classifies the risks according to their origin and the location which the risk impacts to the project [20, 21]. A