Integrated Approach to Construction Risk Management: Cost Implications
Publication: Journal of Construction Engineering and Management
Volume 147, Issue 10
Abstract
Managing risk in construction projects has proven to be a challenge for many project managers and stakeholders involved in projects. The lack of a systematic approach and standardized processes are key factors influencing improper risk management techniques. This research introduces a new model to evaluate and assess risk in terms of cost impact, utilizing a fuzzy Monte Carlo simulation approach for the first time. The method consists of ranking the top risks using a fuzzy logic system utilized in an objective manner by setting criteria for experts to rank the risk based on cost impact and probability to reduce human biases, then evaluating their cost impact through a Monte Carlo simulation both pre- and postmitigation. This work proposes a new strategy to elicit risk for construction projects based on risk cost impact, project type, project location, project contract type, and project delivery method. Based on the findings, implementation of a risk mitigation response plan can decrease the project cost remarkably. This model proved to be beneficial in forecasting risk impact when executed on a commercial construction project in California. This model can be applied as a general tool for risk mitigation processes for the construction industry.
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Data Availability Statement
Some or all data, models, and code generated or used during the study are available from the corresponding author by request. The items include the model for Monte Carlo simulation (Microsoft Excel) and all the data in Fuzzy Logic Toolbox from MATLAB.
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Journal of Construction Engineering and Management
Volume 147 • Issue 10 • October 2021
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© 2021 American Society of Civil Engineers.
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Received: Aug 18, 2020
Accepted: Apr 27, 2021
Published online: Jul 20, 2021
Published in print: Oct 1, 2021
Discussion open until: Dec 20, 2021
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