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Decision Making Essay

2032 words - 9 pages

Risk Management in Construction Projects Using Combined Analytic Hierarchy Process and Risk Map Framework
Satyendra Kumar Sharma*
This paper aims at developing a risk management framework for project risk management in construction projects and demonstrate its application in an ongoing construction project in Amravati, Maharashtra, India. The various risk factors encountered in construction projects and various risk management methods already in use are identified and then a framework is developed which combines the Analytic Hierarchy Process (AHP) and risk map methods. The data was collected from various stakeholders in the construction project. The findings reveal that the proposed ...view middle of the document...

But there are two major lacunae in the existing methods, as pointed out by Martin (2007). Firstly, many methods
* Assistant Professor, Department of Management, Birla Institute of Technology and Science (BITS), Pilani, Rajasthan, India. E-mail: satyendra.sharma1979@gmail.com
©Ris2k0M13anIUagP.emAellntRinghCtsonRsetrsuecrvtieodn. Projects Using Combined 23 Analytic Hierarchy Process and Risk Map Framework

rely on solid statistics and past data like Monte Carlo simulation, network analysis (Dawood, 1998) or matrix propagation method (Tuysuz and Kahraman, 2006). If the project is carried out in a new setting and environment, managers might fall short of such data; and also many problems are ill-defined and imprecise, which these methods fail to address. Secondly, there always has been a distinction between risk analysis and risk management. For example, Dey (2012) has demonstrated the use of Analytic Hierarchy Process (AHP) to assess risks and categorize projects as low, medium or high risk, but no responses to mitigate the risks have been suggested. Since risk analysis and risk management are closely linked, there is a need for an integrated framework which addresses both the aspects (Bryde and Volm, 2009). Dey (2002 and 2006) has stressed on the need for such a framework over several publications.
To address these lacunae, this study aims at developing a risk management framework which combines risk analysis and risk management while eliminating the need for previous data and uses the manager ’s gut feelings and intuition as a substitute. The framework, though reliant on intuition, should be objective, precise and easy to apply. The paper first presents a literature review on the risk factors and risk management models or tools already available. It then elaborates the tools and methods reviewed which form the basis for the new framework, proposes the new framework to address the problems associated with the existing models, and demonstrates the application of this new framework to an existing construction project in India. A housing project by the Indian government which is in the pre-bidding stage has been selected for this purpose. Finally, the paper provides a detailed discussion on the framework and its application before presenting the drawbacks and conclusion.
Literature Review Classification of Risk Factors
Various classification schemes have been used in literature for project risks. By categorizing the risks, the manager can better comprehend the nature of risks.
Mustafa and Al-Bahar (1991) have classified risks into six categories based on their sources. Tah and Carr (2000) have classified risk factors into internal and external. Internal risks are those which are related to the management of internal resources of the project, while external risks are prevalent in the external environment of the project. Risks are also classified on the basis of their origin, i.e., financial, political and acts of god risks (Xenidis...

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