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Cited by 41Construction Project Management and PerformanceCapital Investment and Risk AnalysisMulti-Criteria Decision Making

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Risk assessment of construction projects using Monte Carlo simulation

Qazi, Abroon, Simsekler, Mecit Can Emre·2021·International Journal of Managing Projects in Business
DOI 10.1108/ijmpb-03-2020-0097
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Abstract

Purpose: This paper aims to develop a process for prioritizing project risks that integrates the decision-maker's risk attitude, uncertainty about risks both in terms of the associated probability and impact ratings, and correlations across risk assessments. Design/methodology/approach: This paper adopts a Monte Carlo Simulation-based approach to capture the uncertainty associated with project risks. Risks are prioritized based on their relative expected utility values. The proposed process is operationalized through a real application in the construction industry. Findings: The proposed process helped in identifying low-probability, high-impact risks that were overlooked in the conventional risk matrix-based prioritization scheme. While considering the expected risk exposure of individual risks, none of the risks were located in the high-risk exposure zone; however, the proposed Monte Carlo Simulation-based approach revealed risks with a high probability of occurrence in the high-risk exposure zone. Using the expected utility-based approach alone in prioritizing risks may lead to ignoring few critical risks, which can only be captured through a rigorous simulation-based approach. Originality/value: Monte Carlo Simulation has been used to aggregate the risk matrix-based data and disaggregate and map the resulting risk profiles with underlying distributions. The proposed process supported risk prioritization based on the decision-maker's risk attitude and identified low-probability, high-impact risks and high-probability, high-impact risks.

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Research works printed but not linked: 40

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Metadata

Authors
Qazi, A., & Simsekler, M. C. E.
Affiliations
  • American University of Sharjah (AE)
  • Khalifa University of Science and Technology (AE)
ORCID
Venue
International Journal of Managing Projects in Business
Publisher
Emerald
Published
2021-02-12
Volume
14
Issue
5
Pages
1202-1218
ISSN
1753-8378 (ISSN-L)
DOI
10.1108/ijmpb-03-2020-0097
OpenAlex
W3130298214
Cited by
41
References
0
Citations by year
2026: 15 · 2025: 12 · 2024: 5 · 2023: 4 · 2022: 4 · 2021: 1
FWCI
1.94
Type
journal article
Language
en
Open access
closed
Licence
www.emerald.com/insight/site-policies (tdm)
Locations
International Journal of Managing Projects in Business (publishedVersion)
Topics
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Construction Project Management and Performance
  • Social Sciences › Economics, Econometrics and Finance › Finance › Capital Investment and Risk Analysis
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Multi-Criteria Decision Making
Keywords
construction risk, risk prioritization, Monte Carlo simulation, expected utility, risk preferences, risk matrix, risk exposure, risk probability and impact, risk correlation

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