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2970. Risk assessment framework for project's activities with conditional expectation

Invited abstract in session TB-60: Projects, risk and law, stream Project Management and Scheduling.

Tuesday, 10:30-12:00
Room: S09 (building: 101)

Authors (first author is the speaker)

1. Ken-ichi Suzuki
Graduate School of Economics and Management, Tohoku University
2. Tetsuo Iida
Faculty of Business Administration, Komazawa University

Abstract

Evaluating the impact of an activity on a project is essential for risk management, Therefore, over time, various researchers have proposed different risk indicators, including criticality index (Van Slyke, 1963), significance index (Williams, 1992), Crucially index (Williams, 1992), management-oriented index (Madadi & Iranmanesh, 2012), criticality-slack-sensitivity index (Ballesteros-Pérez et al., 2019), and more. However, while each indicator conveys a certain aspect of the activity's behavior, they have faced criticism for sometimes presenting an evaluation that is counter-intuitive to actual practice, and the debate on the choice of risk indicators is ongoing.
In this presentation, we first discuss the desirable properties that risk indicators should possess. These include consistency with an overall risk measure, linkage to a risk-reducing action, and risk decomposition. Based on these properties, we propose a risk assessment framework that uses conditional expectation. In the proposed framework, we measure the overall risk with the expected delay to a reference time point and define the risk indicator by an activity's expected duration conditioned with the delay and criticality of the activity. Finally, we demonstrate the effectiveness of the new indicators by applying them to the cost allocation for stochastic CPM and the buffer sizing for the buffer allocation problem.

Keywords

Status: accepted

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