Modelling the Effects of Risk Factors on Project Cost and Time

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Addis Ababa University


A significant number of projects fail to achieve their intended goals. The main reason for the failure is due to the associate risks with every project. Among different sectors, the construction industry is usually prone to risk. This is because of the involvement of many stakeholders, complexity, dynamic nature of business, environment and process. Although road construction projects play a significant role in Ethiopian economy, different studies conducted on Ethiopian road construction revealed a significant failure on time and cost of projects. The survey in this industry shows that there is no systematic risk management. In addition, most of the research works on risk assessment are limited to risk ranking. Furthermore, there is no suitable tool or theory for assessing the compounded risk factors on the project objective without considering the interdependencies of risk factor among each other. Thus, the objective of this research is to develop the interrelationship and examine the impact of individual risk factors on project cost and time. Moreover, it is aimed at studying the aggregated impact of risk factors. The research uses questionnaires to examine the risk magnitude by ranking 51 risk factors obtained from comprehensive literature review and expert interview against the probability of occurrence and impact on time and cost. Pairwise relationship matrix is developed for the experts in construction industries to identify the interrelationship between risk factors. The interrelationship between risk factors are developed by using Interpretative Structural Modelling (ISM) technique. On the other hand, the individual risk factors are ranked using fuzzy expert system to examine experts’ judgement due to unavailability of data. The results of the risk ranking revealed that contractual claim and right of way risk factors are found to have high magnitude on both cost and time of the project. Finally, System Dynamics is used to model the aggregation of risk factors on project cost and time. The unintended change in a single risk factor is evaluated on the whole system of the project execution and ultimately on project cost and time. The relationship between risk factors project costs and time were developed. The sensitivity analyses on the change in aggregate risk factors on project cost and time are also deeply examined.



Risk, Project, Fuzzy Expert System, System Dynamics, Interpretative Structural Modelling