2019 CSCE Annual Conference - Laval (Greater Montreal) Conference
Dr. Susan M. Bogus, University of New Mexico
Dr. Vanessa Valentin, University of New Mexico
Risk mitigation is an integral part of a risk management process. The planning and evaluation of the risk responses or strategies close the loop on the risk management cycle. The goal of this study is to develop a risk mitigation approach applied to fast-track projects. Risk mitigation is the last phase of the risk assessment framework for fast-track construction projects developed by the authors. Although the study of risk mitigation is not new in the area of construction, the authors did not find evidence that the study of risk mitigation when construction project activities are overlapped was explored. Therefore, the specific objectives of this study are (1) quantify the ability of the risk responses/strategies to mitigate the risks and the overall impact on the project target performance metrics, and (2) determine the impact boundaries of the risks and the optimal combination of the risk responses or strategies that would minimize the project’s risk exposure and minimize the mitigation costs. A conceptual model was developed to assess the mitigation responses/strategies using a Monte Carlo simulation model and an optimization Pareto Front analysis to find the optimal combination of the risk responses. The model considered the application of risk responses and new values for the probability of occurrence and impact respectively for each level of overlapping, the mitigation costs, and a contract bonus. The output of the model includes: the new probability of attaining the desired fast-track project duration under different risk scenarios considering the mitigation actions, the most probable duration of the project, and the trade-off between the total risk mitigation cost and the possible project bonus for early completion, with the optimum overlapping combination that can produces the most satisfactory trade-off. The implication of the results should be interpreted according to the organization, the decision-maker risk tolerance, and the available resources. However, the result can show that the planned risk responses applied might not be sufficient to promote a significant change in the project’s risk exposure. Moreover, the optimization results might show that it is possible to obtain an overlapping combination that can produce a satisfactory bonus-risk mitigation cost trade-off, meaning that it might be worthy to expend financial resources and try to mitigate the risks that can compromise the fast-track strategy of the project, considering that the mitigation cost is less than the bonus that can be awarded.