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- Title
Risk Perception-Based Project Contingency Management Framework.
- Authors
Ottaviani, Filippo Maria; De Marco, Alberto; Rafele, Carlo; Castelblanco, Gabriel
- Abstract
Project risk management (PRM) involves identifying risks, assessing their impact, and developing a contingency plan. A structured contingency management (CM) approach prevents subjective biases in analyzing risks and developing responses. Previous studies have either focused on improving the accuracy of risk estimates or analyzed, from a qualitative perspective, the relationships between perceived risk and project performance. This study aimed to improve PRM by providing a risk-perception-based contingency management framework (CMF). The CMF guides contingency depletion based on two short- and long-term cost overrun indicators and their respective thresholds. Thresholds and the initial contingency reserve amount are determined by applying the Monte Carlo method to a stochastic, discrete-event, finite-horizon, dynamic project simulation model. The study developed the CMF through a structured approach, validating the simulation model on eight specific project configurations. The results prove that the framework can be applied to any project, shaping the risk response strategy. This study contributes to PRM by explaining the relationships between risk perception and risk responses and providing a prescriptive CM tool.
- Subjects
RISK perception; PROJECT management; MONTE Carlo method; COST overruns; EMERGENCY management; DYNAMIC simulation
- Publication
Systems, 2024, Vol 12, Issue 3, p93
- ISSN
2079-8954
- Publication type
Article
- DOI
10.3390/systems12030093