Article
Evolving risk analysis techniques: Managing project development risk from a top-down perspective
CONSTRUCTION RESEARCH CONGRESS. ASCE/CIB. 2007. (CRC 2007) (2 VOLS)
(2007)
Abstract
Project risk analysis techniques have undergone significant development in the past few
decades. Much of the discussion to date involves a common methodology by which a team of
seasoned project experts creates a risk register—a listing of potential hazardous events which
may befall the project. These hazards are then extracted from the project estimate and evaluated
in terms of likelihood of occurrence and magnitude of cost. Finally, a frequently used method to
consider the combined effect of all such events on the final project outcome is to re-incorporate
these elements into the project estimate and use Monte-Carlo simulation. The result is a graph of
likelihood of outcome of any of a number of project measures, most frequently final cost or final
date of completion. This methodology has been used on many projects, including on projects
developed by the Federal Transit Administration (FTA). However, at the FTA the results of
these analyses have not tracked well with actual cost experience on many projects.
Consequently, the FTA is developing and implementing an alternate method of cost risk
analysis, which is informed through a risk register but consolidates cost variation into a single
distribution for all cost elements within a limited set of cost categories; these categorical
distributions are then “summed” into a distribution of project risk. Since the resulting cost
probability curve is based on a holistic view of the project, rather than on discrete elements, the
technique is called a “Top-Down” analysis. This research investigates this new technique and
concludes that through this approach, the FTA has broadened its risk modeling with the inclusion
of phase-based risk evaluations and the addition of internal risks to the more common
identification of external risks. The factors involved in the Top-Down technique are largely
judgmentally-derived; acquisition and analysis of substantial data from future projects will
strengthen the use of these factors over time.
Keywords
- Risk,
- Transit,
- Project Management
Disciplines
Publication Date
2007
Citation Information
David N. Sillars and Michael OConnor. "Evolving risk analysis techniques: Managing project development risk from a top-down perspective" CONSTRUCTION RESEARCH CONGRESS. ASCE/CIB. 2007. (CRC 2007) (2 VOLS) (2007) Available at: http://works.bepress.com/michael-oconnor/20/
Creative Commons license
This work is licensed under a Creative Commons CC_BY-NC-ND International License.