Some aspects of risk analysis for decision making in engineering projects management

There is a reasonable consensus, both in industry and in academia that there are some credibility and implementation gaps and also, gaps in knowledge in certain aspects of risk analysis for decision making. In recognition of the existence of these gaps and the need for them to be narrowed or bridged the author introduces new or extends existing procedures, approaches, models or concepts in Risk Analysis for Decision Making. The research covers two main areas of decision making: (1) whole project; and (2) Construction phase only. Extensive use is made of results from case project simulation experiments. For any particular study or analysis, the project cases are selected such that they are representative of a wide range of project types. Quantitative criteria for risk analysis modelling using the sensitivity of the risk variables in the risk analysis model is provided. The sensitivity of the Internal Rate of Return (IRR) and the Net Present Value (NPV) decision criteria of different project models are studied and general conclusions which are useful in decision making are drawn. The effect of Input probability distributions on decision criteria output probability distributions from risk analysis models are studied. Conditions under which errors could occur if outputs probability distributions are approximated to the Normal distribution are identified. In the area of Construction Project Management decision making: the author develops a risk analysis and probabilistic Cost Estimating model; uses the model to study certain aspects of risk analysis and provides guidance for risk analysis users, especially in the area of Correlation of variables in risk analysis models; and introduces new approaches to Contingency evaluation.