An optimal model for Project Risk Response Portfolio Selection (P2RPS) (Case study: Research institute of petroleum industry)

Document Type : Research Paper

Authors

Abstract

In the real world, risk and uncertainty are two natural properties in the implementation of Mega projects. Most projects fail to achieve the pre-determined objectives due to uncertainty. A linear integer programming optimization model was used in this work to solve a problem in order to choose the most appropriate risk responses for the project risks. A mathematical model, in which work structure breakdown, risk occurrences, risk reduction measures, and their effects are clearly related to each other, is proposed to evaluate and select the project risk responses. The model aims at optimization of defined criteria (objectives) of the project. Unlike similar previous studies, in this study, the relationship between risk responses during implementation has been considered. The model is capable of considering and optimizing different criteria in the objective function depending on the kind of project. In addition, a case study related to petroleum projects is presented, and the corresponding figures are analyzed.

Keywords

Main Subjects

References

Ben-David, I., & Raz, T. (2001). An integrated approach for risk response development in project planning. Journal of the Operational Research Society, 52(1), 14-25.
Ben-David, I., Rabinowitz, G. & Raz, T. (2002). Economic optimization of project risk management efforts. Project Risk Management Optimization, 1, 1-10.
Boehm, B. W. (1991). Software risk management: Principles and practices. IEEE software, 8(1), 32-41.
Chapman, C., & Ward, S. (2003). Project risk management: Processes, techniques and insights. Second ed., Chichester, John Wiley and sons.
Chapman, C. B. (1979). Large engineering project risk analysis. IEEE Transaction on Engineering Management, 26(3), 78-86.
Conrow, E. H. (2003). Effective risk management: Some keys to success. Second ed., Reston, American Institute of Aeronautics and Astronautics.
Cooper, D. F. (2005). Project risk management guidelines: Managing risk in large projects and complex procurements. Chichester, John Wiley and sons.
Datta, S., & Mukherjee, S. K. (2001). Developing a risk management matrix for effective project planning-an empirical study. Project Management Journal, 32(2), 45-57.
Dikmen, I., Birgonul, M. T., Anac, C., Tah, J. H. M., & Aouad, G. (2008). Learning from risks: A tool for post-project risk assessment. Automation in Construction, 18(1), 42-50.
Elkjaer, M., & Felding, F. (1999). Applied project risk management-introducing the project risk management loop of control. Project management, 5(1), 16-25.
Fan, Z. P., Li, Y. H., & Zhang, Y. (2015). Generating project risk response strategies based on CBR: A case study. Expert Systems with Applications, 42(6), 2870-2883.
Fan, M., Lin, N. P., & Sheu, C. (2008). Choosing a project risk-handling strategy: An analytical model. International Journal of Production Economics, 112(2), 700-713.
Fang, C., & Marle, F. (2012). A simulation-based risk network model for decision support in project risk management. Decision Support Systems, 52(3), 635-644.
Flanagan, R., & Norman, G. (1993). Risk management and construction. Wiley-Blackwell.
Guide, A. (2001). Project Management Body of Knowledge (PMBOK® GUIDE). In Project Management Institute.
Haimes, Y. (2005). Risk modeling, assessment, and management. 2nd edition, New York, John Wiley and sons, ISBN: 978-0-471-72389-9.
Hillson, D. (1999, October). Developing effective risk responses. In Proceedings of the 30th annual project management institute 1999 seminars & symposium (pp. 10-16).
Hillson, D. (2001, November). Effective strategies for exploiting opportunities. In Proceendings of Project Management Institute Annual Seminars & Symposium.
Kayis, B., Arndt, G., Zhou, M., & Amornsawadwatana, S. (2007). A risk mitigation methodology for new product and process design in concurrent engineering projects. CIRP Annals-Manufacturing Technology, 56(1), 167-170.
Klein, J. H. (1993). Modelling risk trade-off. Journal of the Operational Research Society, 44(5), 445-460.
Klein, J. H., Powell, P. L., & Chapman, C. B. (1994). Project risk analysis based on prototype activities. Journal of the Operational Research Society, 45(7), 749-757.
Kujawski, E. (2002). Selection of technical risk responses for efficient contingencies. Systems Engineering, 5(3), 194-212.
López, C., & Salmeron, J. L. (2012). Risks response strategies for supporting practitioners decision-making in software projects. Procedia Technology, 5, 437-444.
Lyons, T., & Skitmore, M. (2004). Project risk management in the Queensland engineering construction industry: A Survey. International journal of project management, 22(1), 51-61.
Mavrotas, G. (2009). Effective implementation of the ε-constraint method in multi-objective mathematical programming problems. Applied Mathematics and Computation, 213(2), 455-465.
Miller, R., & Lessard, D. (2001). Understanding and managing risks in large engineering projects. International Journal of Project Management, 19(8), 437-443.
Pipattanapiwong, J., & Watanabe, T. (2000). Multi-party Risk Management Process (MRMP) for a construction project financed by a international lender. Proceeding of the 16th Association of Researchers in Construction Management (ARCOM) annual Conference, Glasgow Caledonian University Glasgow, Scotland.
Piney, C. (2002). Risk response planning: Select the right strategy. In Fifth project management conference, France.
Seyedhoseini, S. M., Noori, S., & Hatefi, M. A. (2009). An integrated methodology for assessment and selection of the project risk response actions. Risk Analysis, 29(5), 752-763.
Zhang, Y., & Fan, Z. P. (2014). An optimization method for selecting project risk response strategies. International Journal of Project Management, 32(3), 412-422.
Interdisciplinary Journal of Management Studies (Formerly known as Iranian Journal of Management Studies)
Volume 9, Issue 4
October 2016
Pages 741-765

Files

Share

How to cite

Statistics