Analysis of Risk Network Behavior in Project Management Based on Simulation and Mathematical Modeling Chao FANG Supervisors: J.C. BOCQUET, Franck MARLE Project Management Research Group LGI, Ecole Centrale Paris

Outline  Background  Risk Interaction Network Model  Simulation Analysis  Summary & Future Work

Outline  Background  Risk Interaction Network Model  Simulation Analysis  Summary & Future Work

Importance of Project Risk Management  Society is more than ever exposed and averse to risks  Project management is basically a risky activity:  targets and constraints  uncertainty and change  complex with interrelated parameters

Complexity of Project and Risks  The growing complexity of project induces the complexly interacted risk network.

Current Methodologies and Problems  Most classical methods of PRM independently analyze individual risks

Current Methodologies and Problems  Tree-structure methods still focus on single risk  Bayesian Belief Network  Not practical for large network  Not adapt to properties of risk interactions  Could not model “loop”

8 Outline  Background  Risk Interaction Network Model  Simulation Analysis  Summary & Future Work

Methodologies in Modeling Process  Identification of interactions  Expertise  DSM (Design Structure Matrix)  Evaluation of interactions  Expertise  Previous experience  Modeling of risk network  By simulation  By mathematical algorithm

Original Project Risk List (case study)

Risk Interaction Matrix (case study)

Risk Interaction Network (case study)

Outline  Background  Risk Interaction Network Model  Simulation Analysis  Summary & Future Work

Simulation Model in ARENA (case study)

Simulation Results (case study)  Some improbable risks have significant raising ratio  Some underestimated risks escalate into higher level

Outline  Background  Risk Interaction Network Model  Simulation Analysis  Summary & Future Work

Summary  Investigation of limits in literature  Risk interaction network model  Case study on a real project  Simulation results compared with classical methods  Underestimation of some risks with classical analysis due to the false independence assumption

Future Work  Develop a mathematical model in order to approximate the behavior of the network (to be compared with simulation)  Analyze consequence of complex scenarios like “loop”  Tramway infrastructure project case study  More parameters like time and cost of risks will be included and calculated  Potential risk response and control solution

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