A simulation-based risk interaction network model for risk management in international construction projects

Abstract

The inherent complexity in International Construction Projects (ICPs) brings forth the intricate interactions between risks, invalidating the risk analysis under the conventional perception of independent risks. The diverse phases of ICPs feature the temporal dynamics of risks and interactions, exacerbating the challenge of pinpointing critical risks. This study aims to model how the risks are interconnected and amplified by proposing an ICP risk management framework, in which the project phase-based Risk Interaction Network (RIN) is constructed. An integrated index is designed to evaluate each risk’s criticality and discern key risks within a two-part procedure, where the simulation-based model estimates risk sensitivity to predecessor risks and captures the stochasticity of risk occurring, and network analysis gauges risk spread power on the entire network. An example of an application is provided to illustrate the utility of the proposed framework.