Defining project performance standards as parameters of the compliance risk regulatory system

Abstract

Subject. This article discusses the problem of choosing the standards of project time and cash expenditures, taking into account their randomness. Objectives. The article aims to describe the task of setting standards for the values of project time and budget profiles, taking into account compliance risk, and analyze the dependence of the effectiveness of project profile norm setting on the compliance risk level. Methods. For the study, we used the methods of probability theory, mathematical statistics, and dynamic programming. Results. The article formulates a problem of project profile norm setting, taking into account compliance risk, and provides an algorithm for dynamic programming to establish standards and oversizes corresponding to risk appetite. It shows an example of the calculation of these design characteristics, where at each stage of the project there are fourteen types of independent random factors that negatively affect the costs of the project. The article also describes the dependence of efficiency and additional regulatory costs for managing compliance risk on the risk level. Conclusions. The task of project costs norm setting based on a risk-oriented approach is formulated and solved on the basis of the dynamic programming method. This can be used to design a compliance risk management system. For the example considered, we identify areas of unacceptable, acceptable and negligible risks.