Dynamic selection of risk response strategies with resource allocation for construction project portfolios

Abstract

To promote the dynamic risk management of construction project portfolios (CPPs) and improve the effect of risk response, a simulation–optimization model is proposed. The model integrates System Dynamics and optimization to dynamically select risk response strategies (RRSs) and facilitate more refined resource allocation. Specifically, a System Dynamics sub-model simulates the risk level by capturing one-stage and cross-stage risk interactions. Second, develop an optimization sub-model to select RRSs with resource allocation, which allows for partially allocated resources for RRSs. Afterward, integrate them into a simulation–optimization model. The closed-loop information flow between the two sub-models enables the assessment of the initial risk at a specific stage, the selection of optimal RRSs, and the updating of the dynamic impact of the risks of that stage on later stages. Finally, the proposed model is validated using a numerical example. The findings accentuate the significance of considering cross-stage risk interactions and optimizing resource allocation in the risk response of CPPs, and validate the feasibility and superiority of the model for solving the dynamic selection of RRSs.