Measuring project performance and dynamic risk management for engineering design alliance

Abstract

Purpose The purpose of this study is to integrate modern decision sciences and develop a dynamic risk management model for international alliance engineering design projects. Design/methodology/approach To apply the model to real-world risk assessment and managerial decision-making, a mega project case study was conducted. System dynamics and computer simulations were used for improving quantitative analyses and scenario planning. Findings Based on the consideration and analyses of different cooperation risk factors, ripple effects of design error is found to be the key factor of subcontract management in international alliance projects in this study. Research limitations/implications This study provides a rationale for dynamic risk management decisions and enables international alliance companies to systematically control the cooperation risks in the execution of projects. Practical implications In the dynamic project management process, a significant increase in the design error rate does not unilaterally occur but is caused by subcontract and other management errors as a system problem. Integrative solutions with systems thinking would help the management. Originality/value This study proposed a framework of measuring project performance and dynamic risk management. The benchmarked case study demonstrates the capability of the proposed model for the feedback learning of business lessons and knowledge accumulations.