Risk response incorporating risk preferences in international construction projects

PurposeThe objective of this research is to develop a decision method that can generate appropriate risk response strategies for international construction project managers (PMs) and allow these strategies to reflect their different risk preferences.Design/methodology/approachThe optimal model appro...

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Bibliographic Details
Published in:Engineering, construction, and architectural management Vol. 29; no. 9; pp. 3499 - 3519
Main Authors: Yan, Peng, Liu, Junying, Zhao, Xianbo, Skitmore, Martin
Format: Journal Article
Language:English
Published: Bradford Emerald Publishing Limited 24.11.2022
Emerald Group Publishing Limited
Subjects:
Construction
Construction industry
Contractors
Decision making
Industrial plants
International
Management decisions
Preferences
Project management
Risk
Sensitivity analysis
Strategy
Risk response strategies
Fuzzy chance constrained programming
Credibility theory
Risk preference
International construction projects
ISSN:0969-9988, 1365-232X
Online Access:Get full text
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Summary:PurposeThe objective of this research is to develop a decision method that can generate appropriate risk response strategies for international construction project managers (PMs) and allow these strategies to reflect their different risk preferences.Design/methodology/approachThe optimal model approach is adopted. A credibility-based fuzzy chance constrained programming (CFCCP) model is developed, which simultaneously minimizes the expected losses of risk events and total costs of risk response. To solve this multi-objective model, a fuzzy interactive solution method is used. Moreover, the model performance is demonstrated by a real international industrial plant project. In addition, a sensitivity analysis of the model is conducted.FindingsThe result of the sensitivity analysis indicates that PMs with a greater risk aversion can lead to a higher mitigation ratio of expected losses of risk events and a higher total cost of risk response.Practical implicationsThis research provides contractors with an effective decision-making model to develop a project risk response plan, and it will assist contractors to minimize risk losses and enhance the project performance in the international construction market.Originality/valuePrevious studies overlook the risk preference, which is an important behavioral factor influencing decisions in risk response strategy selection. This research proposed a novel risk response strategy selection decision method that considers different attitudes toward risk among decision makers.
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ISSN:0969-9988
1365-232X
DOI:10.1108/ECAM-03-2019-0132