A dynamic systems approach to risk assessment in megaprojects
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Purpose- Megaprojects are large, complex, and expensive projects that often involve social, technical, economic, environmental and political (STEEP) challenges. Despite these challenges, project owners and financiers continue to invest large sums of money in megaprojects that run high risks of being over schedule and over budget. While some degree of cost, schedule and quality risks are considered during planning, the challenge of understanding how risk interactions and impacts on project performance can be modelled dynamically still remains. The consequences learnt from past experiences indicate that there was a lack of dynamic tools to manage such risks effectively in megaproject construction. In seeking to help address these problems, this research put forward an innovative dynamic systems approach called SDANP to risk assessment in megaprojects construction. Design/methodology/approach – The research has developed an innovative SDANP method which involves an integrative use of system dynamics (SD) and analytic network process (ANP) for risk assessment. The SDANP model presented in the thesis has been testified by using data and information collected through a questionnaire survey and interviews from supply-side stakeholders involved in the Edinburgh Tram Network (ETN) project at the Phase One of its construction stage. The SDANP method is a case study risk assessment driven process and can be used against STEEP challenges in megaprojects. Findings – The result of the case study project revealed that the SDANP method is an effective tool for risk assessment to support supply-side stakeholders in decision making in construction planning. The SDANP model has demonstrated its efficiency through case study, and has convinced construction practitioners in terms of its innovation and usefulness. Research limitations/implications – Although the SDANP model has been developed for generic use in risk assessment, data and information used to run the simulation were based on the ETN project, which is in Edinburgh, Scotland. The use of the SDANP model in other megaprojects requires further data and information from local areas. Practical implications – The SDANP method provides an innovative approach to a comprehensive dynamic risk assessment of STEEP issues at the construction planning stage of megaprojects for the first time. It provides an interactive quantitative way for developers to prioritise and simulate potential risks across the project supply network, to understand and predict in advance the consequences of STEEP risks on project performance at the construction stage. Originality/value - The research made an original contribution in quantitative risk assessment with regard to the need for a methodological innovation in research and for a powerful sophisticated tool in practice. The SDANP has shown its advantages over existing tools such as the program evaluation and review technique (PERT) and the risk assessment matrix (RAM).