Project risk management of the construction industry enterprises based on fuzzy set theory

Abstract

The construction industry is a crucially important element of the Ukrainian economy, since its development and performance affect other industries. The economic recession consequences and the unforeseen recent events, caused by different types of risks, have adversely affected the construction industry development and necessitated the search for modern methods of risk management. The study is based on a sample of five projects from five construction industry enterprises and covered the period of 2010–2018. A set of project risks, investigated by the group of experts, was analyzed based on fuzzy set theory, and included seven phases of the fuzzy set model construction to assess project risks of construction industry enterprises. Based on the identified elements of a fuzzy set model and a set of significant project risks, a value classifier of significant project risks for construction industry enterprises was developed. This allowed to estimate the current values of project risk indicators and to identify them by levels of their fuzzy subset membership. Besides, a classifier for the quantitative assessment of the total project risks level for investment projects was developed, which allowed estimating the value of the aggregate indicator. In order to improve the existed methodology, the study suggested introducing probabilistic values for the risk of project failure depending on the significance of the overall project risks. Accordingly, the paper identifies the probability of significant project risks simultaneous occurring during the project implementation. However, the higher the likelihood of risk, the higher the probability of investment project failure.

Keywords

• construction industry
• fuzzy sets
• management
• quantitative assessment
• risks