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(RISK-1523) Estimating Risks

Primary Author: Dr. Ovidiu Cretu PE and Mr. Vlad Cretu

Audience Focus: Intermediate
Application Type: Application
Venue: 2014 AACE International Annual Meeting, New Orleans, LA, USA

Abstract: The paper summarizes the authors’ research and practice on estimating risks (cost and schedule) of construction projects. It advocates for a scalable project risk assessment and presents an algorithm that captures the significant aspects of project’s uncertainties. The authors elaborate on risk based estimate (risk assessment) as an integral component of risk management cycle. The pitfalls and windfalls of the project’s risk assessment are presented in the context of the battle between the “professional sophistication” (PS) and the “keep it short & simple” (KISS) approaches. The KISS approach advocates for assessment: (1) of only significant risks (risks that through their consequences may significantly alter the project objectives) and (2) of the risks’ conditionality (dependency & correlation). Finally it presents an excel tool that may facilitate the integrated cost and schedule risk assessment. The conclusion of the paper is summarized by – keep the risk assessment in proportion with the data available.