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(RISK-2442) Numerical Bias of Risk Teams vs. Project Actual Bid Results

Level: Intermediate
Author(s): David A. Hamilton, PE CCP
Venue: 2017 AACE International Annual Meeting, Orlando, FL

Abstract: Are risk analysts and constructability review teams perpetually pessimistic or does something happen between the time of the risk study and bid day? True, those of us involved with quantitative risk analysis have a critical perspective and survey our surroundings looking for the “what ifs” of this world to complicate our projects. Sometimes it’s a fact of remembering a project that went awry or a combination of facts that may lead to either cost or schedule complications. A subtle tension sometimes arises among the risk team, engineer and owner since risk projections can severely impact budgets, project goals and stakeholder expectations.

The scope of this paper explores the dynamics of risk identification, risk distribution types and the resulting impact upon design teams, project budgets and owners. The design industry has been supporting the use of risk analysis and more project risk events are being identified and mitigation measures are being incorporated prior to construction bidding. A generic case study of a water treatment plant project will highlight the risk bias and its intricate effects upon the design team and the owner’s project management (PM) staff.