Risk management of a torrential flood construction project using the Monte Carlo simulation

Abstract

Projects for the regulation of torrent basins carry various unforeseen adverse effects that may result in breached deadlines, increased costs, a reduction of quality etc. The paper presents the basic characteristics and most frequent risks associated with erosion control. Furthermore, it provides an overview of risk management through its basic stages - starting from risk identification and risk analysis to risk responses, including the methods used for risk analysis. As a part of quantitative methods for risk analysis, the Monte Carlo method is presented as the one most frequently used in simulations. The Monte Carlo method is a stochastic simulation method consisting of the following stages: the identification of criterion and relevant variables, the allocation of probability for relevant variables, the determination of correlation coefficient among relevant variables, simulation execution and result analysis. This method was applied in the analysis of the total cost of the project for the basin regulation of the Dumaca River in order to determine the funding that would be used as a backup in case of unforeseen events with a negative impact. The project for the regulation of the Dumaca River includes basin regulation in the form of complex flow profile and the lining of zones where necessary in terms of stability. The total cost is presented as a sum of costs of all works (preliminary works, earthworks, masonry works, concrete works and finishing works). The Monte Carlo simulation for cost analysis is carried out using the Oracle Crystal Ball software with its basic steps described in the paper. A sum of funding needed as a financial backup in case of unforeseen events with negative effects is obtained as the simulated total cost of the project.