A Generic Framework for Managing Schedule and Cost Risks of Construction Activities Using PERT and the EV Technique

Abstract

Construction projects are complexity, multidisciplinary, have thousands of activities and details, and involve many participants. This intricate and fragmented nature of construction projects coupled with tight budgets and limited resources makes them good candidates for failure and promotes the emergence of risks. These risks must be addressed in the decision-making process and properly managed to mitigate their effect. However, risk management is one of the most difficult tasks and the assessment and analysis of the cost and schedule risks of construction activities are considered the most challenging tasks in the whole risk management process and require careful considerations throughout the life cycle of a project. Despite the high cost associated with managing risk in construction projects, the outcome of this task normally provides fruitful benefits. To address this crucial issue, this study employs a mixed methodology approach utilizing both qualitative and quantitative methods to gather feedback from construction experts and identify schedule and cost risk events associated with construction activities, prioritize their likelihood of occurrence, and suggest responses to mitigate them. The Program Evaluation and Review Technique (PERT) and earned value (EV) analysis are then used to estimate the expected cost at completion and the risk associated with it. A spreadsheet framework is then developed to help construction practitioners identify the most severe risks and measure their effect on the project’s duration and cost. The framework also suggests risk responses for each of the risk events. The study then provides recommendations to mitigate risks with high impact and severity.