A Prototype Risk Analysis for Determining Contingency Using Approximate Reasoning Method

Both subjectivity and complexity are considered to be major sources of uncertainty that may lead to financial loss. The complex and dynamic nature of projects, along with the unsuccessful delivery of projects on time and within budget, has created the need for developing analytical tools and techniques. This article investigates the application of approximate reasoning concepts of fuzzy set theory and then, proposes a systematic procedure for quantifying project risks and predicting cost contingency. The modeling process of approximate reasoning technology, needs only a few linguistic rules and some numerical measures of both the likelihood of occurrence and the impact of the risk event. The authors concluded that their approximate reasoning method has the potential capability to analyze the risks and uncertainties associated with projects; that is, it can provide a simple and reasonable method for assessing project contingency, though not necessarily a better one. [PUBLICATION ABSTRACT]