Project Portfolio Risk Identification and Analysis, Considering Project Risk Interactions and Using Bayesian Networks

Foroogh Ghasemi, Mohammad Hossein Mahmoudi Sari, Vahidreza Yousefi, Reza Falsafi and Jolanta Tamošaitienė
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Foroogh Ghasemi: Project and Construction Management, Faculty of Architecture and Urban Planning, University of Art, Tehran 1136813518, Iran
Mohammad Hossein Mahmoudi Sari: Project and Construction Management, Faculty of Architecture and Urban Planning, University of Art, Tehran 1136813518, Iran
Vahidreza Yousefi: Construction and Project Management, University of Tehran, Tehran 1417614418, Iran
Reza Falsafi: Project and Construction Management, Faculty of Architecture and Urban Planning, University of Art, Tehran 1136813518, Iran
Jolanta Tamošaitienė: Civil Engineering Faculty, Vilnius Gediminas Technical University, Saulėtekio al. 11, LT 2040 Vilnius, Lithuania

Sustainability, 2018, vol. 10, issue 5, 1-23

Abstract: An organization’s strategic objectives are accomplished through portfolios. However, the materialization of portfolio risks may affect a portfolio’s sustainable success and the achievement of those objectives. Moreover, project interdependencies and cause–effect relationships between risks create complexity for portfolio risk analysis. This paper presents a model using Bayesian network (BN) methodology for modeling and analyzing portfolio risks. To develop this model, first, portfolio-level risks and risks caused by project interdependencies are identified. Then, based on their cause–effect relationships all portfolio risks are organized in a BN. Conditional probability distributions for this network are specified and the Bayesian networks method is used to estimate the probability of portfolio risk. This model was applied to a portfolio of a construction company located in Iran and proved effective in analyzing portfolio risk probability. Furthermore, the model provided valuable information for selecting a portfolio’s projects and making strategic decisions.

Keywords: project portfolio risk; risk interactions; risk analysis; risk identification; Bayesian networks (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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