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Integrating risk into estimations of project activities' time and cost: A stratified approach

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  • Asadabadi, Mehdi Rajabi
  • Zwikael, Ofer

Abstract

Time and cost estimations of project activities are challenging tasks for project managers and planners. As a result of the high level of risk and uncertainty present during the early stages of projects, the reliability of these estimations during project planning remains poor. This study argues that this reliability can be improved through using the ‘concept of stratification’. This concept considers a set of states and describes a system that receives inputs (associated with outputs), based on which the system transitions from one state to another. This provides a unique structure that is capable of considering uncertainty related to events that may occur during a project. This paper explains how the concept of stratification can be used to compute estimations of the time and cost of activities involved in a project. The method is illustrated with a construction project that has uncertain events. By determining specific activities’ estimated time and cost, the project's estimated time and cost can also be calculated. Thus, the proposed method increases the reliability of estimations of projects’ completion time and cost.

Suggested Citation

  • Asadabadi, Mehdi Rajabi & Zwikael, Ofer, 2021. "Integrating risk into estimations of project activities' time and cost: A stratified approach," European Journal of Operational Research, Elsevier, vol. 291(2), pages 482-490.
    • Handle: RePEc:eee:ejores:v:291:y:2021:i:2:p:482-490
    DOI: 10.1016/j.ejor.2019.11.018
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    References listed on IDEAS

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    Cited by:

    1. Katarina Buganova & Maria Luskova & Jozef Kubas & Michal Brutovsky & Jaroslav Slepecky, 2021. "Sustainability of Business through Project Risk Identification with Use of Expert Estimates," Sustainability, MDPI, vol. 13(11), pages 1-17, June.
    2. Mehdi Rajabi Asadabadi & Hadi Badri Ahmadi & Himanshu Gupta & James J. H. Liou, 2023. "Supplier selection to support environmental sustainability: the stratified BWM TOPSIS method," Annals of Operations Research, Springer, vol. 322(1), pages 321-344, March.
    3. Kim, Byung-Cheol, 2022. "Multi-factor dependence modelling with specified marginals and structured association in large-scale project risk assessment," European Journal of Operational Research, Elsevier, vol. 296(2), pages 679-695.
    4. Dalia H. Dorrah & Brenda McCabe, 2023. "Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects," Sustainability, MDPI, vol. 16(1), pages 1-25, December.
    5. Vafadarnikjoo, Amin & Chalvatzis, Konstantinos & Botelho, Tiago & Bamford, David, 2023. "A stratified decision-making model for long-term planning: Application in flood risk management in Scotland," Omega, Elsevier, vol. 116(C).

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