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

Author

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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)

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.

Suggested Citation

  • Foroogh Ghasemi & Mohammad Hossein Mahmoudi Sari & Vahidreza Yousefi & Reza Falsafi & Jolanta Tamošaitienė, 2018. "Project Portfolio Risk Identification and Analysis, Considering Project Risk Interactions and Using Bayesian Networks," Sustainability, MDPI, vol. 10(5), pages 1-23, May.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:5:p:1609-:d:146869
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