TY - JOUR
T1 - Improving risk assessment in financial feasibility of international engineering projects: A risk driver perspective
AU - Liu, Junying
AU - Jin, Feng
AU - Xie, Qunxia
AU - Skitmore, Martin
N1 - Funding Information:
The authors would like to acknowledge the support from the National Natural Science Foundation of China (grant number: 71202084) which funded this research.
Publisher Copyright:
© 2016 Elsevier Ltd, APM and IPMA
Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2017/2/1
Y1 - 2017/2/1
N2 - Major engineering projects characterized by intensive technologies and high investment are becoming more complex with increasing risks in a global market. Because incorrect investment decision-making can cause great losses to investors, quantitative risk assessment is widely used in establishing the financial feasibility of projects. However, existing methods focus on the impact of uncertain parameters, such as income, on decision variables of investment, neglecting assessing the impact of risk events, such as the sales of products falling short of expectations. In the context of international engineering projects from a risk driver perspective, this paper presents an improved quantitative risk assessment model to help risk managers identify the direct relationships between specific risk events and decision variables of investment. Stress testing is also introduced to assess the negative impact of extreme risks. The new model is applied to an on-going international petrochemical project to demonstrate its use and validate its applicability and effectiveness.
AB - Major engineering projects characterized by intensive technologies and high investment are becoming more complex with increasing risks in a global market. Because incorrect investment decision-making can cause great losses to investors, quantitative risk assessment is widely used in establishing the financial feasibility of projects. However, existing methods focus on the impact of uncertain parameters, such as income, on decision variables of investment, neglecting assessing the impact of risk events, such as the sales of products falling short of expectations. In the context of international engineering projects from a risk driver perspective, this paper presents an improved quantitative risk assessment model to help risk managers identify the direct relationships between specific risk events and decision variables of investment. Stress testing is also introduced to assess the negative impact of extreme risks. The new model is applied to an on-going international petrochemical project to demonstrate its use and validate its applicability and effectiveness.
UR - http://www.scopus.com/inward/record.url?scp=84999852025&partnerID=8YFLogxK
U2 - 10.1016/j.ijproman.2016.11.004
DO - 10.1016/j.ijproman.2016.11.004
M3 - Article
AN - SCOPUS:84999852025
SN - 0263-7863
VL - 35
SP - 204
EP - 211
JO - International Journal of Project Management
JF - International Journal of Project Management
IS - 2
ER -