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Project risk management from the bottom-up: Activity Risk Index

Author

Listed:
  • Fernando Acebes

    (Universidad de Valladolid)

  • Javier Pajares

    (Universidad de Valladolid)

  • José M. González-Varona

    (Universidad de Valladolid)

  • Adolfo López-Paredes

    (Universidad de Valladolid)

Abstract

Project managers need to manage risks throughout the project lifecycle and, thus, need to know how changes in activity durations influence project duration and risk. We propose a new indicator (the Activity Risk Index, ARI) that measures the contribution of each activity to the total project risk while it is underway. In particular, the indicator informs us about what activities contribute the most to the project’s uncertainty so that project managers can pay closer attention to the performance of these activities. The main difference between our indicator and other activity sensitivity metrics in the literature (e.g. Cruciality, Criticality, Significance, or Schedule Sensitivity Indices) is that our indicator is based on the Schedule Risk Baseline concept instead of on cost or schedule baselines. The new metric not only provides information at the beginning of the project, but also while it is underway. Furthermore, the ARI is the only one to offer a normalized result: if we add its value for each activity, the total sum is 100%.

Suggested Citation

  • Fernando Acebes & Javier Pajares & José M. González-Varona & Adolfo López-Paredes, 2021. "Project risk management from the bottom-up: Activity Risk Index," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 29(4), pages 1375-1396, December.
    • Handle: RePEc:spr:cejnor:v:29:y:2021:i:4:d:10.1007_s10100-020-00703-8
    DOI: 10.1007/s10100-020-00703-8
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    References listed on IDEAS

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    Cited by:

    1. Josefa Mula & Marija Bogataj, 2021. "OR in the industrial engineering of Industry 4.0: experiences from the Iberian Peninsula mirrored in CJOR," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 29(4), pages 1163-1184, December.

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