Optimization for Project Risk Management

In the construction industry, project managers have to consider risks when selecting among alternatives such as raw material suppliers and construction technologies. Identifying the least risky alternative is not possible before identifying and assessing the risks of each alternative. This leads to Multi-Attribute Decision Making (MADM) problem where the alternatives are evaluated against the identified risks and the least risky alternative is selected. Along with MADM problems, project managers should also identify optimal risk mitigation actions during the project lifetime by using optimization approaches. Although optimization and MADM approaches have been extensively used in the risk management literature, relatively little attention has been paid to their applications to construction project risk management. To address this gap, this chapter reviews the general approaches in project risk management. Additionally, it introduces and analyses the general procedure as well as different approaches of the main existing MADM and optimization studies used in construction risk management. An illustrative example from the prefabricated construction is provided. Additionally, this chapter utilizes a scientometric review method to enable understanding of the keywords’ network, the relationships, and the frequency of their co-occurrences among different studies. This chapter provides practitioners and early-stage researchers with basic research topics and solution approaches in project risk management.