Managing project risk using combined analytic hierarchy process and risk map

The main purpose of the study is to develop an integrated framework for managing project risks by analyzing risk across project, work package and activity levels, and developing responses. Design/methodology/approach: The study first reviews the literature of various contemporary risk management frameworks in order to identify gaps in project riskmanagement knowledge. Then it develops a conceptual risk management framework using combined analytic hierarchy process (AHP) and risk map formanaging project risks. The proposed framework has then been applied to a 1500kmoil pipeline construction project in India in order to demonstrate its effectiveness. The concerned project stakeholders were involved through focus group discussions for applying the proposed risk management framework in the project under study. Findings:ThecombinedAHPand riskmapapproach is veryeffective tomanageproject risks acrossproject, work package and activity levels. The risk factors in project level are caused because of external forces such as business environment (e.g. customers, competitors, technological development, politics, socioeconomic environment). The risk factors in work package and activity levels are operational in nature and created due to internal causes such as lack ofmaterial and labor productivity, implementation issues, team ineffectiveness, etc. Practical implications: The suggestedmodel can be applied to any complex project and helps manage risk throughout the project life cycle. Originality/value: Both business and operational risks constitute project risks. In one hand, the conventional project risk management frameworks emphasize on managing business risks and often ignore operational risks. On the other hand, the studies that deal with operational risk often do not link them with business risks. However, they need to be addressed in an integrated way as there are a few risks that affect only the specific level. Hence, this study bridges the gaps. © 2010 Elsevier B.V. All rights reserved.