A Fuzzy Comprehensive Approach for Risk Identification and Prioritization Simultaneously in EPC Projects

Long lasting complicated processes and organizational features generate abundant risks in Engineering, Procurement and Construction (EPC) projects. Iran witnesses an unprecedented boom in engineering, procurement and construction activities at all levels with the government’s goal of diversifying its income away from oil dependence to commercial and industrial activities based on the fourth economical development plan. The number, size and complexity of new EPC projects have created an extra burden on the participants and resulted in lots of risks. It is important to identify and prioritize the important risks in Iran to help local and international companies to consider these important risks. Hence, risk identification and prioritization are influential factors in risk monitoring decisions (Ebrahimnejad et al., 2009). The risk management process aims to identify and assess project risks in order to enable them to be understood clearly and managed effectively. In fact, project risk management is a systematic way of looking at areas of risk and consciously determining how each area should be treated. It is a management tool that aims at identifying sources of risk and uncertainty, determining their impact, and developing appropriate management responses (Thomas, 2003.). There are many commonly used techniques for risk identification and prioritization separately. These techniques generate a list of risks that often does not directly assist the project manager in knowing where to focus risk management attention. Qualitative assessment can help to prioritize identified risks by estimating their probability and impact, exposing the most significant risks; this approach deals with risks one at a time and does not consider their possible correlations, and so also does not provide an overall understanding of the risk faced by the project as a whole (Hillson, 2002). Project risk prioritization is usually affected by numerous factors including the human error, data analysis and available information. The great uncertainty in projects often causes difficulty in assessing risk factors. However, many risk assessment techniques currently used in EPC projects are comparatively mature, such as fault tree analysis, event tree analysis, monte carlo analysis, scenario planning, sensitivity analysis, failure mode and effects analysis, program evaluation and review technique (Carr & Tah, 2001). In this paper, an applicable approach in an uncertain environment that can identify and prioritize project risks simultaneously is introduced. A decision approach is proposed that