An application of stochastic processes for analyzing risks in highway projects
The successes on highway projects are uncertain because of organizational features, improper scope definitions and long lasting complicated processes. Highway projects under uncertain environment can effectively be managed with the application of risk management throughout their life cycles. Risk management within highway projects, therefore, has been recognized vital to improve their performances and increase the success of these projects. Processes of the projects are dynamic by nature. Therefore, commonly used static techniques do not analyze the potential risks properly. The stochastic process is a highly effective tool to quantitatively deal with the risk analysis. In this paper, a new approach based on Markov chain is proposed to assess the potential risks of highway projects in a dynamic framework. The approach takes advantage of the capability of probabilistic tools. Furthermore, using an application example in highway projects, the proposed approach is demonstrated in detail. Finally, the risk management effectiveness of using the stochastic processes is illustrated.