Simulation of expected value method in project risk management in two different construction projects

Abstract

In this paper, we discuss the application of the expected value method of risk management. In the expected value method, there are two possible state of activity - as planned and risky. In a risky state, an activity will require additional time or cost, known as corrective cost and time, over and above the basic cost estimate or basic time estimates. We simulate two different construction projects - a metro construction project and a rural tourism project. The time and cost of an activity have been assumed to follow four different distributions - beta, uniform, normal and triangular. The simulation is performed on the basis of EVM and the expected cost and expected times are computed. We compare and contrast the project completion time and project cost of these four distributions.