Subjective Probability Distribution Elicitation in Cost Risk Analysis: A Review

10.7249/tr410 ◽  
2007 ◽  
Author(s):  
Lionel Galway
Keyword(s):  
Probability Distribution ◽  
Risk Analysis ◽  
Subjective Probability ◽  
Subjective Probability Distribution ◽  
Cost Risk

Provision of Public Goods and the MCS Experimental Paradigm

1985 ◽  
Vol 79 (1) ◽  
pp. 148-155 ◽  
Author(s):  
Amnon Rapoport
Keyword(s):  
Probability Distribution ◽  
Public Good ◽  
Subjective Probability ◽  
The Other ◽  
Experimental Paradigm ◽  
Homogeneity Assumption ◽  
Series Of Experiments ◽  
Decision Policies ◽  
Partial Homogeneity ◽  
Subjective Probability Distribution

Van de Kragt, Orbell, and Dawes (1983) reported the results of a series of experiments in which n subjects each receive a monetary endowment and then may choose privately whether to contribute it to a monetary public good; the good is supplied if a prespecified number m < n of contributions or more is made. Decision policies maximizing expected value are derived for this experimental paradigm under three different assumptions about the expectations each individual has about the decisions of the other n – I members: A homogeneity assumption postulating that each other member contributes with fixed probability p, a heterogeneity assumption postulating that the n – I p's are independently selected from a subjective probability distribution, and a partial homogeneity assumption postulating that the n – I members are partitioned into distinct subsets with the same p for all members of each subset. The theoretical and social implications of these assumptions are briefly discussed.

Scenario based evaluation of a cost risk model through sensitivity analysis

2015 ◽  
Vol 22 (4) ◽  
pp. 403-423 ◽  
Author(s):  
Önder Ökmen ◽  
Ahmet Öztaş
Keyword(s):  
Risk Factors ◽  
Risk Analysis ◽  
Risk Model ◽  
Practical Method ◽  
Cost Evaluation ◽  
Sensitivity Analyses ◽  
Analysis Model ◽  
Content Type ◽  
Detailed Evaluation ◽  
Cost Risk

Purpose – Actual costs frequently deviate from the estimated costs in either favorable or adverse direction in construction projects. Conventional cost evaluation methods do not take the uncertainty and correlation effects into account. In this regard, a simulation-based cost risk analysis model, the Correlated Cost Risk Analysis Model, previously has been proposed to evaluate the uncertainty effect on construction costs in case of correlated costs and correlated risk-factors. The purpose of this paper is to introduce the detailed evaluation of the Cost Risk Analysis Model through scenario and sensitivity analyses. Design/methodology/approach – The evaluation process consists of three scenarios with three sensitivity analyses in each and 28 simulations in total. During applications, the model’s important parameter called the mean proportion coefficient is modified and the user-dependent variables like the risk-factor influence degrees are changed to observe the response of the model to these modifications and to examine the indirect, two-sided and qualitative correlation capturing algorithm of the model. Monte Carlo Simulation is also applied on the same data to compare the results. Findings – The findings have shown that the Correlated Cost Risk Analysis Model is capable of capturing the correlation between the costs and between the risk-factors, and operates in accordance with the theoretical expectancies. Originality/value – Correlated Cost Risk Analysis Model can be preferred as a reliable and practical method by the professionals of the construction sector thanks to its detailed evaluation introduced in this paper.

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