Cognitive risk management in construction projects
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The cognitive model of risk and uncertainty on projects will be introduced and the four standpoints of knowns and unknowns, identifications in the modern construction industry, assessment of the risk with the use of tools as the probability/impact matrix and with the classification of the risk source and risk event the consequences can be mitigated or avoided altogether with the proper approach to risk management in construction. | The cognitive model of risk and uncertainty on projects will be introduced and the four standpoints of knowns and unknowns, identifications in the modern construction industry, assessment of the risk with the use of tools as the probability/impact matrix and with the classification of the risk source and risk event the consequences can be mitigated or avoided altogether with the proper approach to risk management in construction. | ||
== Risk and uncertainty == | == Risk and uncertainty == | ||
| + | Risk in theory could be described as the variation from an expected value, negative or positive. According to the Cambridge dictionary, risk is the possibility of something bad happening . It is in general definition something that is interpreted as a loss and can in fact be modelled in mathematics as the probability of the event multiplied with the consequences. | ||
| + | Risk is not to be confused with uncertainty as the uncertainty is the absence of information required for the decision that needs to be taken at a point in time . Decisions are made to eliminate risks and with sufficient knowledge of possible risks turn them into chances, thus introducing risk management. By introducing the dimension of time into the definition of risk so that risk events become time based, it is possible to explain risk and uncertainty as a three-dimensional framework of the risk source, the risk event and the extent of how a management can respond and reduce the impact of the risk event . | ||
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| + | == The cognitive model == | ||
| + | Cognitive action is the mental action or process of acquiring knowledge and understanding through thought, experience, and the senses . When thinking of this in terms of project management on construction projects and decision making, it becomes clear that the information space is a perception or perspective of the project manager. Cognition becomes a big part of elicitation of risk as it depends on the ability and range of the decision maker. Studies on this topic have led to two important points of cognitive biases: the information process of the human mind is limited in its nature, that our experience, feelings and anticipation influence what we actually perceive due to the cognitive simplification mechanisms in our minds, and that the nature of a task influences greatly the strategy chosen to handle the task . | ||
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| + | From the decision maker’s perspective of a risk source, it is defined in the space from a certainty to impossibility in a cognitive model of risk and uncertainty on projects. The approach of managing risk in the cognitive model is fundamentally about perception of risk events and their impact given the risk sources with the information available at the time of the decision. It makes a difference in the perception of where a probability distribution can be applied to a risk event from data analysis and where no probability distribution can be applied due to no available data . | ||
== Cognitive risk management in construction projects == | == Cognitive risk management in construction projects == | ||
Revision as of 20:59, 12 June 2017
Cognitive risk management in construction projects will be this article main topic.
There is a difference in definition of risk and uncertainty, as uncertainty is the absence of information required to make a decision. With a cognitive approach to risks the risk management becomes three dimensional, the risk source, the risk event and the extent of how a decision maker can respond to the risk source and event as the probability of a future event is a property of the decision maker. As risks are from definition deviation from expected value, positive or negative. Decisions are made to eliminate risks and with sufficient knowledge of possible risks turn them into chances, thus introducing risk management.
In order to manage risk and uncertainty it is important to understand four elements of the risk management process of identifying, assess, respond and control of the risk events and their sources and the corresponding threats and opportunities to the risk event. These elements will be further inspected and existing frameworks. The limitations of these four elements will then be further discussed.
The cognitive model of risk and uncertainty on projects will be introduced and the four standpoints of knowns and unknowns, identifications in the modern construction industry, assessment of the risk with the use of tools as the probability/impact matrix and with the classification of the risk source and risk event the consequences can be mitigated or avoided altogether with the proper approach to risk management in construction.
Contents |
Risk and uncertainty
Risk in theory could be described as the variation from an expected value, negative or positive. According to the Cambridge dictionary, risk is the possibility of something bad happening . It is in general definition something that is interpreted as a loss and can in fact be modelled in mathematics as the probability of the event multiplied with the consequences. Risk is not to be confused with uncertainty as the uncertainty is the absence of information required for the decision that needs to be taken at a point in time . Decisions are made to eliminate risks and with sufficient knowledge of possible risks turn them into chances, thus introducing risk management. By introducing the dimension of time into the definition of risk so that risk events become time based, it is possible to explain risk and uncertainty as a three-dimensional framework of the risk source, the risk event and the extent of how a management can respond and reduce the impact of the risk event .
The cognitive model
Cognitive action is the mental action or process of acquiring knowledge and understanding through thought, experience, and the senses . When thinking of this in terms of project management on construction projects and decision making, it becomes clear that the information space is a perception or perspective of the project manager. Cognition becomes a big part of elicitation of risk as it depends on the ability and range of the decision maker. Studies on this topic have led to two important points of cognitive biases: the information process of the human mind is limited in its nature, that our experience, feelings and anticipation influence what we actually perceive due to the cognitive simplification mechanisms in our minds, and that the nature of a task influences greatly the strategy chosen to handle the task .
From the decision maker’s perspective of a risk source, it is defined in the space from a certainty to impossibility in a cognitive model of risk and uncertainty on projects. The approach of managing risk in the cognitive model is fundamentally about perception of risk events and their impact given the risk sources with the information available at the time of the decision. It makes a difference in the perception of where a probability distribution can be applied to a risk event from data analysis and where no probability distribution can be applied due to no available data .
