Enhancing risk assessment: an improved Bayesian network approach for analyzing interactions among risks

PurposeIn traditional Bayesian belief networks (BBNs), a large amount of data are required to complete network parameters, which makes it impractical. In addition, no systematic method has been used to create the structure of the BBN. The aims of this study are to: (1) decrease the number of questions and time and effort required for completing the parameters of the BBN and (2) present a simple and apprehensible method for creating the BBN structure based on the expert knowledge.Design/methodology/approachIn this study, by combining the decision-making trial and evaluation laboratory (DEMATEL), interpretive structural modeling (ISM) and BBN, a model is introduced that can form the project risk network and analyze the impact of risk factors on project cost quantitatively based on the expert knowledge. The ranked node method (RNM) is then used to complete the parametric part of the BBN using the same data obtained from the experts to analyze DEMATEL.FindingsCompared to the traditional BBN, the proposed method will significantly reduce the time and effort required to elicit network parameters and makes it easy to create a BBN structure. The results obtained from the implementation of the model on a mass housing project showed that considering the identified risk factors, the cost overruns relating to material, equipment, workforce and overhead cost were 37.6, 39.5, 42 and 40.1%, respectively.Research limitations/implicationsCompared to the traditional BBN, the proposed method will significantly reduce the time and effort required to elicit network parameters and makes it easy to create a BBN structure. The results obtained from the implementation of the model on a mass housing project showed that considering the identified risk factors, the cost overruns relating to material, equipment, workforce and overhead cost were 37.6, 39.5, 42 and 40.1%, respectively. The obtained results are based on a single case study project and may not be readily generalizable.Originality/valueThe presented framework makes the BBN more practical for quantitatively assessing the impact of risk on project costs. This helps to manage financial issues, which is one of the main reasons for project bankruptcy.