Critical Risk Path Method: A Risk and Contingency-Driven Model for Construction Procurement in Complex and Dynamic Projects

Critical Risk Path Method: A Risk and Contingency-Driven Model for Construction Procurement in Complex and Dynamic Projects

Chi Iromuanya (Capella University, Minneapolis, MN, USA), Kathleen M. Hargiss (Capella University, Minneapolis, MN, USA) and Caroline Howard (HC Consulting, Oceanside, CA, USA)
Copyright: © 2013 |Pages: 13
DOI: 10.4018/jsita.2013040105
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Abstract

Existing approaches to risk management in construction procurement primarily dwell on strategies designed for commonly identifiable risk factors in typical project environments. Commonly identifiable risk factors would include too early or late material delivery - a condition typically ameliorated by implementing a Just In Time (JIT) plan; inferior construction materials typically mitigated by employing trusted vendors; or ineffective contractors primarily avoided by the use of experienced contractors. The purpose of this paper is to present a coherent model for procurement risk management for construction and infrastructure development projects within the context of dynamic project environments - complex, or chaotic. For the purpose of this study, a critical risk path activity is one in which a delay of activity completion not only leads to project delay, but does so in a manner that may be fatal to project or at best, far greater than the actual delay. The study incorporates observations and theory with practical application for improving initiatives by emergency infrastructure development response organizations such as FEMA (Federal Emergency Management Agency) and USACE (US Army Corps of Engineers) in the United States, the NEMA (National Emergency Management Agency) in Nigeria, or ANDMA (Afghanistan National Disaster Management Authority) etc. This study presents risk response plans aimed at improving the potential occurrence of positive risk aspects while reducing, or eliminating the same for negative risk occurrences. This study explored material, equipment, and skilled labor procurement strategies related to project risk management from the perspectives of scheduling, cost, and quality - three factors often referred to as the triple project constraints. It identified gaps within specific national and multinational organizations’ approaches, and provided detailed recommendations for process improvements from the procurement management perspective to ensure the potential for successful project outcomes in unstable project conditions.
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2. Background

The critical path through a schedule of logically and sequentially connected activities is the longest path through the network of project activities. This longest path known as the critical path also represents the shortest time it would take to complete the project (Kerzner, 2013). Any delay on activities on this longest path will cause delay on the project delivery date if nothing is done to recover the lost time. Most planners want to determine which critical activities have the most impact on schedule delays. The answer to this question is more complicated than one would think, and has to be evaluated within several contexts. Essentially, to determine activities that have “the most impact”, you have to check the total floats of critical activities, and the nature of activity (design, fabrication, or construction), and their places on the calendar. The ones with the least amount of total float, along with ones with the highest “calendar sensitivity” will typically be considered as the most critical. Calendar sensitivity refers to the critical need for an activity to be completed within a specific time frame.

For example:

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