Risk Analysis Methodology for Life Cycle Benefit Analysis of Innovative Construction Technologiesby Charles Lozar, Architects Equities Research Group, Champaign, United States,
Thomas Napier, Architects Equities Research Group, Champaign, United States,
Richard Lampo, Architects Equities Research Group, Champaign, United States,
Abstract: The adoption of new construction technologies into practice moves very slowly since participants in the construction processes are extremely risk adverse. Innovation barriers are characterized by the perception of risk, both real and imagined. There is a need to rationalize a process for characterizing and measuring risk in new construction technologies, determining mitigation requirements and costs, and calculating the overall benefit to be derived from adopting innovative technologies. This paper describes a methodology for assessing comparative risk levels and programming mitigation actions to reduce risk in new construction technologies. Although it is based on economics, the output of the methodology is directly linked to criteria by which engineering and construction is judged acceptable within current professional expertise. A prototype procedure is describe that has been tested on building technologies, with results useful for technology adoption actions. Risk analysis points to the need for mitigation actions in terms of allocating dollars to reduce the risk. Alternative means of bearing mitigation costs among the technologies benefactors were suggested, proportional to their life-cycle return on investment. The use of Life-cycle Cost risk analysis, linked with a Failure tree of construction consequence is described as a partially empirical, but very useful tool to aid in technology adoption. This paper then describes possible applications of this methodology within the Infrastructure environment. The sources and benefactors of new technologies are addressed, as are potential approaches to sharing risk mitigation cost burdens. While this procedure does not presented to remove risk from all construction areas, it can reduce risk and increase life-cycle returns on the product.
Subject Headings: Risk management | Construction methods | Life cycles | Innovation | Construction costs | Economic factors
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