Evaluation and Prioritization of Construction Projects on the Basis of Risk Factors Using ANP - DEMATEL - TOPSIS Integrated Approach in Fuzzy Conditions Mehrdad Abkenari Submitted to the Institute of Graduate Studies and Research in partial fulfilment of the requirements for the Degree of Master of Science in Civil Engineering Eastern Mediterranean University July 2014 Gazimağusa, North Cyprus Approval of the Institute of Graduate Studies and Research Prof. Dr. Elvan Yılmaz Director I certify that this thesis satisfies the requirements as a thesis for the degree of Master of Science in Civil Engineering. Prof. Dr. Özgür Eren Chair, Department of Civil Engineering We certify that we have read this thesis and that in our opinion it is fully adequate in scope and quality as a thesis for the degree of Master of Science in Civil Engineering. Asst. Prof. Dr. Alireza Rezaei Supervisor Examining Committee 1. Assoc. Prof. Dr. Ibrahim Yitmen 2. Asst. Prof. Dr. Giray Özay 3. Asst. Prof. Dr. Alireza Rezaei ABSTRACT Construction projects initiate in complicated dynamic environments and due to the close relationships between project parameters and the unknown outer environment, they are faced with several uncertainties and risks. Success in time, cost and quality in large scale construction projects is uncertain in consequence of technological constraints, large number of stakeholders, too much time required, great capital requirements and poor definition of the extent and scope of the project. Projects that are faced with such environments and uncertainties can be well managed through utilization of the concept of risk management in project’s life cycle. Although the concept of risk is dependent on the opinion and idea of management, it suggests the risks of not achieving the project objectives as well. Furthermore, project’s risk analysis discusses the risks of development of inappropriate reactions. Since evaluation and prioritization of construction projects has been a difficult task, the network structure is considered to be an appropriate approach to analyze complex systems; therefore, this structure has been used for analyzing and modeling the issue. On the other hand, inadequacy of data in deterministic circumstances was faced, and additionally the experts’ opinions are usually mathematically vague and are introduced in the form of linguistic variables instead of numerical expression. Owing to the fact that fuzzy logic is used for expressing the vagueness and uncertainty, formulation of experts’ opinion in the form of fuzzy numbers can be an appropriate approach. In other words, the evaluation and prioritization of construction projects on the basis of risk factors in real world is a complicated issue with lots of ambiguous qualitative iii characteristics. In the present thesis, a combination of fuzzy DEMATEL, fuzzy analytic network process (ANP), and fuzzy TOPSIS was used for the first time for evaluation and prioritization of construction projects on the basis of risk factors. The fuzzy DEMATEL method was used for extraction of the relationships between main risk factors and their sub-criteria. The weight of main risk factors and their sub-criteria was determined by considering the inter-relationships among main risk factors and their related sub-criteria in the fuzzy ANP. Afterwards, these weights were applied into the fuzzy TOPSIS method, and eventually the fuzzy TOPSIS was used for prioritizing the construction projects. The proposed hybrid model is used for prioritization of six construction projects on the basis of risk factors. Keywords: Risk Factors, Construction Project, Fuzzy DEMATEL, Fuzzy ANP, Fuzzy TOPSIS, Project Prioritization. iv ÖZ Proje parametreleri ve bilinmeyen dış çevreye bağlı olarak karmaşık dinamik çevrelerde başlatılan inşaat projelerinde birçok belirsizlikle ve riskle karşılaşılmaktadır. Teknolojik yetersizlikler, ortak sayısının fazla olması, fazla zaman harcanması, yüksek maliyet ihtiyacı ve proje kapsamının tam olarak tanımlanamaması, yüksek ölçekli inşaat projelerinin zaman, maliyet ve kalite bağlamlarında başarıya ulaşmasını belirsizleştirmektedir. Çevre ve belirsizliklere bağlı olarak sorunlarla karşılaşabilecek projeler, proje süresince risk yönetimi kavramının kullanılmasıyla doğru bir şekilde yönlendirilebilir. Risk kavramı, yönetimin görüş ve düşüncelerine bağlı olsa da, proje amaçlarının tamamlanmamasıyla sonuçlanabilmektedir. Buna ek olarak risk analizi, uygunsuz tepkilerin oluşması riskini tartışmaktadır. Değerlendirme ve öncelik belirleme projeler için zor bir görev olduğundan dolayı, ağ yapısı, karmaşık sistemleri analiz edebilmek için uygun bir yaklaşım olarak görülmektedir; bu nedenle bu sorunu analiz etmek ve modellemek için seçilmiştir. Diğer yandan, deterministik koşullarda bir very uyumsuzluğu ile karşılaşılmaktadır; buna ek olarak, profesyoneller, fikirlerini sayısal yerine sözel olarak dile getirdiklerinden dolayı matematiksel açıdan bir belirsizlik oluşmaktadır. Belirsizliği dile getirmek için bulanık mantığın kullanıldığı düşünüldüğünde, profesyonellerin fikirlerini bulanık sayılar olarak belirtmeleri uygun bir yaklaşım olarak görülebilir. Bir diğer deyişle, inşaat projelerinde değerlendirme ve öncelik belirlemenin, risk faktörlerini göz önünde bulundurduğunda, birçok belirsiz nitel özellik taşıyan, karmaşık bir süreç olduğu söylenebilir. Bu çalışmada, risk faktörleri bağlamında inşaat projelerinin değerlendirmesi ve öncelik belirlemesi için ilk kez bulanık DEMATEL, v bulanık analitik ağ süreci ve bulanık TOPSIS’in bir birleşimi kullanılacaktır. Bulanık DEMATEL, risk faktörleri ve alt kriterleri arasındaki ilişkiyi özütleme için kullanılmaktadır. Temel risk faktörleri ve alt kriterlerin ağırlığı, bulanık ANP’deki risk faktörleri ve alt kriterlerinin ilişkilerarası temelinde belirlenmektedir. Daha sonra, bu ağırlıklar bulanık TOPSIS yöntemine uygulandıktan sonra inşaat projelerinde öncelik belirleme için kullanılmaktadır. Sunulan hibrit model, altı inşaat projesinin risk faktörleri temelinde değerlendirilmesi için kullanılmaktadır. Anahtar Kelimeler: Risk Faktörleri, İnşaat Projesi, Bulanık DEMATEL, Bulanık ANP, Bulanık TOPSIS. vi DEDICATION :اراگدرورپ شلات هرثم هک ناشا هت سب هنیپ یاهت سد یارب هن و نمک های س تسا هدش دیفس نم تزع هار رد هک ار ناشیاهوم نماوتیم هن تسد یاصع رد ار مرعم یاه هینثا و شمبا ناشرازگرکش هظلح ره هک هد قیفوت سپ ،مراد یهمرم تسا نم راختفا یارب .نمارذگب ناشندوب یرسم نیا ماش یرخ یاهاعد با تم سناوت هک نمک یم رکش ار ادخ و نمز یم ناتنات سد رب هسوب نمبارمه ردام و راوگرزب ردپ رد دیما رون و بلق توق ثعبا هشیهم ،یمگدزن تسخ لحارم ماتم رد ماش تیماح و دوجو ،نماسرب نیااپ هب و نمک یط ار .تمخوم آ ماش قشع بتکم رد ما هتخوم آ هچ ره و تسا هدوب یمگدزن .تسا ما نییمز ملا آ شبخ مار آ ،ناش نیماس آ رمه هک هکننا آ هب نمک یم یمدقت ار یماه هتخوم آ لصحام To My Supportive Father; My Symbol of Strength Who Offered Me Full Support in Life... And My Affectionate Mother; My Symbol of Patience Who Taught Me the Life Alphabets… And To My Respected lecturer, Dr. Alireza Rezaei; A Man Who Helped Me Learn How to Learn, And Never Let me Down… vii ACKNOWLEDGMENT I see myself at a loss of words when I try to express my thanks and praise to The Supreme ALLAH, my greatest hope and aid in every moment of life. My sincere appreciation goes to my honoured supervisor, Dr. Alireza Rezaei who spared no effort to me, and whose valuable suggestions with endless patience perpetually shed light on my path. I believe that without his help it would be really difficult to handle such a research. I am also grateful to all those who taught me even a word, specially my lecturers at Civil Engineering Department of EMU who offered me expert advice. I would also like to extend my special thanks to my dear friends and classmates, M. Ahmadinasab, H. Moniri, M.Ramezan Shirazi and Dear M. Nourollahi who helped me by offering their precious points of view and by encouraging me from the first step of conduction of this research. I am also indebted to my dear friend, N. Pour Nayeb, for her abundant moral supports in this whole time. My deepest and warmest appreciation goes to my lovely and caring family for their everlasting support, patience and thoughtfulness; my amicable parents who compassionately taught me how to live; my dear brothers Peyman and Masoud, and my lovely sisters Parisa and Nastaran who made it all possible by their persistent encouragements. viii TABLE OF CONTENTS ABSTRACT ................................................................................................................ iii ÖZ ................................................................................................................................ v DEDICATION ........................................................................................................... vii ACKNOWLEDGMENT ........................................................................................... viii LIST OF TABLES ..................................................................................................... xii LIST OF FIGURES .................................................................................................. xiv LIST OF ABBREVIATIONS .................................................................................... xv 1 INTRODUCTION .................................................................................................... 1 1.1 Introduction ....................................................................................................... 1 1.2 Introducing the Subject ..................................................................................... 4 1.3 Necessity of the Research .................................................................................. 5 1.4 Research Questions ........................................................................................... 6 1.5 Scope and Objectives of the Research .............................................................. 7 1.6 Work Undertaken .............................................................................................. 7 1.6.1 Application of Fuzzy DEMATEL ............................................................. 8 1.6.2 Application of Fuzzy Analytic Network Process (ANP) ........................... 8 1.6.3 Application of Fuzzy TOPSIS ................................................................... 9 1.7 Achievements .................................................................................................... 9 1.8 Implications of the Research ........................................................................... 10 1.9 Definition of Technical Terms and Concepts .................................................. 10 1.10 Research Structure ......................................................................................... 12 2 LITERATURE REVIEW........................................................................................ 13 2.1 Introduction ..................................................................................................... 13 ix 2.2 Definition of Risk ............................................................................................ 13 2.3 Main Elements of Risk .................................................................................... 15 2.4 Risk Classification ........................................................................................... 16 2.5 Definition of Risk Management ...................................................................... 19 2.6 Risk Management Process ............................................................................... 21 2.6.1 Risk Management Planning ..................................................................... 22 2.6.2 Risk Identification ................................................................................... 23 2.7 Risk Breakdown Structure (RBS) ................................................................... 26 2.8 History of Risk Management in Construction ................................................. 27 2.9 Identifying the Risk Factors and Evaluation Models of Construction Projects .................................................................................................................. 29 2.10 Analytic Network Process (Fuzzy) ................................................................ 37 2.11 DEMATEL Method (Fuzzy) ......................................................................... 41 2.12 TOPSIS Method (Fuzzy) ............................................................................... 45 3 METHODOLOGY .................................................................................................. 49 3.1 Introduction ..................................................................................................... 49 3.2 Research Type ................................................................................................. 50 3.2.1 Applied Research ..................................................................................... 50 3.2.2 Descriptive Research ............................................................................... 51 3.3 Research Approach .......................................................................................... 52 3.4 Research Tools ................................................................................................ 53 3.5 Identification of Risk Criteria and Sub-Criteria of Construction Projects and Their Network Structure ........................................................................................ 54 3.6 Validation of the Research Tool ...................................................................... 57 3.7 Statistical Population ....................................................................................... 58 x