Integrating system dynamics and fuzzy bargaining for quantitative risk allocation in construction projects


1 Dept. of Civil Engineering, Faculty of Engineering, Payame Noor University, Tehran, Iran

2 Department of Project Management and Construction, Science and Research Branch, Islamic Azad University, Tehran, Iran

3 Dept. of Technical- Engineering, Imam Khomeini International University, Qazvin, Iran

4 Dept. of Civil Engineering, Iran University of Science and Technology, Tehran, Iran


Quantitative approaches to risk allocation have been developed to overcome the limitation of qualitative approaches and to determine how the responsibility of risk should be shared between contracting parties. This paper integrates a system dynamics simulation scheme with fuzzy bargaining game theory for quantitative risk allocation. The behaviour of contracting parties in the quantitative risk allocation negotiation process is modelled as players' behaviour in a game. A system dynamics  based model is employed to determine the contractor and client costs (players' payoffs)at different percentages of risk allocation. Having determined the players' payoffs, the common interval between the players' acceptable risk allocation percentages is determined. The bargaining process is then performed between two parties accounting for the common interval and a desirable and equitable percentage of risk allocation is determined.