Contractor project risks contingency allocation using linguistic approximation

Abstract This paper demonstrates the application of fuzzy set theory to the subjective assessment of risks during tender preparation for the purpose of allocating contingencies. The need for contingency allocation is discussed and relevant project risk factors are identified. A hierarchical risk-breakdown structure for contractor risk assessment and a model for contractor contingency allocation are developed. A brief introduction to fuzzy set theory and the fuzzy risk analysis model to be applied is presented. A simple example is used to illustrate the application of the model in practice. The model is currently being used to develop a knowledge-based system.