An optimization method for selecting project risk response strategies

•Consider an iterative process to solve the problem.•A WBS-based integrated mathematical model and the trade-offs.•Consider three critical elements simultaneously: cost, schedule and quality.•Each strategy coping with multiple risks; each risk managed by several strategies.•Sensitivity analysis is made.

There is wide agreement that the risk response strategy selection is an important issue in project risk management (PRM). Some academic researchers have paid attention to this issue. This paper proposes a novel method for solving the risk response strategy selection problem in PRM. In the method, an optimization model is developed, which integrates three critical elements that are the project cost, project schedule and project quality. By solving the model, the optimal solution could be obtained so that the most desirable risk response strategies to cope with the risk events can be determined. If the optimal solution is not found or project managers are not satisfied with the solution, another pathway can be used to support the managers to get the desirable strategies. The pathway is based on an iterative process which involves making trade-offs between the project budget, time and quality according to objective requirements and managers' judgments. The iterative process comes to an end if the objectives predefined by the managers are reached. A simple example project is also provided to illustrate the practicality and usefulness of the proposed method.