**3. Need for risk performance measurement system related to construction processes**

In recent years, the main trend in urban regeneration projects and large-scale development projects throughout the world has been the development of three-dimensional mixed-use spaces that include such functions as residential, commercial, business, public, cultural, and leisure and that arrange these in horizontal and vertical spaces.

Although this type of development has the advantage of providing all the facilities required in a specific area, thus simultaneously maximizing the usability of the space, it involves many risks throughout the project, such as complicated interests in the major subjects, mixed development areas dominated by the civil and public spheres, operation and maintenance, and property management. In addition, there have been few studies on performance management for construction businesses because conventional performance

Risk Performance Index and Measurement System 231

No Terminology Description Abb.

specified project time ACI

risk at the specified project time ASI

specified project time CIV

specified project time SIV

forecasted cost risk at the specified project time ARC

forecasted schedule risk at the specified project time ARD

specified project time CRRV

specified project time SRRV

dividing CIV by ARC at the specified project time CRRE

CRPI = (FCRV-RCRV)/FCRV (1)

SRRE

Variance between FSI and ASI calculating at the

Variance between ACI and ARC calculating at the

Variance between ASI and ARD calculating at the

Actual cost risk response efficiency calculated from

Actual schedule risk response efficiency calculated from dividing SIV by ARD at the specified project

As noted in Equation (1), the cost risk performance index (CRPI) can be calculated by subtracting the residual cost risk variance (RCRV) from the forecast cost risk variance

The analysis of the CRPI can be performed as follows. First, if the CRPI is 1, then the RCRV is 0, showing the perfect elimination of the cost risk. It can also be seen that the residual risk in the project is 0, which is the best condition of the cost risk. Second, if the CRPI is greater than 0 and less than 1, it shows that the RCRV is lower than the FCRV. This means that although there are still some risks in the project, they are at a low level compared with the forecasts and so the cost risk shows a good status. Third, if the CRPI is 0, the FCRV is the same as the RCRV. Because this shows that there has been no reduction in the FCRV, it also shows no reduction in the cost risk. Fourth, if the CRPI is less than 0, it shows that the RCRV exceeds the FCRV, indicating an increase in the cost risk in the project. Table 3 shows the

(FCRV) and dividing by the FCRV at a specific point during the business period.

9 Actual Cost Impact Cost Impact actually occurring from cost risk at the

10 Actual Schedule Impact Schedule Impact actually occurring from schedule

11 Cost Impact Variance Variance between FCI and ACI calculating at the

13 Actual Response Cost Cumulative sum of actual costs responding to the

14 Actual Response Days Cumulative sum of actual days responding to the

time

<sup>12</sup>Schedule Impact Variance

<sup>15</sup>Cost Risk Response Variance

<sup>17</sup>Cost Risk Response Effective

Variance

Effective

where,

<sup>16</sup>Schedule Risk Response

<sup>18</sup>Schedule Risk Response

Table 2. Risk Performance Indexes.

CRPI: Cost Risk Performance Index FCRV: Forecasted Cost Risk Value RCRV: Residual Cost Risk Value

cost risk and its analysis method.

**4.2.1 Cost Risk Performance Index (CRPI)** 

management only measures the visible performance in businesses, such as financial and management performance. In particular, few studies have examined the risk factors that affect the performance management of mega projects.

Therefore, it is necessary to create a performance management method related to such risk factors to help estimate these factors' influence on a project in a timely and effective manner by developing a technology that continuously manages performance in relation to the risk factors in the early stages of mega projects and that suggests strategies for responses. Thus, we define an RPI for measuring the performance related to risks in construction businesses and derive calculation techniques and measurement methods. We then propose a new performance measurement method that considers the internal risk factors that affect the success or failure of the project in the context of the conventional cost/schedule-based approach.
