Determining contingency reserve is critical to project risk management. Classic methods of determining contingency reserve significantly rely on historical data and fail to effectively incorporate certain types of uncertainties such as vagueness, ambiguity, and subjectivity. In this paper, an interval type-2 fuzzy risk analysis model (IT2FRAM) is introduced in order to determine the contingency reserve. In IT2FRAM, the membership functions for the linguistic terms used to describe the probability, impact of risk and the opportunity events are developed, optimized, and aggregated using interval type-2 fuzzy sets and the principle of justifiable granularity. IT2FRAM is an extension of a fuzzy arithmetic-based risk analysis method which considers such uncertainties and addresses the limitations of probabilistic and deterministic techniques of contingency determination methods. The contribution of IT2FRAM is that it considers the opinions of several subject matter experts to develop the membership functions of linguistic terms. Moreover, the effect of outlier opinions in developing the membership functions of linguistic terms are reduced. IT2FRAM also enables the aggregation of non-linear membership functions into trapezoidal membership functions. A hypothetical case study is presented in order to illustrate the application of IT2FRAM in Fuzzy Risk Analyzer© (FRA©), a risk analysis software.
Development of a risk analysis model. Appendix E. 1,000 ton per day anaerobic digestion plant case study, Final report, October 1979