A critical evaluation of risk on large scale logistics projects

Abstract

As an important basis in decision-making, risk assessment has been applied in many fields. However, most risk analyses of logistics projects are still at their infancy, wherein qualitative methods are applied. Performing further qualitative and quantitative analyses of the risk of logistics projects is meaningful. This thesis aims to thoroughly analyse the effects of risk factors on project objectives to illustrate the economic goals of investment and the possibility of realisation. Hence, it can promote scientific decision-making by investors, which is the main issue in this thesis. Large-scale logistics projects are characterised by high risk, high investment, and high professionalism. This thesis applies risk assessment to logistics projects and divides the risk assessment of logistics projects into two levels. In the first level, various risk factors in the process of investment, construction and operation of the logistics projects are fully considered, and a set of risk comprehensive evaluation index system for the logistics projects is established. At this level, this thesis assigns light to each factor, judges the degree of risk of each factor in logistics projects and evaluates the risk degree of the logistics projects via fuzzy comprehensive measurement method (FCMM). It proposes a logistic alliance risk identification and analysis method based on the particle swarm optimisation (PSO) algorithm and penalty function method to address the limitation of existing methods, such as FCMM. This proposed method is called PSO–analytic hierarchy process (PSO–AHP). On the basis of the introduced index system and methods, this thesis uses Hanjin Shipping as a novel case to show how risk evaluation is performed. Results show that both methods can be used to predict the risk of Hanjin Shipping, and management risk is the main risk faced by Hanjin Shipping. This finding is consistent with the predicted results. The contents of this thesis provide meaningful results for actual application. Thus, the models and index system applied in this thesis (FCMM and PSO–AHP) can be used to perform risk measurement. In the second level, combined with the results of the overall risk assessment of the logistics projects, this thesis provides several suggestions on risk prevention for these kind of logistics projects. This thesis not only measures the risk of large-scale logistics projects but also provides several strategies to improve the management of logistics projects and reduce the probability of risk in the Chinese context. Moreover, this thesis generates suggestions for the development of Chinese large-scale logistics projects in South Africa. The main contents of this thesis can be summarised as follows. The first chapter is the introduction. This chapter briefly introduces the background of large-scale logistics projects, explains the purpose and significance of the research and introduces the main research issues and innovations. It also briefly introduces the structure of this thesis. The second chapter comprises a review of previous studies. It mainly reviews and summarizes relevant literature on risk theory and logistics risk to provide a solid background analysis for the remaining part of this thesis. The third and the fourth chapters are about the methodologies and indicators used in this thesis. The third chapter summarises and introduces the main methods used in the risk assessment for the logistics projects. It focuses on the methods used in this thesis. The fourth chapter presents a systematic analysis of the various risks faced in the process of investment, construction and operation of logistics projects. It appropriately enumerates the main analysis of this thesis, namely, the various risks in large-scale logistics projects. An index system is also constructed in this chapter. The fifth and sixth chapters focus on the specific operation process of the models used in this thesis. These chapters focus on the data analysis according to the models proposed in previous chapters, and the results of quantitative analysis are mainly discussed. The seventh chapter is aimed at the risk prevention of large-scale logistics projects. The eighth chapter is the research summary and outlook, where it summarises the conclusions and shortcomings of this research, discusses the innovation of this thesis from the analysis and indicates further research directions. The main contributions of this thesis are as follows. (1) On the basis of China’s Belt and Road strategy, this thesis pays special interest on the risk analysis of large-scale logistics projects. With the development of Chinese economics and special relationship with South Africa, cooperating in aspects where logistics projects play a great connecting role becomes increasingly important for these countries Thus, ensuring how the risk of China’s large-scale logistics projects is sufficiently low becomes increasingly important. The methods and results in this thesis can be applied to the large-scale logistics projects in China and South Africa. (2) Many studies on risk assessment issues obtain risk factors using Delphi method (Dalkey and Helmer, 1963; Fan, 2019; Dufour et al., 2017). This method usually suffers from the fact that the experts’ knowledge, ability and experience limit their personal judgement method, and the recognition result is influenced by the subjective factors of the experts. This thesis does not use AHP method on it own but focuses on the usage of work breakdown structure (WBS) method to determine the risk factors of logistics construction projects, which can provide a reasonable risk index system. As WBS can let people carefully build an index system from each aspect of the large-scale logistics projects. (3) This thesis generates a PSO method to PSO–AHP method and applies it in the risk assessment of large-scale logistics projects, in which Hanjin Shipping is taken as an example in a novel way. Many studies primarily use FCMM to perform the risk assessment. However, limited research focuses on the use of PSO–AHP methods on the risk assessment of large-scale logistics projects. This thesis not only uses FCMM to handle risk assessment but also uses PSO–AHP method and then selects the better method on the basis of certain criteria. By doing so, this thesis provides an excellent example for researchers to select between the two models for risk assessment. (4) This thesis not only measures the risk of large-scale logistics projects but also provides several strategies that can improve the management of logistics projects to reduce the chance of risk happening based on actual situations. It also generates suggestions for the development of Chinese large-scale logistics projects in South Africa. As the measurement of risk in terms of large-scale logistics projects is an instrument for people to prevent risk, each method should be used to guide the development in actual situations. Thus, this thesis provides several strategy suggestions that can reduce the risk of large-scale logistics projects in China and South Africa by combining the results obtained from models and actual situations in China and South Africa.