Patent ID: 7318038

Claim:
A method in a data processing system having a processor and a memory, said method comprising assessing risk associated with a project by: storing sets of operational values in the memory, each set corresponding to a different previously completed project and each operational value being representative of an operational parameter of a corresponding previously completed project; generating, in the processor, a risk vector for each previously completed project based on the set of operational parameters for that previously completed project; partitioning the risk vectors into groups (G 1 , G 2 , . . . , G k ) of similar risk vectors for previously completed projects bearing similar profitability margins; determining a set of membership rules for each group based on the risk vectors therein; generating risk group membership probabilities (p 1 , p 2 , . . . , p k ) that a new project (P) belongs to at least one respective group based on the membership rules associated with the each group; generating a risk value indicative of the risk associated with the new project (P) based on the probabilities generated for The new project, said risk value comprising an estimation of an expected financial loss or gain of said new project (P) based on said probabilities, said expected financial loss estimation E[Loss(P)], given that the new project (P) belongs to group G k , is based on E [Loss( P )]=Loss( P|P∈G 1 )· p 1 +Loss( P|P∈G 2 )· p 2 + . . . +Loss( P|P∈G k )· p k where Loss( P|P∈G k )=∫ Gk DGP·g a ( a )· g d (δ) da·dg and where g a (a) and g d (δ) are estimated probability density functions of financial operating parameters “a” and “δ”, where “a” represents fraction of approved revenue actually generated by a project, δ=b/a represents a matching ratio between actual and the approved profit margins where “b” represents a fraction of approved cost which was actually incurred by a project, and DGP is a measure of actual loss or gain in project profitability which is a function of “a”, “δ” and an approved cost financial value; and, providing said estimation to a user for adapting a pricing strategy for said new project based on said estimation.