Evaluation and selection of construction projects based on risk analysis

Abstract

The project selection problem has attracted significant attention among construction project participants. Typically, a contractor can execute one or more projects from available projects. This study introduces a new strategy to help contractors in evaluating and selecting suitable construction projects. The new strategy is based on identifying multiple criteria that affect construction projects as well as developing and using a model that supports decision based on the analytic hierarchy process. Furthermore, a fuzzy risk analysis model is proposed to analyze and quantify some of the identified criteria to help contractors select minimally risky projects. Market conditions, financial resources, project conditions, time delays, and cost overruns are five identified criteria that control the selection. Through identifying 70 subsidiary factors, the effects and importance of the first three criteria were determined through a field survey, while time delay and cost overrun criteria were analyzed and quantified through the risk analysis model. The new strategy was applied on a real case study comprising two HVAC system projects in the construction industry (project 1 in Egypt and project 2 in Saudi Arabia). Criteria and causes that yield different effects on the new strategy to support contractor decision and selection control are discussed in detail. Risk factors were ranked according to their importance, and their effects on both time and cost were clarified. The results obtained from the investigated case study showed 55.5% support for project 2, and only 44.5% support for project 1. This strategy is applicable to other case studies in different countries with different projects, criteria, and execution activities.