Risk Management In Construction Projects Research Articles

Risk Management in Construction Project: Taking Sustainability into Account

One pillar of the European Union’s policy is the environmental policy, which indicates, among other things, a need for taking into account ecological conditions and effects in all types of economic activity. The construction industry is exposed to conflicts between processes and the natural environment. Taking into account the sustainable development in construction projects requires an inclusion of environmental problems in the scope of project risk management. Risk management in construction projects is considered as a very important process supporting the achievement of project goals in terms of time, cost, quality, safety and stainability issues. The aim of the article is to pay particular attention to the latter aspect. Project risk management is effective when it is implemented in a systematic manner throughout the life cycle of the construction project. The article indicates that the specific features of construction activity have a significant impact on shaping the nature of construction investment projects. Their executions are connected with deep and long-lasting interference in the natural environment, and they are burdensome for the environment, both in the construction phase, as well as during their maintenance and liquidation phase. It requires the consumption of significant amount of material resources and the involvement of a number of specialists and institutions making decisions in succeeding phases of the life cycle of erected structures. Therefore, these projects have many stakeholders - interested, to a different extent, in the particular stages of the project. The results of the survey carried out among construction entrepreneurs at the turn of 2015-2016 about the fuel and energy consumption in the logistics processes of construction projects are presented. This provides a basis for answering a research question about how seriously entrepreneurs treat sustainability problems. Risks related to sustainable development are indicated on the map of risks in the construction project. It is emphasized that construction works should be executed with the use of such energy-saving technical solutions that enable for minimising a use of natural resources in the construction and maintenance phases, and in the final stage will allow easy liquidation of the structure.

Risk management in construction projects: a study on the state-of-practice

Construction, a key economic activity worldwide, is vulnerable to several risks, which compromise the successful completion of construction projects, and call for the implementation of risk management activities. Within this context, it is the aim of the study presented in this paper to investigate the current state of risk management practice in construction projects along with the factors that affect it, and the relationship of risk management with projects' success. To this end, a questionnaire survey was undertaken among professionals of medium and large construction companies active in the regions of Greece and Middle East, and data were analysed with statistical techniques. The analysis results indicate that construction companies, irrespective of size and region, get engaged in, but do not systematically implement, risk management activities during the whole lifecycle of their projects, a fact that influences projects' successful completion in terms of compliance to budget, time schedule, and specifications and standards.

Risk management in construction projects: a study on the state-of-practice

Construction, a key economic activity worldwide, is vulnerable to several risks, which compromise the successful completion of construction projects, and call for the implementation of risk management activities. Within this context, it is the aim of the study presented in this paper to investigate the current state of risk management practice in construction projects along with the factors that affect it, and the relationship of risk management with projects' success. To this end, a questionnaire survey was undertaken among professionals of medium and large construction companies active in the regions of Greece and Middle East, and data were analysed with statistical techniques. The analysis results indicate that construction companies, irrespective of size and region, get engaged in, but do not systematically implement, risk management activities during the whole lifecycle of their projects, a fact that influences projects' successful completion in terms of compliance to budget, time schedule, and specifications and standards.

Формування механізму управління ризиками будівельних проектів на засадах компенсаторної технології «Tax Increment Financing»

Формування механізму управління ризиками будівельних проектів на засадах компенсаторної технології «Tax Increment Financing»

Social Risk Assessment and Management for Major Construction Projects in China Based on Fuzzy Integrated Analysis

With the vigorous development of major engineering projects in China, the social risks associated with major construction projects not only challenge the success of projects but also threaten social harmony and stability. Therefore, it is of great practical significance to assess and manage social risks. This paper aims to identify and evaluate the social risk factors by conducting a survey and assess the overall risk level of major construction projects (MCPs) with fuzzy integrated approach. First, 35 social risk factors and related stakeholders were identified based on literature analysis and case study. Then, 18 critical social risk factors (CSRFs) were selected and classified into six groups (CSRGs) based on a questionnaire survey. Next, using fuzzy integrated method, the probability of occurrence (PO), magnitude of impact (MI), the integrated risk level (IRL) of each CSRF and CSRG, and the overall risk of MCPs were calculated. As a result, “unfair compensation for housing demolition and land requisition” was the most critical social risk factor, and “policy/legal risk” was the most critical social risk group. The overall risk of MCPs was between moderate and high. At last, a social risk synthetic management framework was established, which can provide reference for policymakers and project decision makers to effectively manage the social risks.

Price risk management in BOT railroad construction projects using financial derivatives

PurposeRailroad transit infrastructures are amongst major capital-intensive projects worldwide, which impose significant risks to the contractors of build-operate-transfer projects because of the fluctuations in steel price fluctuation. The purpose of this paper is to introduce a methodology for hedging steel price risk using financial derivatives.Design/methodology/approachCox–Ross valuation lattice has been used as an option valuation model for determining option’s price for the construction companies involved in fixed-price railroad projects. A sensitivity analysis has been conducted using the financial option Greeks to evaluate the impacts of option’s pricing factors in the total price of option.FindingsThe result of valuation shows that European options cost to safeguard against the effects of price risk is only a fraction in contrast to the total cost of steel procurement for a typical railroad construction company. This confirms that using this kind of financial derivative is a beneficial yet effective approach for hedging steel price risk for railroad construction companies.Practical implicationsThe applicability of the financial derivatives, both exchange-traded and over-the-counter instruments, is evident in broad financial industry. This paper shows how European options can be readily used for risk management of a typical railroad project, and explains the methodology in a step-by-step procedure.Originality/valueAlthough the financial engineering literature is rife of theory and application of derivatives in various contexts, to the best knowledge of authors there is only few papers on the application of these well-developed financial instruments for risk management in construction industry. This study intends to illustrate how financial derivatives can add value to risky construction projects and shed new light in this important application area.

Risks in the Construction Project Procurement Process and the Mitigation Methods

Risk management in construction projects is considered as an important part of the management process. Since risk in construction projects associated with three major principles, which are Time, Cost and Quality. Those risks and uncertainties are caused by performance of workers, material and parts quality, delays in supply of important materials to site, project budget and cost control, or the complexity of project procurement processes, which may threaten the project objectives. This article will emphatically focus on risk, that is caused by the complexity of the construction procurement process. In addition, the appropriate risk identification methods will be also introduced in this article. Suggested methods shall start with setting up a risk profile, avoidance of risks, basic risk assessment and useful risk mitigation actions for project management participants, particularly architects or project managers to understand risks associated in construction procurement process including how to mitigate those risks.

SCIENTIFIC SCHOOL OF MANAGEMENT OF RISKS TO THE REAL PROPERTY UNDER CONSTRUCTION AND IN USE: PURSUIT AND ACHIEVEMENTS

The article is devoted to the actual issues of the introduction of European standards in the construction industry. One of the most important areas is the development of a system of engineer consultants that works efficiently abroad and can contribute to the development of the construction industry in Ukraine. At the current stage of economic development, the construction industry requires the creation of effective integrated management systems that can ensure its competitiveness not only within the framework of Ukraine but also in European markets. In conditions of transformation of the economic system to European standards of business, special attention is needed to create scientifically grounded prerequisites for the development of the construction industry. In this aspect, the development of a scientific risk management school in the construction and operation of real estate is of particular relevance. The article gives a theoretical definition of the concept “scientific school”, conducted a retrospective analysis of the definition of the conceptual foundations of the development of scientific schools in Ukraine and abroad. On the basis of the analysis carried out, the main characteristics of scientific schools and the prospects for further development of research and development in the field of construction and operation of buildings and structures are indicated. The purpose of the article is to determine the further ways of developing the school of science, to provide effective practical solutions to the actual problems of risk management at the macro level and macro levels. The Scientific School of Risk Management in the construction and operation of real estate objects is an analysis of the processes of risk management of construction projects and the operation of real estate objects throughout the life cycle of the construction project (pre-investment stage, design, construction, commissioning, operation, repair, reconstruction, demolition and utilization of materials and waste). That is, approaches to the research work of the School of Risk Management in the construction and operation of real estate objects are complex and systemic, and the issues that it considers may be relevant to solving problems of various stages of the implementation of construction projects, which emphasizes the great importance of the development of scientific areas school. In order to ensure the further development of a scientific risk management school in the construction and operation of real estate objects, priority tasks and future directions of further development have been identified.

Validation of Impacts of Widely Acknowledged Human Factors in Risk Management of Residential Construction Projects

In the countries like India where one has to still handle a unique blend of operational diversities like human operated traditional construction practices and modern construction technologies, in all construction projects that are highly vulnerable to socio-economic, political, technical and business risks. The involvement of the people with diverse educational, technical, economical and experience backgrounds is an unavoidable fact of the construction industry in India and hence the human factors are going to play a key role in the project to be more prone to risks as well as to mitigate the likely projects risks. Due to lack of robust risk management system, many prestigious construction projects in India have suffered failures and have impacted the country’s GDP and growth because of the gigantic share of the construction industry in the country’s economy. Hence, the risk management in the construction industry has become the subject of concern for the industry practitioners and so the analysis of operational difficulties for the identification and management of construction related risks to minimize the cost overruns, quality deviations and uncertain delays, is remained to be the main objective of the research by the domain experts and engineers for so long. In this paper, an attempt has been made to review all such papers with a specific aim to identify and analyze the human factors that, are highly acknowledged by experts in their works and, can influence / impact the project parameters namely cost, time and quality and validate the results by tracking a real time construction project to draw conclusions.

Research on safety risk management of civil construction projects based on risk matrix method

In the view of the safety characteristics of open-air operation, high mobility and low safety quality of personnel in construction projects, in order to facilitate the systematic management of the safety risks of construction projects, the risk pre-control study of civil construction projects is carried out by using the risk matrix method in advance, the risk sources are identified according to the work task analysis method, and all work tasks and the specific processes of each task are listed in the form of a list. Identifying four types of hazard sources in all work tasks under existing working conditions, including human, machine, ring and pipe, and analyzing them using the risk matrix method, determining the risk value of the hazard sources and classifying the identified risk factors(hazard sources) by physical failure, human error, environmental factors and management deficiencies, It is convenient to take measures from management concept, technical method selection, organizational setting, staffing, system building and so on to improve risk management capability.

МОДЕЛЮВАННЯ ОЦІНКИ “RISK MANAGEMENT” В СИСТЕМІ УПРАВЛІННЯ БУДІВЕЛЬНИМИ ПРОЕКТАМИ

The basic processes, methods and tools of the project risk management in the knowledge system “Guide to the Project Management Body of Knowledge” outlined. The theoretical and practical approaches to managing risk events affecting the cost, terms, quality of construction projects analysed. The correlation matrix of risk management processes to “tools and methods” of their implementation compiled. It is proposed to highlight the risk components as an important condition for the developer’s technological maturity in construction projects, programs, portfolio management. The risk manage-ment maturity model for the context of construction project risk management is developed. The math-ematical description for the evaluation of five maturity levels of risk management presented. The re-strictions of the target function of maturity “Risk Management” for each of the levels defined. The developed assessment tool is applicable for the work of top management of construction and development companies. It will be useful to self-assess progress in the development of risk-sustainable management. It is effective in choosing the actions necessary to move to a higher level of maturity. It is noted that the author's approach requires further scientific and practical development in the direction of operations with specific data.

Hybrid Approach to Construction Project Risk Management with Simultaneous FMEA/ISO 31000/Evolutionary Algorithms: Empirical Optimization Study

AbstractUncertainty and risks have been the inherent characteristics of large-scale projects. Although practitioners have applied different project risk management standards, numerous uncertainties...

Risk Management in Construction Project

This article is intended to describe the concise history of the first Portuguese cements companies (Mining and Industrial Company of Cabo Mondego, General Company of Lime and Cements of Rasca, Cement Company of Tejo, Company of Maceira-Liz, Company of White Cements, Northern Cement Company, South Cement Company) that contributed to the emergence of Cimpor SGPS (current Portuguese cement company).Risks have a significant impact on a construction project’s performance in terms of cost, time and quality. As the size and complexity of the projects have increased, an ability to manage risks throughout the construction process has become a central element preventing unwanted consequences. How risks are shared between the project actors is to a large extent governed by the procurement option and the content of the related contract documents. Therefore, selecting an appropriate project procurement option is a key issue for project actors. The overall aim of this research is to increase the understanding of risk management in the different procurement options: design-bid-build contracts, designbuild contracts and collaborative form of partnering. Deeper understanding is expected to contribute to a more effective risk management and, therefore, a better project output and better value for both clients and contractors. The study involves nine construction projects recently performed in Sweden and comprises a questionnaire survey and a series of interviews with clients, contractors and consultants involved in these construction projects. The findings of this work show a lack of an iterative approach to risk management, which is a weakness in current procurement practices. This aspect must be addressed if the risk management process is to serve projects and, thus, their clients. The absence of systematic risk management is especially noted in the programme phase, where it arguably has the greatest potential impact. The production phase is where most interest and activity are to be found. As a matter of practice, the communication of risks between the actors simply does not work to the extent that it must if projects are to be delivered with certainty, irrespective of the form of procurement. A clear connection between the procurement option and risk management in construction projects has been found. Traditional design-bid-build contracts do not create opportunities for open discussion of project risks and joint risk management. A number of drivers of and obstacles to effective risk management have been explored in the study. Every actor’s involvement in dialogue, effective communication and information exchange, open attitudes and trustful relationship are the factors that support open discussion of project risks and, therefore, contribute to successful risk management. Based on the findings, a number of recommendations facilitating more effective risk management have been developed for the industry practitioners.

Cost and Time Risk Management in Construction Projects

Identifying and evaluating the business risk (Cost and time overruns) management in construction projects to control and minimize such risk is the aim of this research. In diverse construction site, qualified professional workings are asked through an online questionnaire to collect tremendous diverse thoughts to compare between them. The questionnaire developed the research and collected more sensitive/accurate and reliable data about construction business risk management. The first step in this research is to attain worthy information about business risk management in term of cost and time overruns from previous related studies. A theoretical background about management of business risk is provided by the review of these studies that led to the design of the questionnaire questions. This paper concluded that poor business performance, such as time delays and cost overruns, are common in construction projects. Poor business performances can be significantly reduced by providing adequate construction planning at the beginning of the project, accurate in estimation, preventing changes in projects during construction, improving contract management and improving communication between construction parties.

A Hybrid MCDM Technique for Risk Management in Construction Projects

Multi-stakeholder based construction projects are subject to potential risk factors due to dynamic business environment and stakeholders’ lack of knowledge. When solving project management tasks, it is necessary to quantify the main risk indicators of the projects. Managing these requires suitable risk mitigation strategies to evaluate and analyse their severity. The existence of information asymmetry also causes difficulties with achieving Pareto efficiency. Hence, to ensure balanced satisfaction of all participants, risk evaluation of these projects can be considered as an important part of the multi-criteria decision-making (MCDM) process. In real-life problems, evaluation of project risks is often uncertain and even incomplete, and the prevailing methodologies fail to handle such situations. To address the problem, this paper extends the analytical network process (ANP) methodology in the D numbers domain to handle three types of ambiguous information’s, viz. complete, uncertain, and incomplete, and assesses the weight of risk criteria. The D numbers based approach overcomes the deficiencies of the exclusiveness hypothesis and completeness constraint of Dempster–Shafer (D–S) theory. Here, preference ratings of the decision matrix for each decision-maker are determined using a D numbers extended consistent fuzzy preference relation (D-CFPR). An extended multi-attributive border approximation area comparison (MABAC) method in D numbers is then developed to rank and select the best alternative risk response strategy. Finally, an illustrative example from construction sector is presented to check the feasibility of the proposed approach. For checking the reliability of alternative ranking, a comparative analysis is performed with different MCDM approaches in D numbers domain. Based on different criteria weights, a sensitivity analysis of obtained ranking of the hybrid D-ANP-MABAC model is performed to verify the robustness of the proposed method.

Risk Management in Construction Projects: Are Small Companies Prepared?

Risk Management in Construction Projects: Are Small Companies Prepared?

Model of risk management of construction project based on transaction costs

The paper studies the relationship between transaction costs and risk management in the construction projects affecting ecosystem considering economic externalities. Quantitative indicators of the impact of transaction costs on the level of risk in the project are thoroughly investigated. The construction project risk management model based on transaction costs is discussed in detail. Collected and experimental data of the construction project, which has a significant impact on the ecology of the Baikal region in the Russian Federation is analyzed and the uncertainty reduction caused by transaction costs is measured.

An exploratory factor analysis of risk management practices: A study among small and medium contractors in Gauteng

Risk management (RM) is acknowledged as a key activity in project management in the pursuit to deliver successful construction projects. However, these projects are associated with various risks, which often jeopardise project performance, especially among small and medium construction enterprises (SMEs). Risk management practices (RMPs) have been developed, in order to curtail project risks. Nevertheless, there is no consensus on the practices that constitute RM for SME projects. Therefore, the main purpose of this research is to determine the RMPs that can be tailored for construction SMEs to manage risk in their projects, in order to achieve project success. An extensive review of relevant literature on RMPs was conducted and used to develop a structured questionnaire posted to construction SMEs who were conveniently sampled in the Gauteng province of South Africa. The empirical findings established nine RMPs that were reliable and valid for managing risk in projects undertaken by construction SMEs, namely organizational environment; defining project objectives; resource requirements; risk measurement; risk identification; risk assessment; communication approach and evaluation; risk response and action planning, as well as monitoring and review. It is important to note that the study was not conducted across South Africa; hence, the findings cannot be generalized. Despite the delimitation, the researchers recommend that these practices are for risk management in construction projects undertaken by SMEs in South Africa.

Risk Management in Construction Projects

Risk Management in Construction Projects

Identifying Political Risk Management Strategies in International Construction Projects

International construction projects are plagued with political risk, and international construction enterprises (ICEs) must manage this risk to survive. However, little attention has been devoted to political risk management strategies in international construction projects. To fill this research gap, a total of 27 possible strategies were identified through a comprehensive literature review and validated by a pilot survey with 10 international experts. Appraisals of these 27 strategies by relevant professionals were collected using questionnaires, 155 of which were returned. Exploratory factor analysis was conducted to explore the interrelationships among these 27 strategies. The results show that all of the 27 strategies are important for political risk management in international construction projects. Moreover, these 27 strategies were clustered into six components, namely, (1) making correct decisions, (2) conducting favorable negotiations, (3) completing full preparations, (4) shaping a good environment, (5) reducing unnecessary mistakes, and (6) obtaining a reasonable response. The 6 components can be regarded as 6 typical management techniques that contribute to political risk management in the preproject phase, project implementation phase, and postevent phases. The findings may help practitioners gain an in‐depth understanding of political risk management strategies in international construction projects and provide a useful reference for ICEs to manage political risks when venturing outside their home countries.