Republic of Iraq

Ministry of Higher Education and Scientific Research

University of Kufa
College of Engineering
Department of Civil Engineering
third phase -2020
Construction Project Management Course

Risks that occur when implementing

construction projects

) ‫تقرير مقدم من قبل الطالب( حيدر امحد زعيج‬

)A( ‫املرحةل الثالثة –ادلراسة الصباحية – الشعبة‬
2020 ‫كجزء من متطلبات الامتحان الهنايئ لعام‬
:‫اىل اس تاذ مادة (ادارة املشاريع) الاس تاذ‬
‫امحد اكمل‬
The final examination report
of the project management
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contents of the report

The study in this report dealt with the definition of risks in general, as well as in the
construction processes, their types, and ways of dealing with them (their management) in
.terms of their collection and methods of analysis

References
 https://www.constructconnect.com/blog/identifying-managing-construction-
project-risks
 https://www.thriveatwork.org.au/resources/physical-risks/
 https://www.levelset.com/blog/simple-guide-financial-risk-payment-construction-
industry/
 ‫النصي رشيد‬
‫ر‬ ‫ادارة ر‬
‫مشوعات التشييد للدكتور ابراهيم عبد‬
 Risk Management in Construction Projects from" Contractors and Owners"
perspectives Eng.( Jaser Hmaid Abu Mousa)
 Risk management in construction project second edication 2012 by hatham Baraka

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1. Introduction
Construction projects are always unique and risks raises from a number of different sources.
Risk is defined as any action or occurrence which will affect

the achievement of project objectives. risk is a probability or threat of damage, injury, loss,
or any other negative occurrence that is caused by external or internal vulnerabilities, and
that may be avoided through preemptive action. Risk management is a technique which

is used, in many other industries from, IT related to business, automobile

pharmaceutical industry, to the construction sector. Risks and uncertainties inherent in the
construction industries are more than any other industries.

Many industries have become more proactive about using risk management techniques in
project However, with respect to the construction industry, the same is not used commonly

The project management phases for construction will not be mentioned here as they are
multiple, but during the design phase, there are construction works that must be done to
study the expected risks and the risks will be studied in the following stages

1. Determine the type of risk that may occur

2. An analytical study of these risks
3. Then determine the best way to deal with these risks

Which we will study later.

2.Concept of Risk Analysis and Management

Risk management is a process which identifies the project risks, analyze them, and
determine the actions to avert the threats on any project. All steps in the risk management
process should be included to deal with risks, in order to implement the process of the
project. Due to the nature of construction projects, risk management is a very important
process. Risk associated with construction industry can be broadly categorized into

1.1 Technical Risks: The risks associated with the Incomplete Design, Inadequate
specification, inadequate site investigation, Change in scope, Construction procedures and
insufficient resource availability etc. are termed as technical risks that can be addressed by
completing designs and providing all the specifications that we need to construct the project
and these The risks can be avoided by carrying out studies before starting implementation.

2.2 Construction Risks: These risks include Labor productivity, Labor disputes, Site
condition, Equipment failures, Design changes, too high quality standard and new
technology. for proper construction risk management, you need to know the types of risks
inherent in construction projects. These can be financial, contractual, operational, and
environmental and can be caused by both internal and external sources

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Common risks include:

1. Safety hazards that lead to worker accidents and injuries

2. Managing change orders
3. Incomplete drawings and poorly defined scope
4. Unknown site conditions
5. Poorly written contracts
6. Unexpected increases in material costs
7. Labor shortages
8. Damage or theft to equipment and tools
9. Natural disasters
10. Issues with subcontractors and suppliers
11. Availability of building materials
12. Poor project management

3.2 Physical Risks: Reducing physical risks and ensuring a physically safe workplace is a
central component of Work Health and Safety legislation. All employees have the right to
complete their job without being exposed to excessive risk of physical harm. these are risks
arising from the Damage to structure, Damage to equipment, Labor injuries, Equipment &
material fire and theft etc. are known as physical risks.

4.2 Organizational Risks: The organizational risks consist of Contractual relations,

Contractor’s experience, Attitudes of participants, inexperienced work force and
Communication. therefore, care must be taken in choosing a contract type because it is the
basis for organizing the relationship between the participating parties

5.2 Financial Risks: Increased material cost, Low market demand, Exchange rate fluctuation,
Payment delays and improper estimation taxes etc. are related to financial risks.

6.2 Socio-Political Risks: Changes in laws and regulations, Pollution and safety rules,
Bribery/Corruption, Language/Cultural barrier, Law & order, War and civil disorder and
Requirement for permits and their approval.

7.2 Environmental Risks: Natural Disasters and Weather Implications.

3.stages of risk management

3.1 Risk Identification
This is the first stage in risk management and tracking capturing all possible risks that may
arise within the project. It is generally recognized that among all stages of the risk
management process, the risk identification stage has the greatest impact on the accuracy
of any risk assessment. To facilitate risk identification, risks can be broadly categorized as
controllable and uncontrollable risks. Moreover, controllable risks are those that the

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decision maker voluntarily bears and whose outcome is, in part, within our direct control;
Uncontrollable risks are ones that we cannot influence. Determining the expected risks for
the project through several auxiliary points, identifying the sources of these risks as much as
possible, and determining the relationship between the risks after their classification, and a
list of these risks is made in a simple way. That is the goal of this step as it is assigned to one
of the project members

3.1.1 the elements by which potential risks are identified

 Reports from previous similar projects
 Project goals
 Quantitative resources, financing, operational aspect, and staffing
 Cost estimation assumpution like P.R and prices

3.2 Risk Analysis

Risks analysis is an assessment process for the possibility of a negative event within the
corporate sector, government or the environment. J is a component of the risk
management process, along with the causes and effects of the events that cause the
damage. The aim of this analysis is to accurately and objectively calculate the risks. The
essence of risk analysis is that it attempts to capture all possible options and analyze the
different outcomes of any decision. For construction projects, customers are primarily
concerned with the most likely price,The stages of analysis are summarized in Figure 1.

Figure .1. Risk Analysis Sequence (Flanagan & Norman, 1993)

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3.2.1 Methods of Risk Analysis

risks analysis is either quantitative or qualitative, depending on the amount of information
available. Qualitative analysis focuses on identification alongside risk assessment, and
quantitative analysis focuses on risk assessment. In fact, there may be little information
about some of the risks that cannot be analyzed. Table (1) summarizes the various
techniques used in risk analysis.

Table .1. Various risk analysis techniques, adapted from (Ward

and Chapman,1997)

A- Qualitative Risk Analysis

Risk management of qualitative risk analysis works as a means of recording the
characteristics of each risk. Qualitative risk analysis assesses the importance of specific risks
and develops priority lists of these risks for further analysis or direct mitigation. The
management team evaluates each risk identified for its potential occurrence and impact on
project objectives. Sometimes experts or functional units assess the risks in their areas of
specialization and share these assessments with the team.

Figure 2. Qualitative Risk Factor Ranking Criteria, adopted from (Kindinger & Darby, 2000)

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B. Quantitative Risk Analysis

Quantitative risk analysis is a way of numerically estimating the probability that a project
will meet its cost and time objectives. Quantitative analysis is based on a simultaneous
evaluation of the impact of all identified and quantified risks. When thorough quantitative
risk analysis is necessary it can take two alternative approaches (Kuismanen, 2001):

 risks can be quantified as individual entities while looking at the big picture. This way
can include the cumulative effects (to certain accuracy) into each individual risk and
thus make more accurate estimations of the net value of the risks.
 Alternatively modeling the mathematical properties of the interrelations from the
bottom up can be started and then calculate the net impact of each risk including
the effects of interrelations.

In Figure .3 the basic steps of a quantitative risk analysis and a simplified relationship
between risk analysis, risk assessment and risk management is presented (Abrahamsson,
2002). In this report, we are satisfied with this introduction because the topic of risk
analysis needs special books

Figure .3. Simplified relationship between risk analysis, risk assessment and risk management.
Adapted from Abrahamsson (2002)

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Methodology flow chart