**2. Literature review**

In today's post-crisis economy effective risk management is a critical component of any winning management strategy. Risk management is one of the nine knowledge areas propagated by the Project Management Institute (PMI). The PMBOK® Guide recognises nine knowledge areas typical of almost all projects. The nine knowledge areas are [4]:


Although these knowledge areas are all equally important from a project manager's point of view, in practice a project manager might determine the key areas which will have the greatest impact on the outcome of the project.

Each PMI knowledge area in itself contains some or all of the project management processes. For example, project risk management includes [4]:


430 Risk Management – Current Issues and Challenges

project managers and contractors.

Lithuanian construction companies.

1. Project integration management. 2. Project scope management. 3. Project time management. 4. Project cost management. 5. Project quality management.

6. Project human resource management. 7. Project communications management.

9. Project procurement management.

greatest impact on the outcome of the project.

8. Project risk management.

**2. Literature review** 

outcomes.

Therefore nowadays, the risk analysis and management continue to be a major feature of the project management of construction projects in an attempt to deal effectively with

Construction projects are always unique and risks raise from a number of the different sources [9,10]. Construction projects are inherently complex and dynamic, and involving multiple feedback processes [11,12]. A lot of participants – individuals and organisations are actively involved in the construction project, and they interests may be positively or negatively affected as a result of the project execution or project completion [4]. Different participants with different experience and skills usually have different expectations and interests [13]. This naturally creates problems and confusion for even the most experienced

Cost of risk is a concept many construction companies have never thought about despite the fact that it is one of the largest expense items [14]. Risk management helps the key project participants – client, contractor or developer, consultant, and supplier – to meet their commitments and minimize negative impacts on construction project performance in relation to cost, time and quality objectives. Traditionally, practitioners have tended to associate construction project success with these three aspects of time, cost and quality

The current economic downturn and challenges in a highly competitive Lithuania's construction sector require contractors to manage risks by themselves. This paper reports the research that aims to examine the risk analysis and risk management practices in the

In today's post-crisis economy effective risk management is a critical component of any winning management strategy. Risk management is one of the nine knowledge areas propagated by the Project Management Institute (PMI). The PMBOK® Guide recognises

Although these knowledge areas are all equally important from a project manager's point of view, in practice a project manager might determine the key areas which will have the

nine knowledge areas typical of almost all projects. The nine knowledge areas are [4]:

uncertainty and unexpected events and to achieve project success.


Risk management is probably the most difficult aspect of project management. A project manager must be able to recognise and identify the root causes of risks and to trace these causes through the project to their consequences. Furthermore, risk management in the construction project management context is a comprehensive and systematic way of identifying, analyzing and responding to risks to achieve the project objectives [5,6]. The use of risk management from the early stages of a project, where major decisions such as choice of alignment and selection of construction methods can be influenced, is essential [15]. The benefits of the risk management process include identifying and analyzing risks, and improvement of construction project management processes and effective use of resources.

The construction industry is heterogeneous and enormously complex. There are several major classifications of construction that differ markedly from one another: housing, nonresidential building, heavy, highway, utility, and industrial [16]. Construction projects include new construction, renovation, and demolition for both residential and nonresidential projects, as well as public works projects, such as streets, roads, highways, utility plants, bridges, tunnels, and overpasses. The success parameters for any project are in time completion, within specific budget and requisite performance (technical requirement). The main barriers for their achievement are the change in the project environment. The problem multiplies with the size of the project as uncertainties in project outcome increase with size [17,18]. Large construction projects are exposed to uncertain environment because of such factors as planning, design and construction complexity, presence of various interest groups (owner, consultants, contractors, suppliers, etc.), resources (manpower, materials, equipment, and funds) availability, environmental factors, the economic and political environment and statutory regulations.

Construction projects can be unpredictable. Managing risks in construction projects has been recognized as a very important process in order to achieve project objectives in terms of time, cost, quality, safety and environmental sustainability [19]. Project risk management is an iterative process: the process is beneficial when is implemented in a systematic manner throughout the lifecycle of a construction project, from the planning stage to completion.

In the European Union construction is the sector most at risk of accidents, with more than 1300 people being killed in construction accidents every year. Worldwide, construction workers are three times more likely to be killed and twice as likely to be injured as workers in other occupations. The costs of these accidents are immense to the individual, to the employer and to society. They can amount to an appreciable proportion of the contract price [20].

Construction activities in Lithuania provided employment to an estimated 93.7 thousand persons in 2011, while an annual turnover in excess of EUR 1.91 billion [21]. Construction is one of Lithuania's largest industries. Unfortunately it has also the occupational health and safety problems. More construction workers are killed, injured or suffer ill-health than in any other industry. In 2011, 13 construction workers killed whilst at work, compared to 7 industrial workers and 4 agricultural workers. In comparison with 2010, the number of fatal accidents in construction enterprises increased by more than 2 times, i.e. from 6 to 13 cases has been reported [22].

Risk Management in Construction Projects 433

investment in common stocks or government bonds, and some are specific to construction. The risk identification process would have highlighted risks that may be considered by project management to be more significant and selected for further analysis [34]. Risk identification is an iterative process because new risks may become known as the project progresses through its life cycle and previously-identified risks may drop out [35]. Construction projects carry complex risks for all involved—including owners, consultants, contractors, and suppliers—that can increase when construction takes place near an active facility or congested area. Risks include geological or pollution-related conditions, interference with ongoing operations, construction accidents, as well as design and construction faults that may negatively impact the project both construction and when the

Generally two broad categories, namely, qualitative and quantitative analysis are distinguished in literature on risk assessment. A qualitative analysis allows the key risk factors to be identified. Risk factors may be identified through a data-driven (quantitative) methodology or qualitative process such as interviews, brainstorming, and checklists. It is considered as an evaluation process which involves description of each risk and its impacts or the subjective labelling of risk (high/medium/low) in terms of both risk impact and probability of its occurrence [19]. Qualitative risk analysis assesses the impact and likelihood of the identified risks and develops prioritized lists of the risks for further analysis or direct mitigation. Carr and Tah [36] introduced a hierarchical risk breakdown structure (HRBS), and the HRBS represents a formal model for qualitative risk assessment. Quantitative analysis involves more sophisticated techniques and methods to investigate and analyze construction project risks. Quantitative risk analysis attempts to estimate the frequency of risks and the magnitude of their consequences by different methods such as the decision tree analysis, the cost risk analysis, and Monte Carlo simulation [37]. The application of the quantitative risk analysis allows the construction project exposure to be modelled, and quantifies the probability of occurrence of the identified risk factors as well as their potential

Various risk management tools are available, but unfortunately they are not suitable for many industries, organizations and projects [38]. Although today's organizations appreciate the benefits of managing risks in construction projects, formal risk analysis and management techniques are rarely used due to lack of knowledge and to doubts on the

There are four alternative strategies – risk avoidance, risk transfer, risk mitigation, and risk acceptance, for treating risks in a construction project. As stated by Hillson [39], risk mitigation and risk response development is often the weakest part of the risk management process. The proper management of risks requires that they be identified and allocated in a well-defined manner. This can only be achieved if contracting parties comprehend their risk

Before the crisis (2004-2008), due to a lack of contractors' responsibilities and control in various steps of a project's development, the time and quality performance levels of

suitability of these techniques for construction projects.

responsibilities, risk event conditions, and risk handling capabilities [40].

project is complete.

impact.

The risk analysis and management techniques have been described in detail by many authors [23-27]. A typical risk management process includes the following key steps [28]:


Risk identification is the first and perhaps the most important step in the risk management process, as it attempts to identify the source and type of risks. It includes the recognition of potential risk event conditions in the construction project and the clarification of risk responsibilities [29]. Risk identification develops the basis for the next steps: analysis and control of risk management. Corrects risk identification ensures risk management effectiveness. Carbone and Tippett [30] stated that the identification and mitigation of project risks are crucial steps in managing successful projects.

The PMBOK® Guide [4] defines a project risk as "an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective". There are many possible risks which could lead to the failure of the construction project, and through the project, it is very important what risk factors are acting simultaneously. As stated by Raz et al. [31], too many project risks as undesirable events may cause construction project delays, excessive spending, unsatisfactory project results or even total failure.

Many approaches on risk classification have been suggested in the literature for effective construction project risk management. Tah and Carr [32] categorized risks into two groups in accordance with the nature of the risks, i.e. external and internal risks. Combining the fuzzy logic and a work breakdown structure, the authors grouped risks into six subsets: local, global, economic, physical, political and technological change. According to Wang et al. [33], the classification of the risks depends mainly upon whether the project is local or international. The internal risks are relevant to all projects irrespective of whether they are local or international. International projects tend to be subjected to the external risk such as unawareness of the social conditions, economic and political scenarios, unknown and new procedural formalities, regulatory framework and governing authority, etc.

According the PMBOK® Guide [4], the risks are categorized into such groups: technical, external, organizational, environmental, or project management. Some categories of risk that affect a construction project are similar to risks for other investment projects, whether it is an investment in common stocks or government bonds, and some are specific to construction. The risk identification process would have highlighted risks that may be considered by project management to be more significant and selected for further analysis [34]. Risk identification is an iterative process because new risks may become known as the project progresses through its life cycle and previously-identified risks may drop out [35]. Construction projects carry complex risks for all involved—including owners, consultants, contractors, and suppliers—that can increase when construction takes place near an active facility or congested area. Risks include geological or pollution-related conditions, interference with ongoing operations, construction accidents, as well as design and construction faults that may negatively impact the project both construction and when the project is complete.

432 Risk Management – Current Issues and Challenges

has been reported [22].

 Risk identification; Risk assessment; Risk mitigation; Risk monitoring.

Construction activities in Lithuania provided employment to an estimated 93.7 thousand persons in 2011, while an annual turnover in excess of EUR 1.91 billion [21]. Construction is one of Lithuania's largest industries. Unfortunately it has also the occupational health and safety problems. More construction workers are killed, injured or suffer ill-health than in any other industry. In 2011, 13 construction workers killed whilst at work, compared to 7 industrial workers and 4 agricultural workers. In comparison with 2010, the number of fatal accidents in construction enterprises increased by more than 2 times, i.e. from 6 to 13 cases

The risk analysis and management techniques have been described in detail by many authors [23-27]. A typical risk management process includes the following key steps [28]:

Risk identification is the first and perhaps the most important step in the risk management process, as it attempts to identify the source and type of risks. It includes the recognition of potential risk event conditions in the construction project and the clarification of risk responsibilities [29]. Risk identification develops the basis for the next steps: analysis and control of risk management. Corrects risk identification ensures risk management effectiveness. Carbone and Tippett [30] stated that the identification and mitigation of

The PMBOK® Guide [4] defines a project risk as "an uncertain event or condition that, if it occurs, has a positive or negative effect on at least one project objective". There are many possible risks which could lead to the failure of the construction project, and through the project, it is very important what risk factors are acting simultaneously. As stated by Raz et al. [31], too many project risks as undesirable events may cause construction project delays,

Many approaches on risk classification have been suggested in the literature for effective construction project risk management. Tah and Carr [32] categorized risks into two groups in accordance with the nature of the risks, i.e. external and internal risks. Combining the fuzzy logic and a work breakdown structure, the authors grouped risks into six subsets: local, global, economic, physical, political and technological change. According to Wang et al. [33], the classification of the risks depends mainly upon whether the project is local or international. The internal risks are relevant to all projects irrespective of whether they are local or international. International projects tend to be subjected to the external risk such as unawareness of the social conditions, economic and political scenarios, unknown and new

According the PMBOK® Guide [4], the risks are categorized into such groups: technical, external, organizational, environmental, or project management. Some categories of risk that affect a construction project are similar to risks for other investment projects, whether it is an

project risks are crucial steps in managing successful projects.

excessive spending, unsatisfactory project results or even total failure.

procedural formalities, regulatory framework and governing authority, etc.

Generally two broad categories, namely, qualitative and quantitative analysis are distinguished in literature on risk assessment. A qualitative analysis allows the key risk factors to be identified. Risk factors may be identified through a data-driven (quantitative) methodology or qualitative process such as interviews, brainstorming, and checklists. It is considered as an evaluation process which involves description of each risk and its impacts or the subjective labelling of risk (high/medium/low) in terms of both risk impact and probability of its occurrence [19]. Qualitative risk analysis assesses the impact and likelihood of the identified risks and develops prioritized lists of the risks for further analysis or direct mitigation. Carr and Tah [36] introduced a hierarchical risk breakdown structure (HRBS), and the HRBS represents a formal model for qualitative risk assessment. Quantitative analysis involves more sophisticated techniques and methods to investigate and analyze construction project risks. Quantitative risk analysis attempts to estimate the frequency of risks and the magnitude of their consequences by different methods such as the decision tree analysis, the cost risk analysis, and Monte Carlo simulation [37]. The application of the quantitative risk analysis allows the construction project exposure to be modelled, and quantifies the probability of occurrence of the identified risk factors as well as their potential impact.

Various risk management tools are available, but unfortunately they are not suitable for many industries, organizations and projects [38]. Although today's organizations appreciate the benefits of managing risks in construction projects, formal risk analysis and management techniques are rarely used due to lack of knowledge and to doubts on the suitability of these techniques for construction projects.

There are four alternative strategies – risk avoidance, risk transfer, risk mitigation, and risk acceptance, for treating risks in a construction project. As stated by Hillson [39], risk mitigation and risk response development is often the weakest part of the risk management process. The proper management of risks requires that they be identified and allocated in a well-defined manner. This can only be achieved if contracting parties comprehend their risk responsibilities, risk event conditions, and risk handling capabilities [40].

Before the crisis (2004-2008), due to a lack of contractors' responsibilities and control in various steps of a project's development, the time and quality performance levels of construction projects in the Lithuania were generally inadequate or even poor. In construction projects, many parties are involved such as owner, consultant, contractor, subcontractor, and supplier. Each party has its own risks. Risk transfer means the shift of risk responsibility to another party either by insurance or by contract. Wang and Chou [29] reported that contractors usually use three methods to transfer risk in construction projects:

Risk Management in Construction Projects 435

According to Baloi and Price [43], the construction contractors highlight that delay in payments is common both in private and public projects, with the public sector being the worse defaulter. Moreover, most types of contracts presume compensation clauses for delay in payments, but clients rarely agree to pay the interests due to the contract. Nasir et al. [47] analysed schedule risks and developed a comprehensive construction schedule risk model is referred to as Evaluating Risk in Construction–Schedule Model (ERIC-S). The ERIC-S model provides decision support to project owners, consultants, and researchers as a project delay prediction tool. Similarly, the Cost-Time-Risk diagram (CTR) proposed by Aramvareekul and Seider [48] helps project managers consider project risk issues while monitoring and controlling their project schedule and cost performance in

The performance by the project management team highly influences the success of a construction project. Some of the incidental risks associated with poor project management

Many authors have recognized the value of trust within the project business. Lewicki and Bunker [50] emphasize that trust is a critical success element to most business, professional, and employment relationships. Trust is argued to improve the inter-organizational relationships among principal actors in project development, such as owners, contractors, and suppliers [51]. According by Krane et al. [52] trust between project owners and project

In business relations, as stated by Kaklauskas et al. [53], the global economic crisis brought about distrust of other stakeholders. Trust reinforces the relationships of the critical stakeholder that often determine the success of a project [51,54,55]. Ward and Chapman [56] concluded that stakeholders are a major source of uncertainty in construction projects. Smyth et al. [57] note that trust provides an important resource for creating greater probability and certainty. Wilkinson [58] found that project management companies need to overcome problems in their relationships with other professionals on the project team and with the client. For the success of construction projects, there is a need for alignment of the project owners' interests and the project management team's interests and trust between

Construction projects are tendered and executed under different contract systems and payment methods [59]. According by Zaghloul and Hartman [60], there is no possibility to

one diagram.

performance are [49]:

 Contractual problems; Insurance problems;

Insufficient time for testing.

managers is crucial for project success.

Quality concerns;

 Poor scoping; Poor estimation;

Delays;

them.

Unclear or unattainable project objectives;

Budget based on incomplete data;


Construction projects can be managed using various risk management tools and techniques. Ahmed et al. [23] reviewed techniques that can be used for development of risk management tools for engineering projects. Techniques for context establishment, risk identification, risk assessment and treatment were provided. Application of risk management tools depends on the nature of the project, organization's policy, project management strategy, risk attitude of the project team members, and availability of the resources [12]. A risk assessor model (RAM) presented by Jannadi and Almishari [41] was developed to determine risk scores for various construction activities. The model provides an acceptability level for the risks and determines a quantitative justification for the proposed remedy.

Risks and uncertainties, involved in construction projects, cause cost overrun, schedule delay and lack of quality during the progression of the projects and at their end [28,29,42]. As stated by Baloi and Price [43], poor cost performance of construction projects seems to be the norm rather than the exception, and both clients and contractors suffer significant financial losses due to cost overruns.

Oyegoke et al. [44] discusses the problems of managing risk and uncertainty in construction project due to the owner dissatisfaction in project outcome and dynamism within agile construction environment. The authors identified some areas in supply chain processes which are prone to greater risks and uncertainty and propose an agile management principle based on the concept of integration and fragmentation in product development and execution processes respectively.

Many authors have reviewed problems on time performance in construction projects [43,45,46]. Aibinu and Odenyinka [46] investigated and assessed the causes of delays in building projects in Nigeria. The nine factor categories evaluated include: client-, contractor-, quantity surveyor-, architect-, structural engineer-, services engineer-, supplier-, and subcontractor-caused delays, and external factors (i.e. delays not caused by the project participants). Finally, ten overall delay factors were identified, namely: contractors' financial difficulties, client' cash flow problems, architects' incomplete drawings, subcontractors' slow mobilization, equipment break-down and maintenance problems, suppliers; late delivery of ordered materials, incomplete structural drawings, contractors' planning and scheduling problems, price escalation, and subcontractors' financial difficulties. The authors pointed the poor risk management as one of the principal delay factors and concluded that actions and inactions of construction project participants contribute to overall project delays.

According to Baloi and Price [43], the construction contractors highlight that delay in payments is common both in private and public projects, with the public sector being the worse defaulter. Moreover, most types of contracts presume compensation clauses for delay in payments, but clients rarely agree to pay the interests due to the contract. Nasir et al. [47] analysed schedule risks and developed a comprehensive construction schedule risk model is referred to as Evaluating Risk in Construction–Schedule Model (ERIC-S). The ERIC-S model provides decision support to project owners, consultants, and researchers as a project delay prediction tool. Similarly, the Cost-Time-Risk diagram (CTR) proposed by Aramvareekul and Seider [48] helps project managers consider project risk issues while monitoring and controlling their project schedule and cost performance in one diagram.

The performance by the project management team highly influences the success of a construction project. Some of the incidental risks associated with poor project management performance are [49]:


434 Risk Management – Current Issues and Challenges

proposed remedy.

financial losses due to cost overruns.

and execution processes respectively.

 through insurance to insurance companies; through subcontracting to subcontractor;

construction projects in the Lithuania were generally inadequate or even poor. In construction projects, many parties are involved such as owner, consultant, contractor, subcontractor, and supplier. Each party has its own risks. Risk transfer means the shift of risk responsibility to another party either by insurance or by contract. Wang and Chou [29] reported that contractors usually use three methods to transfer risk in construction projects:

Construction projects can be managed using various risk management tools and techniques. Ahmed et al. [23] reviewed techniques that can be used for development of risk management tools for engineering projects. Techniques for context establishment, risk identification, risk assessment and treatment were provided. Application of risk management tools depends on the nature of the project, organization's policy, project management strategy, risk attitude of the project team members, and availability of the resources [12]. A risk assessor model (RAM) presented by Jannadi and Almishari [41] was developed to determine risk scores for various construction activities. The model provides an acceptability level for the risks and determines a quantitative justification for the

Risks and uncertainties, involved in construction projects, cause cost overrun, schedule delay and lack of quality during the progression of the projects and at their end [28,29,42]. As stated by Baloi and Price [43], poor cost performance of construction projects seems to be the norm rather than the exception, and both clients and contractors suffer significant

Oyegoke et al. [44] discusses the problems of managing risk and uncertainty in construction project due to the owner dissatisfaction in project outcome and dynamism within agile construction environment. The authors identified some areas in supply chain processes which are prone to greater risks and uncertainty and propose an agile management principle based on the concept of integration and fragmentation in product development

Many authors have reviewed problems on time performance in construction projects [43,45,46]. Aibinu and Odenyinka [46] investigated and assessed the causes of delays in building projects in Nigeria. The nine factor categories evaluated include: client-, contractor-, quantity surveyor-, architect-, structural engineer-, services engineer-, supplier-, and subcontractor-caused delays, and external factors (i.e. delays not caused by the project participants). Finally, ten overall delay factors were identified, namely: contractors' financial difficulties, client' cash flow problems, architects' incomplete drawings, subcontractors' slow mobilization, equipment break-down and maintenance problems, suppliers; late delivery of ordered materials, incomplete structural drawings, contractors' planning and scheduling problems, price escalation, and subcontractors' financial difficulties. The authors pointed the poor risk management as one of the principal delay factors and concluded that actions and inactions of construction project participants contribute to overall project delays.

through modifying the contract terms and conditions to client or other parties.


Many authors have recognized the value of trust within the project business. Lewicki and Bunker [50] emphasize that trust is a critical success element to most business, professional, and employment relationships. Trust is argued to improve the inter-organizational relationships among principal actors in project development, such as owners, contractors, and suppliers [51]. According by Krane et al. [52] trust between project owners and project managers is crucial for project success.

In business relations, as stated by Kaklauskas et al. [53], the global economic crisis brought about distrust of other stakeholders. Trust reinforces the relationships of the critical stakeholder that often determine the success of a project [51,54,55]. Ward and Chapman [56] concluded that stakeholders are a major source of uncertainty in construction projects. Smyth et al. [57] note that trust provides an important resource for creating greater probability and certainty. Wilkinson [58] found that project management companies need to overcome problems in their relationships with other professionals on the project team and with the client. For the success of construction projects, there is a need for alignment of the project owners' interests and the project management team's interests and trust between them.

Construction projects are tendered and executed under different contract systems and payment methods [59]. According by Zaghloul and Hartman [60], there is no possibility to

eliminate all the risks associated with a specific project. All that can be done is to regulate the risk allocated to different parties and then to properly manage the risk. Chapman and Ward [61] argue that the contract choice decisions are central to both stakeholder management and the management of risk and uncertainty. The authors proposed an integrated approach based on a balanced incentive and risk sharing (BIARS) approach to contracting as well as a best practice approach to risk management in terms of the whole project life cycle.

Risk Management in Construction Projects 437

The questionnaire of first survey was distributed either personally or via e-mail to 40 members of top and middle management in the construction companies. A sample of 40 practitioners received the questionnaire and 38 valid questionnaires were returned for analysis with a response rate of 95%. The second questionnaire was distributed either personally or via e-mail to 35 members of top and middle management in the construction companies. Of the 35 questionnaires distributed in the second survey, 35 were returned, but 5 were incompletely completed and so were excluded from the data analysis. The response

In both surveys, the baseline characteristics of the respondents were relatively similar. Of the 38 respondents in the first study, site managers comprise 29%, project managers 26%, other position senior managers 21%, civil engineers 16%, and designing engineers 8%. Of the 30 respondents in the second study, site managers, project managers, and other position

The Likert scale was selected to obtain the probability of the risk factors in construction project that are identified in the literature review. A 5-point Likert scale was adopted, where 1 represented "rare", 2 "occasional", 3 "somewhat frequent", 4 "frequent", and 5 "very frequent". Likewise, the Likert scale was selected to obtain the impact of the risk factors in construction project that are identified in the literature review. A 5-point Likert scale was adopted, where 1 represented "very low", 2 "low", 3 "moderate", 4 "high", and 5 "very

The latest survey was carried out in December 2010-January 2011. In a subsequent study, the role of risk factors at a project level was addressed. A questionnaire containing three sections was developed to facilitate data collection. The first section includes the respondents' opinion on the risk consequences for construction project performance measures as well as the risk assessment and response practices. The second section includes the respondents' opinion on the risk factor in terms of its probability and impact to overall construction project success. The third section aims to collect the background information of the respondents, e.g. their age, gender, position, education, work experience and

The third questionnaire was distributed either personally or via e–mail to 23 members of top and middle management in the construction company and 23 valid questionnaires were returned for analysis in time to be included in the analysis (100% overall response rate). Of the 23 respondents in the study, site managers, project managers, and other position senior

In all surveys, the majority of the respondents have more than 15 years' experience in construction/project management or working knowledge of construction/project management activities. Based on work experience and employment position, it was inferred that the respondents have adequate knowledge of the activities associated with construction project risk. This makes them as reliable and credible sources of information which is crucial to satisfy the research goal. The procedure, findings, and relevant discussion of the analyses

rate was 86%.

high".

senior managers comprise 80%.

professional background.

managers comprise 91%.

are detailed in the following section.

Contractors generally aim to make an acceptable range of profit margin. Profit margins in the industry have been low for most contractors on projects in recent years. Correct understanding and allocation of risk helps for contractors to avoid erosion of the profit margin. Ökmen and Öztas [62] proposed a new simulation-based model – the correlated cost risk analysis model (CCRAM) – to analyse the construction costs under uncertainty when the costs and risk-factors are correlated. The CCRAM model captures the correlation between the costs and risk-factors indirectly and qualitatively. Baloi and Price [63] determined the most critical risk factors affecting construction cost performance. The authors stated that global risk factors pose more challenges to contractors, which are less familiar with them. The authors introduced a fuzzy decision framework for a systematic modelling, analysis and management of global risk factors affecting construction cost performance from contractor's perspective and at a project level. Similarly, Ismail et al. [64] provide a 'Level-Severity-Probability' approach to determine the critical risk source and factors. Fuzzy logic is used in the proposed methodology for evaluation of the risk level, severity and probability. As stated by Zeng et al. [65], the application of fuzzy reasoning techniques provides an effective tool to handle the uncertainties and subjectivities arising in the construction project.

The review of the literature revealed a wide range of risk types and sources in construction projects, and that various risk management methods and techniques can be employed in the management of construction projects in order to control potential risks.
