**Abstract**

Construction projects are well known to be prone to a high level of risk that cannot be ignored but can be managed. Researchers have studied numerous aspects of risk management including identification, analysis/assessment, response and control. Despite the fact that studies focused on risk management in construction projects have been increasing, there seems to be a limited number of published studies that summarize what has already been presented in the literature. In this regard, this chapter aims to present the existing literature on risk management from a holistic perspective and provide a guide for future directions. With this aim, a systematic literature review has been undertaken by presenting the areas focused on by researchers as well as neglected ones, by indicating the trends in research through the years and by discussing research gaps for potential studies.

**Keywords:** construction projects, future directions, research trends, risk management, systematic review

#### **1. Introduction**

Construction projects involve participants from different specialties working together which makes the cooperation among them designed around extensive, disparate and interrelated processes [1]. Such complexity is also increased by other external factors such as political, legal, cultural, technological and financial, which resulted in project risk. Project Management Institute (PMI) defines project risk as "an uncertain event or condition that, if it occurs, has a positive or negative effect on a project objective. … there will be a consequence on the project cost, schedule, or quality" [2]. Due to the increasing size and complexity, a wide variety of risks impact the successful completion of the construction projects. In other words, risks are threats to project success [3]. Despite trying to eliminate all the risks in construction projects is impossible, a formal risk management process is required to manage them effectively [4].

In this regard, a systematic risk management process can help construction companies to identify not only the involved risks of projects but also to mitigate impacts of those uncertainties in different phases of projects [5]. The term "risk management" can be broadly defined as work that classifies, analyses and responds to unpredictable risks that exist in the processes of project implementation [6]. Risk management is about defining sources of uncertainty (risk identification), estimating the consequences of uncertain events/conditions (risk analysis), generating response strategies in the light of expected outcomes and, finally, based on the

feedback received on actual outcomes and risks emerged, carrying out identification, analysis and response generation steps repetitively throughout the life cycle of a project to ensure that the project objectives are met [7]. Briefly, a traditional risk management process consists of risk identification, risk analysis or assessment, risk response or mitigation and risk monitoring and control [2, 8].

The initial step of risk management is risk identification. Risk identification is the process of identifying individual project risks as well as sources of overall project risk and documenting their characteristics [2]. Although it is difficult to define and measure, it is very important to identify potential risks as early as possible. In order to manage risks properly, risk identification should be performed along with the project's initiation stage. Construction companies usually benefit from risk checklists [9, 10] and risk breakdown structures [9, 11, 12] for the identification.

Risk analysis/assessment is the process that focuses on evaluating and seeking the likelihood in which potential risks in the risk identification stage may occur [13] and it is implemented by two approaches: qualitative risk analysis and quantitative risk analysis. In qualitative risk analysis process, the main focuses are rating and prioritizing individual project risks for further analysis or action by assessing their probability of occurrence and severity of consequence/impact as well as other characteristics [2, 14]. On the other hand, quantitative risk analysis process focuses on numerically analyzing the combined effect of identified individual project risks and other sources of uncertainty on overall project objectives [2]. Researchers employed Delphi [15–17], AHP/fuzzy AHP [10, 17–23] and Monte Carlo simulation [24–26] to assess risks in their studies.

Risk response process consists of developing options, selecting strategies and agreeing on actions to address overall project risk exposure, as well as to treat individual project risks, and finally implementing agreed-upon risk response plans [2]. Dealing with negative consequences, risk response is also referred to as risk mitigation, risk elimination, risk prevention and risk reduction [8]. Appropriate risk response strategies must be selected to reduce risk exposure once the risks have been identified and analyzed [27]. Researchers widely agree that the selection of risk response strategy is an important issue in project risk management [28–30]. These strategies are avoiding, reducing or accepting project risks.

Risk monitoring and control process is the process of monitoring the implementation of agreed-upon risk response plans, tracking identified risks, identifying and analyzing new risks and evaluating risk process effectiveness throughout the project [2]. This step ensures that all information generated by risk management process is captured, used and maintained throughout the construction period [31].

The subject of risk management in construction projects has been increasingly studying since the 1980s. Most of these studies have focused on how risks are identified or analyzed/assessed in different countries such as Australia [32, 33], China [23, 34, 35], Ghana [36], Hong Kong [37, 38], India [39, 40], Indonesia [41, 42], Italy [43], Korea [44], Malaysia [31, 45], Mexico [46], New Zealand [47, 48], Nigeria [49, 50], Poland [51], Singapore [52, 53], Spain [54], Sri Lanka [55], Tanzania [56], the United Kingdom [57, 58], the United States of America [59, 60], Vietnam [61, 62] and Zambia [63]. These studies mostly used survey/interviews or case studies. Additionally, researchers proposed that various theoretical and mathematical models are also proposed for managing risks effectively and efficiently.

While literature is rich in papers addressing risk management in construction projects, few papers have researched what has already been presented. Edwards and Bowen's [64] research is one of the exceptional studies which analytically reviews the construction risk literature over the period from 1960 to 1997. Given that two decades have passed since then, it is appropriate to review the progress in risk

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**Figure 1.**

*Stages of the systematic literature review.*

*A Guide for Risk Management in Construction Projects: Present Knowledge and Future Directions*

management research in construction. In this regard, this paper aims to analyze current literature and provide a guide for future studies on risk management in

To review the risk management literature comprehensively, a twofold procedure was adopted in this study. At first, a systematic literature review was conducted to identify the key scientific contributions in the risk management domain. The findings of the review, then, were statistically synthesized through a meta-analytical approach which is an associated procedure of systematic literature review. Systematic literature review adopts a replicable, scientific and transparent process that aims to minimize bias through exhaustive literature searches of published studies [65]. On the other hand, meta-analysis helps to analyse these studies by interrelating focused areas and identifying emerging or neglected themes [66]. In this regard, this study has been organized in two stages represented in

The first stage concentrates on searching for relevant papers using scientific databases, namely, American Society of Civil Engineers (ASCE), Elsevier, Emerald and Taylor & Francis. From these databases, relevant papers were searched in the following construction and built environment-related journals: Automation in Construction (AC), International Journal of Project Management (IJPM), Journal

*DOI: http://dx.doi.org/10.5772/intechopen.84361*

**2.1 Stage 1: systematic literature review**

construction projects.

**Figure 1**.

**2. Research methodology**

*A Guide for Risk Management in Construction Projects: Present Knowledge and Future Directions DOI: http://dx.doi.org/10.5772/intechopen.84361*

management research in construction. In this regard, this paper aims to analyze current literature and provide a guide for future studies on risk management in construction projects.
