Establishing Risk Management Factors for Construction Projects in Iraq

International Journal of Advanced Research in Engineering and Technology (IJARET), ISSN 0976 –

6480(Print), ISSN 0976 – 6499(Online), Volume 6, Issue 1, January (2015), pp. 35-48 © IAEME

35

ESTABLISHING RISK MANAGEMENT FACTORS FOR

CONSTRUCTION PROJECTS IN IRAQ

Dr.FirasKhairyJaber

Lecturer, College of Electrical & electronic Eng. Techniques-Middle Technical University

ABSTRACT

The construction industry is widely associated with a high risk and uncertainty due to the

nature of its operating environment. This study aims to identify and evaluate key risk factors and

their frequency and severity and then their impact in different types of construction projects in Iraq.

A questionnaire survey was conducted and a total of sixty five critical factors were identified and

categorized into eight groups. These are: 1. Financial related risk, 2. Legal related risk, 3.

Management risk, 4. Market related risk, 5. Political and security related risk, 6. Technical related

risk, 7. Environmental related risk, and 8. Social related risk. Seventy five respondents participated

in the survey representing 22 clients, 21 consultants and 32 contractors. The results are presented on

the basis of their frequency, severity and importance. The study revealed that the most ten important

factors are: Security measures, loss incurred due to corruption and bribery, loss due to bureaucracy

for late approvals, un-official holidays, loss incurred due to political changes, increase of materials

price, unfairness in tendering, improper project planning and budgeting, design changes and increase

of labor costs. Finally the study suggested that what are the importance of risk function and project

risk management for project success.

Key words: Risk Factors, Project Risk Management, Construction Projects, Iraq

1. INTRODUCTION

Construction companies in general and Iraq in specific, normally face difficult kinds of risks

during the implementation phase of the project. However, most of these companies do not predict

risk when they are considering bids and tenders. Construction risk is generally perceived as events

that influence project objectives, i.e. cost, time and quality. Some of the risks associated with the

construction process are fairly predictable or readily identifiable; others may be totally unpredictable

(Al-Bahar, 1990). In project management terms, the most serious effects of risk can be summarized

as follows:

INTERNATIONAL JOURNAL OF ADVANCED RESEARCH IN ENGINEERING

AND TECHNOLOGY (IJARET)

ISSN 0976 - 6480 (Print) ISSN 0976 - 6499 (Online) Volume 6, Issue 1, January (2015), pp. 35-48 © IAEME: www.iaeme.com/ IJARET.asp

Journal Impact Factor (2014): 7.8273 (Calculated by GISI) www.jifactor.com

IJARET

© I A E M E



36

• Failure to keep within the cost estimate.

• Failure to achieve the required completion date.

• Failure to achieve the required quality and operational requirements.

2. DEFINITION AND CONTEXT OF RISK MANAGEMENT

Project risk management includes the process concerned with identifying, analyzing, and

responding to project risk. It includes maximizing the results of positive events and minimizing the

sequences of adverse events (Shan, 2012). Generally, risk is a choice in an environment rather than a

fate. B.S. 6079 (British Standard Institute 1996) defines risk as "It is the uncertainty inherent in plans

and possibility of something happening that can affect the prospects of achieving, business or project

goals".

Miller (1992) defines risk as "Unpredictability incorporation/ business outcome variables".

About uncertainty he defines as "Unpredictability of environmental and organizational variables that

impact the corporation/ business performance". Consequences of uncertainty and its exposure in a

project, is risk.

In a project context, it is the chance of something happening that will have an impact upon

objectives. It includes the possibility of loss or gain, or variation from desired or planned outcomes,

as a consequence of the uncertainty associated with following a particular course of a action.

Accordingly, risk has two elements:

• The likelihood or probability of something happening.

• The consequences or an impact of it does.

Managing risk is an integral part of good management, and fundamental to achieving good

business and project outcomes and the effective procurement of goods and services. Risk

management provides a structured way of assessing and dealing with future uncertainty.

3. CLASSIFICATION OF RISK

In additional to the different definitions of risk, there are various ways for categorizing risk

for different purposes too. PMI (2009), categorize risk in construction projects broadly into external

risks and internal risks while Aleshin (2001) classify risk in more detailed categories of political risk,

financial risk, market risk, intellectual property risk, social risk, safety risk, etc. Ahmed and Dikbas

(2013) proposed the type of the risks depend 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 projects tends to be subjected to the external risks such as unawareness of the social

conditions, economic and political scenarios, unknown and new procedural formalities, regulatory

framework and governing authority, etc.

4. OBJECTIVES OF THE RESEARCH

This study is intended to achieve the following objectives:

• Identify risk for construction projects in Iraq and categorize them.

• Ranking of the risk factors in accordance of their frequency, severity and importance.

5. LITERATURE REVIEW

In the last three decades, intensive research and developments have focused on project

management. The project risk management is widely recognized as one of the most critical



37

procedures and capability areas in the field of project management. The following is some of the

research papers and studies published in the two decades.

Based on their study Bing et al. (1999) categorized the risk factors and their mitigating

measures, the most effective risk mitigating measures were categorized into eight groups. Those are

partner selection, agreement, employment, control, subcontracting, engineering contract, good

relationship, and renegotiation. They proposed a risk management model incorporating measures.

Three cases of international construction Joint Ventures were analyzed from the perspectives of the

execution of these measures.

Mulholland and Christian (1999) presented a model in a systematic way to consider and

quantify uncertainty in construction schedules. The study focused on lessons learned from past

projects and describes a risk assessment process involving typical inputs and expected outputs. The

model incorporates knowledge and experience acquired from many experts, project-specific

information, and decision analysis techniques and a mathematical model to estimate the amount of

risk in a construction schedule at the initiation of a project. The model provides the means for

sensitivity analyses for different outcomes wherein the effect of critical and significant risk factors

can be evaluated.

Shou et al. (2000), based on their survey on risk management of build-operate-transfer

(BOT) projects in developing countries, with emphasis on infrastructure projects in China, discussed

specifically the criticality of the political and force majeure risks. Based on the survey, critical risks,

in descending order of criticality, were identified: Chinese Parties’ reliability and creditworthiness,

change in law, force majeure, delay in approval, expropriation, and corruption. The measures for

mitigating each of these risks are also discussed.

Hastak and Shaked (2000), in their study classified all risks specific to whole construction

scenario into three broad levels, i.e. country, market and project levels. Macroeconomic stability is

partly linked to the stance of fiscal and monetary policy, and to a country’s vulnerability to economic

shocks. Construction market level risks, for foreign firm, include technological advantage over local

competitors, availability of construction resources, complexity of regulatory processes, and attitude

of local and foreign governments towards the construction industry while project level risks are

specific to construction sites and include logistic constraints, improper design, site safety, improper

quality control and environmental protection, etc.

Aleshin (2001), studied the problem of risk management of international and joint venture

projects with foreign co-operation in Russia. The author identified classified and assessed risks

inherent to joint venture projects in Russia and practical recommendation for risk management.

Kartam and Kartam (2001), based on a questionnaire survey found that contractors show

more willingness to accept risks that are contractual and legal related rather than other types of risks.

Their research also indicated that the application of formal risk analysis techniques is limited in the

Kuwaiti construction industry.

Ahmed and Wood (2010) identified the financial risk factors associated with international

construction ventures from an integrated perspective. They examined the most effective mitigation

measures adopted by construction professionals in managing these risks for their construction

projects and suggest other means of risk aversion.

Zayed (2002), established risk prototype evaluation model that provides a logical, reliable,

and consistent procedure for assessing the project risk. The proposed model introduced the risk index

which relied on the actual performance of eight main risk areas.

Wang and Chou (2003), identified the importance of risk factors by data collected in a postal

questionnaire survey conducted to the building contractors in Hong Kong. Out of 60 factors

identified the availability of required cash, uncertainty in costs estimates, urgent need for work, past

experience in similar projects and contract size are considered most important. The findings

suggested that in the upward adjustment of tender prices, the large-size contractors are more



38

concerned with the uncertainty in costs estimates while the medium- and small-size contractors care

more about no past experience.

Lyons and Skitmore (2004) conducted a survey of senior management involved in the

Queensland engineering construction industry, concerning the usage of risk management techniques.

Their survey results are compared with four earlier surveys conducted around the world which

indicates that: the use of risk management is moderate to high, with very little differences between

the types, sizes and risk tolerance of the organizations, and experience and risk tolerance of the

individual respondents; risk management usage in the execution and planning stages of the project

life cycle is higher than in the conceptual or termination phases; risk identification and risk

assessment are the most often used risk management elements ahead of risk response and risk

documentation; brainstorming is the most common risk identification technique used; qualitative

methods of risk assessment are used most frequently; risk reduction is the most frequently used risk

response method, with the use of contingencies and contractual transfer preferred over insurance;

and project teams are the most frequent group used for risk analysis, ahead of in-house specialists

and consultants.

Li Bing et.al (2005) conducted a questionnaire survey to explore preferences in risk

allocation in United Kingdom. Analysis of the response data shows that some risks should still be

retained within the public sector or shared with the private sector. These are mainly macro and micro

level risks. The majority of risks in PPP/PFI projects, especially those in the macro level risk group,

should be allocated to the private sector.

El-Diraby and Gill S.M (2006) developed taxonomy for relevant concepts in the domain of

privatized-infrastructure finance. The taxonomy is an attempt to create information interoperability

between the construction and financial industries. The taxonomy models the concepts of privatized-

infrastructure finance into six main domains: processes, products, projects, actors, resources and

technical topics (technical details and basic concepts). The taxonomy was designed to be consistent

with Open Financial Exchange (OFX). It was developed through the analysis of 10 case studies and

involvement in project development and interaction with industry experts. The taxonomy was

validated through interviews with domain experts, and through the analysis of two independent case

studies. A prototypical semantic web-based portal for communicating project risks was developed to

in order to illustrate the use of the taxonomy.

6. METHODOLOGY OF THE RESEARCH

The methodology adopted in this research is given below:

• Study the literature related to risk analysis and risk management capabilities.

• Preparation of questionnaire

• Site visits to major construction project sites.

• Questionnaire survey and personal interviews with in-charge and managers.

• Remedial measures to be suggested

• Conclusions, recommendations and suggestions for further studies.

6.1 Method of surveying

The general methodology of this study relies largely on the survey questionnaire which will

be collected from the local construction contractors of different sizes by mail or by personnel

meetings. A thoroughly literature review was conducted to identify the risk factors that affect the

performance of construction industry as a whole. The survey is mainly based on this literature review

and on some interviews with project managers and senior engineers. This was carried out in order to

produce and check the effectiveness of questionnaire.



39

6.2 The questionnaire structures

The questionnaire survey is divided into two paths. The first part consists of general

information about the respondents such as type of the company or the establishment, experience,

value of their project, etc.The second part consist questions about the construction risk for

evaluation. Risk factors for this study are classified into eight categories, namely: 1. Financial risk, 2.

Legal risk, 3. Management risk, 4. Market risk, 5. Political and security risk, 6. Technical risk, 7.

Environmental risk, and 8. Social risk.

6.3 Risk rating

A Likert scale of 1 – 5 was used in the questionnaire. When responding to a Likert

questionnaire item, respondents specify their level of agreement to a statement. The respondents

were required to indicate the relative criticality/ effectiveness of each of the risk factors and their

impact to the management.

6.4 Design of the survey

The respondents were requested to judge the total risk effect of each risk factor. The

approach adopted is to consider two attributes for each risk: the probability level of the risk

occurrence denoted by Frequency Index (F.I) andthe degree of impact or the level of loss if the risk

occurs denoted by Severity Index (S.I).By applying this approach, the respondents were asked to

respond to the two attributes for each risk factor. For considering (F.I), the respondents were

required to judge the probability level of risk occurrence by selecting one from among five levels,

namely: Very small, Small, Normal, large, and Very Large. For considering (S.I) the respondents

were asked to judge the degree of impact if the risk concerned occurs by selecting one from among

five grades, namely: Very low, Low, medium, High, and Very high.

7. ANALYSIS OF SURVEY RESULTS

To assess the relative significance among risks, previous literatures study suggests

establishing a risk significance index by calculating a significance score for each risk. For calculating

the significance score is to multiply the probability of occurrence by the degree of impact. Thus, the

significance score for each risk assessed by each respondent can be obtained

8. RESULTS OF THE SURVEY

Totally for 120 respondents the questionnaires were given, out of which 75 had an effective

reply. Thus the response rate is 62.5% which is considered a good response in this type of survey. In

those 75 respondents surveyed, 32 are representing contractors and 22 are clients and the rest

representing consultants. All the questionnaire survey was done from project manager of the project

or project engineer at the site. In some cases, consultant gave the answers on behalf of their clients,

both from the client and the contractor side. Even telephonic and email reply was accepted since it

was difficult to get the direct one to one meeting with the Project managers. Sub-contractor related

problems, time constraint, and increase in inflation were the major problems concerned with both the

contractor and owner.

9. DATA ANALYSIS

Descriptive and frequency statistical analysis techniques were used to analyze the data

collected in the survey. However, an advanced and accurate method is necessary to analyze the data



40

in a systematic, fast and reliable way. For this purpose, the computer software Statistical Package for

Social Science (SPSS 16) and MS Excel were selected.

The data collected from the survey were analyzed using the frequency and severity index

method (Assaf and Al-Hejji, 2006). Details of both frequency and severity index analysis are

explained below.

According to Assaf and Al-Hejji (2006), a formula as shown in equation (1) was used to rank

risk factors based on frequency of occurrence as identified by the participants, which is called the

Frequency Index (F.I).

Where (a) is the constant expressing weighting given to each response (ranges from 1 for

very small up to 5 for very high occurrence), n is the frequency of the responses, and N is the total

number of responses.

Similarly, a formula as shown in equation (2) used to rank risk factors based on severity

index as indicated by the participants, which is called Severity Index (S.I).

Where (a) is the constant expressing weighting given to each response (range from 1 for very low to

5 for very high effect), n is the frequency of the response, and N is the total number of responses.

Importance Index: The importance index of each risk factor is calculated as a function of both

frequency and severity indices, as follows:

10. RESULTS AND DISCUSSION OF THE SURVEY

10.1 Characteristics of the respondents

The respondents involved in the survey had several years of experience in handling various

types of projects. The characteristics of the respondents participated in the survey are summarized in

table (1).

Frequency Index (F.I) (%) =

Severity Index (S.I) (%) =

Importance Index (I.I) (%) =

5

X 100100 (1)

∑ a (n/N)

5

x100100 (2)

∑ a (n/N)

100

(3)

F.I (%) x S.I (%)



41

Table (1). The respondent's characteristics

Parameter Frequency % Cumulative %

Type of organization

Client 22 29.33 29.33

Consultant 21 28.00 57.33

Contractor 32 42.67 100

Type of project

Housing 10 13.33 13.30

General buildings 31 41.33 54.00

Infrastructure 22 29.33 83.99

Industrial 7 9.33 93.33

Others 5 6.67 100

Working experience

0 – 5 years 8 10.67 10.67

6 – 10 years 15 20.00 30.67

11 – 15 years 29 38.67 69.34

16 – 20 years 14 18.67 88.00

More than 20 years 9 12.00 100

10.2 The significant of risk factors

Sixty three risk factors have been identified. Hierarchical assessment of these factors was

carried out depending on the level of significant. This was assessed based on the Frequency Index,

Severity Index, and then the Importance Index for each group of factors i.e. financial risk, legal risk,

management risk, market risk, political and security risk, technical risk, environmental and social

risk. Below is a general discussion of the results for each group:

10.2.1 Financial risk group

As shown in table (2), financial risks experienced by all the parties involved in the

implementation of construction projects (client, consultant and contractor) are shown. It can be seen

that the three most important risk factors are: "Bankruptcy of contractor" with a total risk effect of

54.44 followed by "depending on the bank and paying high" with Importance factor of 45.20 and in

the third position is "lack of experience in this type of contract" with I.I = 42.33. These results

comply with many studies like Ahmed and Dikbas (2013) and Wang and Chou (2003).

Table (2) Risk in Construction industry – Financial Risk

Type of risk

Probability of risk

occurrence

Degree of

impact on risk

Total risk effect

F.I Rank S.I Rank I.I Rank

Bankruptcy of contractor 73.42 1 74.15 1 54.44 1

Depending on the bank and paying high 66.82 2 67.65 2 45.20 2

Loss due to fluctuation of interest rate 59.63 6 58.66 7 34.98 7

Loss due to fluctuation of exchange rate 60.36 5 61.74 6 37.27 5

Lack of experience in this type of contract 64.78 3 65.34 3 42.33 3

Changes in Bank formalities and

regulations 60.73 4 62.36 4 37.87 4

Insurance risk 59.35 7 60.78 5 36.07 6



42

10.2.2 Legal risk group

The results concerning this group of factors are shown in table (3) below. It can be seen that

the most effective factors are: "Breach of contract by project parties with I.I. of 35.27, "improper

verification of contract documents with I.I. of 31.86 and "lack of enforcement of legal judgment"

with I.I. of 28.96.

Other factors received less attention. The results mentioned above comply with some of the

previous studies like Shan (2012).

Table (3) Risk in Construction industry – Legal Risk

Type of risk

Probability of risk

occurrence

Degree of

impact on risk Total risk

effect


Breach of contract by project parties 60.12 1 58.67 1 35.27 1

Lack of enforcement of legal judgment 54.52 3 53.11 4 28.96 3

Improper verification of contract

documents 55.25 2 57.67 2 31.86 2

Lack of knowledge of arbitration 50.15 5 52.36 5 26.26 5

Uncertainty and unfairness of

court justice 51.39 4 53.76 3 27.63 4

10.2.3 Management risk group

The study included 14 risk factors related to this group. Ranking of the results based on

overall importance index for the three groups of participants are shown in table (4) below. The most

important factors are: "improper project planning and budgeting" withI.I. = 59.68, "sub-contractor

related problems" with I.I. of 55.91 and in the third position is "project delay" with significant risk

effect of 55.89. These results comply with many previous studies like Ahmad and Wood (2010),

Simon (2011) and Zayed and Chang (2002).

Table (4) Risk in Construction industry – Management Risk

Type of risk

Probability

of risk

occurrence

Degree of

impact on risk

Total risk

effect


Change of Top management 64.26 13 65.65 11 42.19 12

No past experience in similar projects 62.39 14 64.76 13 40.40 14

Short tendering time 70.29 6 71.75 6 50.43 6

Sub-contractor related problems 73.92 3 75.63 2 55.91 2

Improper project feasibility study 72.79 4 73.35 5 53.39 4

Improper project planning and budgeting 76.88 1 77.63 1 59.68 1

Improper project organization structure 69.63 7 70.74 7 49.26 7

Poor relation and disputes with client's

representative 63.78 64.63 14 41.22 13

Poor communication between clients and

other parties 65.93 9 66.63 10 43.93 9

Contractor's management problems 66.72 8 65.36 12 43.61 10

Time constraint 72.12 5 73.79 3 53.22 5

Project delay 75.88 2 73.66 4 55.89 3

Poor team work 65.72 10 67.35 8 44.26 8

Poor relation with government

departments 64.25 11 66.72 9 42.87 11



43

10.2.4 Market risk group

The study included 7 risk factors, and the results are presented in table (5). The most

important factors are: "increase of material prices", "unfairness in tendering" and "increase of labor

cost" with total risk factors representing by importance indices of 63.99, 62.89 and 59.29

respectively.

Table (5) Risk in Construction industry – Market Risk

Type of risk

Probability of risk

occurrence

Degree of

impact on risk

Total risk effect


Competition from other companies 68.22 4 70.82 4 48.30 4

Fall short of expected income from project 58.66 7 55.67 7 32.66 7

Increase of accessoryfacilities price 63.74 5 64.25 6 40.95 6

Increase of labor costs 78.26 2 75.76 3 59.29 3

Increase of materials price 80.05 1 79.94 2 63.99 1

Inadequate forecast about market demand 63.13 6 65.28 5 41.21 5

Unfairness in tendering 78.11 3 80.52 1 62.89 2

10.2.5 Political risk group

The most important factors with this group are: "security measure" with I.I. of 77.94, "loss

incurred due to corruption and bribery" with I.I of 71.98 and in third place "loss due to bureaucracy

for late approvals" with I.I. of 67.08. These results are presented in table (6). Similar results are

revealed in previous studies like Mahmood and Ibrahim (2012) related to countries with unstable

situation.

Table (6) Risk in Construction industry – Political Risk

Type of risk

Probability

of risk

occurrence

Degree of

impact on risk

Total risk

effect


Cost increase due to changes of Government

policies 72.15 5 73.56 5 53.07 5

Loss incurred due to corruption and

bribery 83.78 2 85.91 2 71.98 2

Loss incurred due to political changes 80.70 4 79.85 4 64.44 4

Loss due to bureaucracy for late approvals 81.11 3 82.70 3 67.08 3

Security measures 87.65 1 88.92 1 77.94 1

10.2.6. The technical group

This group has more factors than any other group of this study (21 risk factors). The results

are shown in table (7) below. The most effective factors are: "design changes" with total risk effect

represented by I.I of 59.46, "material shortage" with I.I of 51.97 and in the third position is "shortage

of skilled workers" with I.I of 51.19. The results of this study comply with previous works like Li

Bing et al. (2005) and Kartan and Kartan (2001).



44

Table (7) Risk in Construction industry – Technical Risk

Type of risk

Probability

of risk occurrence

Degree of impact

on risk

Total risk

effect


Accidents on site 65.12 11 66.63 8 43.39 10

Design changes 78.26 1 75.98 1 59.46 1

Equipment failure 71.52 3 70.65 4 50.53 4

Errors in design drawings 68.15 7 66.21 10 45.12 8

Difficulty in construction due to

complexity of design 60.10 16 61.22 18 36.79 18

Stiff environmental regulations 68.12 8 67.35 6 45.88 6

Incompetence of transportation facilities 59.16 19 58.66 19 34.70 19

Materials shortage 71.55 2 72.63 2 51.97 2

Obsoleteness of building equipment 65.69 9 66.66 7 43.79 9

Poor quality of procured materials 63.71 14 64.62 15 41.18 14

Shortage in supply of water 53.11 21 50.17 21 26.66 21

Shortage in supply fuel 60.06 18 63.72 16 38.27 16

Shortage in supply electricity 63.75 13 65.23 11 41.58 12

Unknown site physical conditions 65.25 10 64.63 14 42.17 11

Following government standards and codes

and practices 58.01 20 56.35 20 32.69 20

Wastage of materials by workers 70.11 5 69.36 5 48.60 5

Theft of materials at site 68.72 6 66.36 8 45.60 7

Site distance from urban area 60.13 16 61.82 17 37.17 17

Surplus materials handling 62.38 14 64.82 12 40.43 15

Architect Vs. Structural Engineer dispute 63.78 11 64.66 13 41.24 13

Shortage of skillful workers 70.75 4 72.36 3 51.19 3

10.2.7 Environment risk group

This group included only three risk factors. Ranking of these factors are shown in table (8)

below. These are: "any adverse impact on project due to climatic conditions", "any impact on the

environment due to the project" and "healthy working environment for the workers" with I.I. of

51.75, 44.04 and 42.07 respectively.

Table (8) Risk in Construction industry – Environmental Risk

Type of risk

Probability of risk

occurrence

Degree of impact

on risk

Total risk

effect


Any adverse impact on project due to climatic

conditions 71.11 1 72.77 1 51.75 1

Any impact on the environment due to the

project 66.91 2 65.82 2 44.04 2

Healthy working environment for the workers 65.62 3 64.11 3 42.07 3



45

10.2.8 Social risk factors

This group also included three risk factors. Ranking of these factors are shown in table (9)

below. The I.I for each factors are: "unofficial holiday" of 65.83, "local people support for the

project" 50.15 and finally "problems due to adjacent or nearby projects" with I.I. of 29.57.

Table (9) Risk in Construction industry – Social Risk

Type of risk

Probability of risk

occurrence

Degree of

impact on risk

Total risk effect


Un-official holidays 80.80 1 81.47 1 65.83 1

Problems due to adjacent or nearby projects 53.15 3 55.63 3 29.57 3

Local people support for the project 70.52 2 71.11 2 50.15 2

10.2.9 Ranking of most effective factors

Considering that the average risk factor of all the 65 productivity factors is 45.846, those

factors above it are those with stronger impact on risk on construction sites. These factors ranked

from higher to lower values are shown in table (10) below:

Table (10) Risk in Construction industry – factors with strong impact Risk Factor Risk Factor (I.I) Rank

Security measures 77.94 1

Loss incurred due to corruption and bribery 71.98 2

Loss due to bureaucracy for late approvals 67.08 3

Un-official holidays 65.83 4

Loss incurred due to political changes 64.44 5

Increase of materials price 63.99 6

Unfairness in tendering 62.89 7

Improper project planning and budgeting 59.68 8

Design changes 59.46 9

Increase of labor costs 59.29 10

Sub-contractor related problems 55.91 11

Project delay 55.89 12

Bankruptcy of contractor 54.44 13

Improper project feasibility study 53.39 14

Time constraint 53.22 15

Cost increase due to changes of Government policies 53.07 16

Materials shortage 51.97 17

Any adverse impact on project due to climatic conditions 51.75 18

Shortage of skillful workers 51.19 19

Equipment failure 50.53 20

Short tendering time 50.43 21

Local people support for the project 50.15 22

Improper project organization structure 49.26 23

Wastage of materials by workers 48.60 24

Competition from other companies 48.30 25

Stiff environmental regulations 45.88 26

10.2.10 the brief of group results

Table (11) below shows (in ranking order) a brief of (total risk effect) of the eight groups

considered in this study. Also the number of factors included in each is included in this table.



46

Table (11) Group ranking Average total risk

effect Rank Ave No. of factors Group

66.902 1 5 Political related risk factors

49.898 2 7 Market related risks factors

48.516 3 3 Social related risks factors 48.304 4 14 Management related risks factors 45.953 5 3 Environment related risks factors 42.781 6 21 Technical related risks factors 41.165 7 7 Financial related risks factors 29.996 8 3 Legal relate

11. CONCLUSIONS AND RECOMMENDATIONS

11.1 Conclusions

In this study, identifying the risk factors faced by construction industry is based on collecting

information about construction risks, their consequences and corrective actions that may be done to

prevent or mitigate the risk effects.

The main point which was considered this research is to explore the key risk factors and

identify these factors that could be faced in construction projects in Iraq. Analysis of these risk

factors was carried out to measure their frequency and severity on the construction projects. The risk

factors that were identified for each category are shown in tables (2 to 9). The study suggested that

factors with stronger impact on risk in construction sites are those with importance index above the

average importance index calculated for the 63 factors identified in this study. These factors are

shown in table (10). The ten most important factors are:

• Security measures

• Loss incurred due to corruption and bribery

• Loss due to bureaucracy for late approvals

• Un-official holidays

• Loss incurred due to political changes

• Increase of materials price

• Unfairness in tendering

• Improper project planning and budgeting

• Design changes

• Increase of labor costs

The impact of the risk factors based on the average for each group is shown in table (11).

11.2 Recommendations

• Contracting companies should compute with high accuracy and consider risks by adding a

risk premium to quotation and time estimation.

• Contractors should provide all the efforts to prevent financial failure by practicing a tough

cash flow management and minimizing the dependence on bank loans.

• Contractors should learn how to share and shift risks by hiring specialized staff or specialized

subcontractors. It is suggested that the contractor enforced to employ specialized Project

Management company specially for the large scale projects.

• The contract clauses should be modified and improved to meet the impact of the political

situation in the country.



47

REFERENCES

1. Ahmed, M. and Dikbas, J. (2013), Applying a risk management process (RPM) to manage

construction projects in Turkey, Istanbul Technical University, Turkey.

2. Ahmad, F., Wood, M. (2010). Causes of project failure in developing countries, School of

Construction management and Engineering, University of Reading.

3. Al-Bahar, J,F, and Crandall, K.C. (1990). Systematic risk management approach for

construction project. Journal of Construction Engineering and Management, 116 (3), 533-546.

4. Aleshin, A. (2001), Risk management of international projects in Russia, International Journal

of Project Management Vol. 19, 2001, PP. 207-222.

5. Assaf, S. and Al-Hejji (2006), Causes of delay in large construction projects. International

Journal of Project Management, 21 (4), 349-357.

6. Bing, L., Tiong, R. L. K., Wong, W. F., and Chow, D.(1999).Risk management of international

construction joint ventures, Journal of Construction Engineering and Management, 1999,

ASCE, 25(4), 277–284.

7. B.S. 6079 (1996).British Standard Instritute.

8. El-Diraby.T. A and Gill S. M. (2006), A taxonomy for construction terms in privatized

infrastructure finance: supporting semantic exchange of project risk information, Construction

Management and Economics, 24 (3) 271–285.

9. Hastak, M. and Shaked, K. (2000). ICRAM-1: Model for international construction risk

assessment. Journal of management in Engineering, 16 (1), 59-67.

10. Kartam N. &Kartam S. (2001), Risk and its management in the Kuwaiti construction industry:

a contractors' perspective, International Journal of Project Management 19 (2), p. 325-335.

11. Miller, K. (1992). A framework for integrated risk management in international business.

Journal of International Business Studies, Vol. 23 (2), 311-331.

12. Mulholland, B. and Christian.J(1999), Risk assessment in construction schedules, Journal of

Construction Engineering and Management, Vol. 125, No. 1, p. 8-15

13. Li Bing, A. Akintoye, P.J. Edwards, C. Hardcastle (2005), The allocation of risk inPPP/PFI

construction projects in the UK, International Journal of Project Management 23(3), p. 25–35.

14. Lyons, N.S., and Skitmore, M. (2004) Project risk management in theQueensland engineering

construction industry: a survey. International Journal of Project Management 22(1):pp. 51-61.

15. Mahmood, J. and Ibrahim, K.(2012), Identifying, evaluation and classification of risk factors of

construction projects in Afghanistan, Proceedings of the 2014 International Conference on

Industrial Engineering and Operations management, Bali, 7-9 January.

16. Project Management Institute PMI (2009), Project management Body of Knowledge, PMI.

17. Shan, J.F. (2012), Project risk management in Malaysia, 6th Project management Conference,

Sydney.

18. Shou, Q., Robert, L. K.,Tiong,S. K. Ting and Ashley, D. (2000), Evaluation and management

of political risks in China's BOT projects, Journal of Construction Engineering and

Management, Vol. 126, No. 3, , 242-250.

19. Simon, G. (2011), Systematic risk management approach for construction projects in Hong

Kong, International Journal of Engineering and Construction, 22 (3), 46-55.

20. Wang, M. and Chou, H. (2003). Risk allocation and risk management of highway projects in

Taiwan, Journal of Management in Engineering, Vol. 19, p. 145-152.

21. Zayed T. and Chang L., (2002), Prototype model for build-operate-transfer risk assessment.

Journal of Management in Engineering, 18, p.7-16.

22. Er. Amit Bijon Dutta and Dr. M. J. Kolhatkar, “Study of Risk Management In Construction

Projects” International Journal of Management (IJM), Volume 5, Issue 6, 2014, pp. 32 - 39,

ISSN Print: 0976-6502, ISSN Online: 0976-6510.



48

23. S.R. Kannan and R. Vinodhinisri, “Work Quantity Based Decision Support Scheduling Model

For Large Construction Projects” International Journal of Civil Engineering & Technology

(IJCIET), Volume 5, Issue 3, 2014, pp. 226 - 232, ISSN Print: 0976 – 6308, ISSN Online:

0976 – 6316.

24. Saleh Alawi Ahmad, Usama H. Issa, Moataz Awad Farag and Laila M. Abdelhafez,

“Evaluation of Risk Factors Affecting Time and Cost of Construction Projects In Yemen”

International Journal of Management (IJM), Volume 4, Issue 5, 2013, pp. 168 - 178, ISSN

Print: 0976-6502, ISSN Online: 0976-6510.

Documents

Establishing Risk Management Factors for Construction Projects in Iraq