HBRC Journal (2015) xxx, xxx–xxx

Housing and Building National Research Center

HBRC Journal

[Link]

FULL LENGTH ARTICLE

Identification and assessment of risk factors

affecting construction projects
Mohamed Sayed Bassiony Ahmed Abd El-Karim a,*,
Omar Aly Mosa El Nawawy b,1, Ahmed Mohamed Abdel-Alim c,2

a
Ain Shams University, Egypt
b
R C Structures Faculty of Engineering, Ain Shams University, Egypt
c
Construction Management Civil Engineering Department Matariyah, Helwan University, Egypt

Received 27 November 2014; revised 1 March 2015; accepted 11 May 2015

KEYWORDS Abstract Cost saving and time performance are usually essential to all parties who are involved in
Risk assessment; a construction project, that is owner, contractor, subcontractor. The main causes of disputes in con-
Cost overrun; struction projects involve delay and failure to complete the work in the specified cost and time
Schedule overrun; frame. The delivery time of a project is a key factor to the owner in terms of cost as much as it
Likelihood; is for the contractor.
Probability; Unexpected increase in cost and delays in construction projects are caused by owner, contractor,
Scale environments, etc. in which several types of risk factors may occur concurrently. The effect of cost
overrun and schedule overrun do not only influence the construction industry but the overall econ-
omy as well. Even though construction project increasing in cost and schedule has received exten-
sive attention of researchers, but because of continuous changes and development in the field, the
study considered of added value to the construction industry in Egypt, in addition to risk strategy
and plan analysis. In order to meet the deadline of a project and due to the complex nature of con-
struction projects, cost and scheduling should be flexible enough to accommodate changes without
negatively affecting the overall project cost and duration. As such, the objectives of the presented
research in this paper are to identify, study, and assess the effect of the factors that affect cost and
time contingency. Data are collected from sixteen construction companies in Egypt. The collected

* Corresponding author. Cell: +20 100 50 175 30.

E-mail addresses: plpo1@[Link] (M.S.B.A. Abd El-Karim),
nawawyomar@[Link] (O.A. Mosa El Nawawy), [Link].
abdelalim@[Link] (A.M. Abdel-Alim).
1
Cell: +20 12 824 90 949.
2
Cell: +20 10 10 788 060.
Peer review under responsibility of Housing and Building National
Research Center.

Production and hosting by Elsevier

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1687-4048 ª 2015 The Authors. Production and hosting by Elsevier B.V. on behalf of Housing and Building National Research Center.
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2 M.S.B.A. Abd El-Karim et al.

data, output charts and analyses spreadsheets will be used for the development of computerized
model built by the authors with identification abbreviation RIAM.
ª 2015 The Authors. Production and hosting by Elsevier B.V. on behalf of Housing and Building
National Research Center. This is an open access article under the CC BY-NC-ND license (http://
[Link]/licenses/by-nc-nd/4.0/).

Introduction should be flexible enough to accommodate changes without

negatively affecting the overall cost and duration. It is also
Risk management has become an essential requirement for essential to allocate a contingency value to both cost and time
construction projects. Risk management process includes [3].
Hazard identification, Risk assessment and Risk control. Yet, there are situations where there could be delays in
Risk is assessed by Qualitative Methods and Quantitative activities, whether they are within the critical path or not,
Methods. Risk management is the systematic process of iden- which result in a delay in the overall project duration. These
tifying, analyzing, and responding to project risk, and it delays will consequently have a negative impact on the quality,
includes maximizing the probability and consequences of pos- budget, and might be safety of a project. Therefore, estimating
itive attributes and minimizing the probability and conse- cost and time contingencies are seen as a prime factor in
quences of attributes adverse to project objectives. achieving a successful construction project. Although several
Project risk is an uncertain event or condition that, if industrial sectors developed and used software for estimating
occurs, has a positive or negative effect on a project’s objec- time and cost contingencies in order to minimize delays and
tives. Components of risk are an event that may or may not avoid being over budget, yet limited efforts are reported in
happen, the probability of the occurrence of that event and the literature in the area of predicting time contingency in con-
the impact of the occurrence of that event. struction projects. The overall objectives of the presented
There are many sources of uncertainty in construction pro- research in this paper are as follows: (1) to identify and study
jects, which include the performance of construction parties, the factors that affect cost overrun and schedule overrun; (2) to
resources availability, environmental conditions, involvement develop a probability distribution charts for likelihood, cost
of other parties, contractual relations, etc. As a result of these impact and schedule impact; and (3) to quantify the Risk
sources, construction projects may face problems that cause assessment impact on cost and schedule.
delay(s) in the project completion time [1].
The key success indicators of construction management
system(s) include completing the project with cost and time,
within the planned budget and duration, and within the
required quality, safety, and environmental limits. These goals
are interrelated where each of them is affecting and affected by
the others. An accurate cost estimating and scheduling should
be sought in order to meet the overall budget and time dead-
line of a project.
Time contingency is used to guarantee the completion time
of either an activity or a project [2]. Due to the unique nature
of construction projects, cost overrun and schedule overrun
uncertainty are essential for true budget and scheduling, which

Fig. 2 Impact matrix.

Fig. 1 Probability matrix. Fig. 3 Strategies for negative risks.

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Risk factors affecting construction projects 3

Table 1 Factors affecting cost and schedule overruns.

Cost Schedule
Risk Probability
Criteria
Risk Impact Risk Impact
Sub-criterion Attributes/risk factor Very Very Very Very Very Very
Low Moderate High Low Moderate High Low Moderate High
Low High Low High Low High
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Environmental Earthquake
Site conditions

Precipitation /flood
Unpredicted Weather conditions
Pollution
Sub-surface Unexpected Surface conditions
Archeological survey done
Geo-technical investigation
Site location Construction area (rural/urban)
Access conditions
On-site congestion
Delay in permits and licenses
Security requirements
Safety regulation
Differing site conditions

Labor Labor skills level

Resources

Labor availability
Drop in Labor productivity
Labor accidents
Human resource planning
Working hours restrictions
Equipment Equipment quality
Equipment breakdown
Equipment maintenance
Equipment malfunctions
Material Material delivery
Material storage
Material theft & damage
Material procurement
Non-conforming material
Material monopoly
Nominated vendors

Owner Owner type

Project parties

management strategy
organization structure
Work/labour permits
on-site access
Engineering Team experience
and Design Project goal
Complexity of design
Ad-hoc consultants
Design error
Contractor Contractor pre-qualified
New technology
Defective work
Rework
no of subcontractors
Contractor Reputation
Nominated sub-contractors
no. of current projects
Project Management experience
management Owner quality assurance
Scope definition
quality control process
Type of contract
availability of variations

Financial Type of Funds

Project features

Fluctuation in prices
Invoices delay
Change in currency rate
Owner financial capacity
Progress payment
rate of interest
tax rate
foreign currency
project size
Political Bribery and Corruption
Wars and revolutions
Changes in laws and regulations
Schedule Fast track schedule
Project duration

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Strategies for Negative Risks or Threats are Avoid, project execution [7]. It is an amount of money or time (or
Transfer, Mitigate or Accept. On the other hand Strategies other resources) added to the base estimated amount to
for Positive Risks or Opportunities are Exploit, Enhance or achieve a specific confidence level or allow for changes where
Accept. experience shows obligation [8]. It can also be defined as the
budget that is set aside to cope with uncertainties during con-
Background struction [3] or the amount of money/time needed above the
estimate to reduce the risk of overruns of project objectives
Delays have an adverse impact on project success in terms of to an acceptable level within the organization [9]. Treasury
time, cost, quality and safety [1]. [10] identified two major categories of contingency for con-
Time-delays and cost overruns are among the most com- struction projects:
mon phenomena in the construction industry [4]. Therefore,
planners and schedulers have used time contingency to guaran- 1. Design Contingency – it addresses the changes during the
tee the completion time of either an activity or a project [2]. design process for factors such as incomplete scope defini-
The easiest and safest way to build a time contingency is to tion and inaccuracy of estimating methods as well as data
extend the project end date to a point where there is a comfort- [11].
able amount of positive float, which may not be cost effective 2. Construction Contingency – it addresses the changes during
or acceptable to the client. However, it might not also be a construction process. Under a traditional procurement
acceptable to proceed in a project with a zero float plan [5]. arrangement, the contract typically contains a variation
There is no standard definition of contingency in which it clause(s) to allow for changes and provide a mechanism
could imply different meanings to estimators, contractors, for determining and valuing variations.
and owners’ organizations [6]. Contingency is probably the There are many definitions for contingency in the literature;
most misunderstood, misinterpreted, and misapplied word in most of them focused on cost contingency. Contingency has

Fig. 4 Research methodology flow chart.

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Risk factors affecting construction projects 5

Fig. 5 Summary of attributes.

different meanings to different people. Despite its importance, to uncertain events in which their impact was difficult to pre-
estimating time contingency was not thoroughly addressed in dict because of the uniqueness of construction projects.
the literature. Prior to reviewing the estimating methods for Schedule contingency analysis is the process of identifying
project contingency, there are different attributes that affect and evaluating contingency factors, present or anticipated,
contingency. Iyer and Jha [12] identified 55 factors affecting and determining both the probability and impact of identified
the performance of project schedule. They observed seven fac- contingency factors [17]. It is a preliminary step in establishing
tors that have the most significant impact on schedule outcome a schedule and time control strategy, which is intended to
and divide them into two main categories (see Figs. 1–3). increase the probability of desired outcome while minimizing
The first category included factors that encompassed the risk factors [12].
capability to improve performance level, such as owner’s com-
petence as well as commitment and conflict among project
Factors affecting cost overrun and schedule overrun
members. The second included factors that tended to retain
the schedule at its existing level, such as coordination among
project members, lack of knowledge and skills for the project Based on the literature and the opinion of practitioners/Expert
managers, hostile socioeconomic environment, and uncer- through fifty nine questionnaires, several imperative factors
tainty in selecting project members/team. In addition, that affect cost and time contingency are identified and stud-
Touran [3] indicated that the effect of change orders increased ied. They are divided into four major criteria: (A) Site condi-
the original cost and schedule since they modified the original tions, (B) Resources, (C) Project parties, and (D) Project
contract. Boskers and AbouRizk [13] presented a methodology features related factors. Table 1 shows the detail of these main
that incorporated network analysis and duration uncertainty criteria and their factors. Site conditions include environmen-
in project time analysis. They studied the effect of various fac- tal, Sub-surface and Site location. Resources include Labor,
tors on time contingency using a linear equation. Equipment and Material. On the other hand, project parties
There are many factors that impact time contingency in cover Owner, Engineering & Design, Contractor and Project
which it is not only important to identify these factors but management. In addition Project features cover Financial,
assess their impact on the project duration as well. Most engi- Political and schedule sub-criterions.
neers, planners, and agencies relied on their experience to esti- The detail attributes/risk factors related for each sub-
mate cost and time contingencies [3,13–15]. The contractor’s criterion are shown in Table 1. It is quite clear that the identi-
contingency was represented as a fixed percentage of the con- fied criteria and factors effectively contribute to the uncer-
tract value [16] or as a percentage of total project cost or dura- tainty in construction project cost and scheduling, which in
tion [3]. The completion date of a project was often missed due turn, impact the assessment of cost and schedule overruns.

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Fig. 6 Heat map concerning attributes COST impact.

In the present research, these factors are considered in predict- The output charts developed by crystal ball software will be
ing project budget and time contingencies. divided into three stages: the first one illustrates the probability
distribution per each attribute likelihood [Pi], the second stage
Research methodology will concern the cost impact probability distribution either for
attributes which will be defined as [weight Wi], or concerning
Fig. 4 shows the detailed steps utilized to perform the various the sub-criterion itself, which will be defined as [Score Si], fur-
activities of the present research. Factors that affect cost and thermore the third stage will reflect the schedule impact prob-
schedule overruns are identified and discussed using literature ability distribution either for attributes/risk factor or for the
review and experts opinion. A questionnaire survey is con- sub-criterions themselves as described previously. These data
ducted to collect the impact of each factor. The research will be used by AHP based simulation modeling which will
methodology is performed using probability distribution be described in detail in another paper.
developed by crystal ball software. The collected data through As illustrated in Fig. 4 below, the upper steps will be done
questionnaires will be used to illustrate the min., mean, max. in this paper, and on the other hand the lower part of the flow
and stander division values (see Fig. 5). chart includes AHP analysis will be illustrated in detail in

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Risk factors affecting construction projects 7

Fig. 7 Heat map concerning attributes SCHEDULE impact.

Fig. 8 Attributes probability of occurrence tornado chart (for sub-criterions).

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8 M.S.B.A. Abd El-Karim et al.

Fig. 9 Tornado chart for sub-criterions cost impact.

Fig. 10 Tornado chart for sub-criterions schedule impact.

Frequency

Fig. 11 Probability of occurrence for OWNER sub-criterion.

Frequency

Fig. 12 Probability of occurrence for ARCHEOLOGICAL SURVEY DONE attribute.

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Risk factors affecting construction projects 9

Frequency

Fig. 13 Probability of occurrence for LABOR ACCIDENTS attribute.

Frequency

Fig. 14 Probability of occurrence for TEAM EXPERIENCE attribute.

Frequency

Fig. 15 Cost impact probability distribution for GEO-TECHNICAL INVESTIGATION attribute.

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10 M.S.B.A. Abd El-Karim et al.

Frequency

Fig. 16 Cost impact probability distribution for COMPLEXITY OF DESIGN attribute.

Frequency

Fig. 17 Cost impact probability distribution for DESIGN ERROR attribute.

Frequency

Fig. 18 Schedule impact probability distribution for OWNER TYPE attribute.

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Risk factors affecting construction projects 11

Frequency

Fig. 19 Schedule impact probability distribution for NOMINATED SUB-CONTRACTOR attribute.

another paper which can be considered as a complementary and schedule impact, and these questionnaires cover a lot of
part for the present paper. attributes/risk factors from the literature to allocate various
categories as per environmental and financial effects which
Development of data and charts had covered by 65 factors and increased up to 70 factors by
practitioners’ advice. These added factors are equipment mal-
Introduction functions, ad hoc consultants, availability of variations, owner
financial capacity and tax rate.
The data have been mentioned in Excel spreadsheets to
Cost and schedule overruns analysis are defined in this
determine the min., max., mean values in addition to standard
research as the process of – identifying and evaluating contin-
deviation, and the evaluated weights have been transformed
gency factors, present or anticipated, and determining the cost
into percentages using (PMBOK Guide) chapter-11 scales.
and schedule overruns indexes. In order to assess these indexes,
The probability distribution of likelihood of occurrence, cost
some steps are utilized to perform the intended analysis. These
impact and schedule impact has been developed using Oracle
steps are discussed further in the following sections.
The questionnaires have been developed to evaluate the
probability of attributes in addition to attributes cost impact

Fig. 20 Model information screen. Fig. 21 Project information screen.

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12 M.S.B.A. Abd El-Karim et al.

Fig. 22 Model main screen.

crystal ball Release [Link] software, and these charts will be category is spread into five levels, very low = 1, low = 2,
used in the graphical mode mentioned in the developed model moderate = 3, high = 4 and very high = 5, Table 1 illustrates
as discussed later, on the other hand the user can use the these details.
numerical mode simply. Oracle Crystal Ball Release [Link] software will be used
The spreadsheets will be used to present the heat maps and for representing the probability distribution for all attributes
tornado charts as mentioned in the paper. as same as the probability distribution of sub-criterions them-
selves, referred to (PMBOK Guide) – Fifth Edition chapter-
Data acquisition and probability distribution 11 and some distributions are frequently used as per Beta, tri-
angular and lognormal distribution.
The questionnaires have been prepared in Arabic language and Some figures concerning tornado charts and probability
English language to be simply filled; the sheets have been dis- distribution have been illustrated as samples, due to limited
tributed in three evaluated portions, the first one concerning space and all charts and figures cannot be illustrated.
the attribute probability of occurrence, the second portion The sample charts mentioned in Figs. 11–19 will be used as
assigned for attribute cost impact and the third portion a part of model structure named RIAM which has been built
assigned for attribute schedule impact. The evaluation by the same authors and described in another paper titled

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Risk factors affecting construction projects 13

Fig. 23 User data entry.

‘‘Decision Support System for Risk Assessment in company partnership, type of the projects, project duration.
Construction Projects Using AHP-Simulation Based Otherwise part two, includes the identified attributes probabil-
Technique’’. ity of occurrence, cost impact and schedule overrun. Part three
includes any additional attributes have been added by practi-
Data collection tioner. In order to facilitate the answers of reviewers, a scale
from 1 to 5 is used, using a scale range as mentioned in article
Data are collected through one mean questionnaire and struc- 5.1 above. Furthermore the intensity of filled color is graded to
tured interviews to collect information on case study projects. attract practitioner sense of weight and simplify the choice.
A survey is conducted in the form of a questionnaire to collect Physical and telephone interviews are conducted with
each project risk factors and its probability of occurrence in senior managers of sixteen companies, which are located in
addition to its cost and schedule overruns from the construc- Egypt, or located outside Egypt but have some projects inside.
tion firms work in Egypt. The questionnaire is designed using The surveyed companies have experience and history ranges
the significant factors identified by the literature and experts as from 15 to 60 years in the construction industry.
shown in Table 1. The questionnaire includes three parts. Part They work in variety of projects, such as pipelines, tanks,
one includes the respondent personal general information, that refineries, infrastructure and silos. The variety of companies
is years of experience, total value of completed works, type of type is taken into consideration as per national/international

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14 M.S.B.A. Abd El-Karim et al.

Fig. 24 The developed charts through graphical solution.

huge companies, construction firms, consultants and insurance percentage, in addition the second group of charts will illus-
group. Fifty nine feedbacks have been received, 6 have been trate the frequency of attributes cost impact percentage, and
rejected due to shortage data, the type of contact engineers furthermore the third group of charts will illustrate the fre-
are 5 consultants, 7 project managers, 9 construction man- quency of attributes schedule impact percentage.
agers, 8 planners, 11 cost estimators, 3 contract administrator, The horizontal axes will refer to the percentage of such val-
1 insurance engineer and 9 site engineers. The budget values of ues as illustrated in the previous paragraph and will be divided
projects that run by the interviewed managers range from $25 into equal units. The vertical axes will intersect the mean value
to $500 Million US dollars and the durations range from of the practitioners’ assessment through the questionnaires.
6 months to 3 years. The user can choose the type of chart distribution from the
The charts above present the normal distribution concern- list as per Beta, Gamma, lognormal, uniform, triangle, Min
ing the frequency of the risk factors percentage as collected Extreme, Max Extreme, Logistic, Weibull,. . .etc. In addition
from the questionnaires, the first group of charts will illustrate Crystal ball software can assist the user for best choice of chart
the frequency of attributes probability of occurrence distribution type by using option ‘‘Fit’’.

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Risk factors affecting construction projects 15

Brief of RIAM-model and impact effect of such factors, if the cost estimator takes the
impact of those attributes as same as their values, the budget
The detail of this model will be discussed in another paper pre- and schedule will increase accordingly, and the tenderer maybe
pared by the same authors titled ‘‘Decision Support System for unsuccessful. Therefore risk response and risk plan shall be
Risk Assessment in Construction Projects Using AHP- studied and controlled to transfer or mitigate the impact of
Simulation Based Technique’’. said factors to another party such as insurance company,
A computerized system (RIAM) will be used for Risk sub-contractor or the client himself, which enhance the cost
assessment and risk strategy (plan) for project attributes as and schedule contingency demand. On the other hand the
mentioned in Fig. 4 above. The system will be developed by attributes located in the green zone have little probability
Microsoft Visual Basic programming language and and impact, and these factors maybe neglected or avoid.
Microsoft Access. From Figs. 8–10 political sub-criterion can be considered as
RIAM-model will be run through three softwares, the most probable and impacted factor, on the other hand
Microsoft Excel and Crystal ball in addition to Expert owner sub-criterion can be considered the lowest probable
Choice 2000. and impacted factor.
This model is designed to be flexible and easy to use. It does
not require previous knowledge of the above mentioned pro- Conflict of interests
grams. Thus RIAM-model overcomes the deficiencies of previ-
ous risk analysis and quantification tools in being complicated, The author states that there is no conflict of interests.
non-flexible, and time consuming. The system runs on
Microsoft Windows XP and later (see Fig. 20). References
As per Fig. 21 above, the user will insert brief of the project
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