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Risk Assessment for International Construction Projects

Year 2023, , 44 - 51, 06.07.2023
https://doi.org/10.46460/ijiea.1114344

Abstract

International projects are inherently exposed to unforeseeable and complex risk scenarios. This study aimed to assess and identify the critical risk factors in international contracting projects, based on the analytic hierarchy process (AHP) method. The most compelling risks that are faced by the construction firms in the Afghanistan market are determined primarily by meta-analysis. According to the data obtained from this analysis, the priorities of the risks and the degree of severity between each other are determined by using the AHP method. This research enhances the current body of knowledge about the possible encountered threats for investing the high-risk construction markets. The findings of the study may also help contractors to develop strategies "to bid or no-bid decisions" for high-risk markets.

References

  • [1] Bing, L., Tiong, R.L.-K., Fan, W.W. and Chew, D.A.-S. (1999) Risk management in international construction joint ventures Journal of Construction Engineering and Management, 125 (4), pp. 277-284.
  • [2] Zhao, X., Hwang, B.-G., and Low, S.P (2014) Investigating enterprise risk management maturity in construction firms Journal of Construction Engineering and Management, 140 (8). art. No. 05014006.
  • [3] Hwang, B.-G., Zhao, X., and Chin, E.W.Y. (2017) International construction joint ventures between Singapore and developing countries Risk assessment and allocation preferences Engineering, Construction and Architectural Management, 24 (2), pp. 209-228.
  • [4] Gunhan, S., Arditi, D.. (2005) “Factors affecting international construction.” J. Constr. Eng. Manage., pp, 273–282.
  • [5] Deng, X., Low, S.P., Zhao, X., and Chang, T. (2018) Identifying micro variables contributing to political risks in international construction projects Engineering, Construction and Architectural Management, 25 (3), pp. 317-334.
  • [6] Ramcharran, H. (1998) “Obstacles and opportunities in international engineering services.” J. Manage. Eng., pp 38–47.
  • [7] Diab, M.F., Varma, A., and Panthi, K. (2017) Modeling the Construction Risk Ratings to Estimate the Contingency in Highway Projects Journal of Construction Engineering and Management, 143 (8), art. No. 04017041.
  • [8] Stephen, M., Picken, D. (2000) Using risk analysis to determine construction project contingencies Journal of Construction Engineering and Management, 126 (2), pp. 130-136.
  • [9] Mills, A. (2001) A systematic approach to risk management for construction Structural Survey, 19 (5), pp. 245-252.
  • [10] Chang, T., Hwang, B.-G., Deng, X., and Zhao, X. (2018) Identifying Political Risk Management Strategies in International Construction Projects (Open Access) Advances in Civil Engineering, 125 pp. 13-16.
  • [11] Crosthwaite, D. (2000) The global construction market: a cross-sectional analysis, Construction Management and Economics, 18, issue 5, pp. 619-627
  • [12] Duman, D. U., Green, S. D. (2018) Strategizing as Identity Work: Creating Heroes in International Contracting In: Gorse, C and Neilson, C J (Eds) Proceeding of the 34th Annual ARCOM Conference,
  • [13] Tayanç, T. (2011) Geography of Builders: Overseas Contracting Adventure of Turkish Construction Sector, History Foundation, Ankara
  • [14] TCA Turkish International Contracting- 2017 / March. https://www.tmb.org.tr/eng 24.01.2021
  • [15] Mak, S., Picken, D. (2000) Using risk analysis to determine construction project contingencies. Journal of Construction Engineering and Management, 126(2). pp.130–136.
  • [16] Project Management Institute (PMI). (2017). A guide to the project management body of knowledge (PMBOK® guide) – Sixth edition. Newtown Square, PA: Author.
  • [17] Park, H., Lee, K.-W., Jeong, H.D., and Han, S.H. (2014) Effect of institutional risks on the performance of international construction projects Construction Research Congress 2014: Construction in a Global Network- Proceedings of the 2014 Construction Research Congress, pp. 2126-2135.
  • [18] Liu, J., Zhao, X., and Yan, P. (2016) Risk paths in international construction projects: Case study from Chinese contractors Journal of Construction Engineering and Management, 142 (6), art. No. 05016002.
  • [19] Xiaopeng, D., Pheng, L. (2013) “Understanding the critical variables affecting the level of political risks in international construction projects.” KSCE J. Civ. Eng., 17(5), pp.895–907.
  • [20] Zhi, H. (1995) Risk management for overseas construction projects International Journal of Project Management, 13 (4), pp. 231-237.
  • [21] Akintoye, A. S., MacLeod, M. J. (1997) “Risk analysis and management in construction”. International Journal of Project Management, 15(1), pp.31-38.
  • [22] Wang, S.Q., Dulaimi M.F, Aguria M.Y. (2004) Risk management framework for construction projects in developing countries, Construction Management and Economics, 22:3, pp. 237-252,
  • [23] Taroun, A. (2014) Towards a better modelling and assessment of construction risk: Insights from a literature review International Journal of Project Management, 32 (1), pp. 101-115.
  • [24] Zhao, X., Hwang, B. and Low, S., (2015) “Enterprise risk management in international construction firms: drivers and hindrances", Engineering, Construction and Architectural Management, Vol. 22 No. 3, pp. 347-366.
  • [25] Lee, K.P.; Lee, H.S.; Park, M.; Kim, D.Y.; and Jung, M. (2017) Management-Reserve Estimation for International Construction Projects Based on Risk-Informed k-NN. J. Manag. Eng., 33.
  • [26] Hastak, M., Shaked, A (2000). “ICRAM-1: Model for international construction risk assessment.” J. Manage. Eng., pp. 59–69.
  • [27] El-Sayegh S. (2014) Project risk management practices in the UAE construction industry International Journal of Project Organization and Management 6(1/2): pp.121-137
  • [28] Ruqaya A., Carol C and Hanna, A. (2014) Evaluating impact of construction risks in the Arabian Gulf Region from perspective of multinational architecture, engineering and construction firms, Construction Management and Economics, 32:4, pp. 382-402,
  • [29] Zou, P.X.W., Chen, Y., and Chan, T., (2010) Understanding and improving your risk management capability: assessment model for construction organizations. J. Constr. Eng. Manag. 136 (8), 854–863.
  • [30] Deng, X., Low, S.P. (2014) Exploring critical variables that affect political risk level in international construction projects: Case study from Chinese contractors Journal of Professional Issues in Engineering Education and Practice, 140 (1), art. No. 04013002.
  • [31] Cano, A., and de la Cruz, M. P. (2002) “Integrated methodology for project risk management.” J. Constr. Eng. Manage., 128 6, 473–485.
  • [32] Ho, W. (2008) “Integrated Analytic Hierarchy Process and Its Applications – A Literature Review.” European Journal of Operational Research 186: 211–228
  • [33] Chai, J., J. N. K. Liu, and E. W. T. Ngai. (2013) “Application of Decision-making Techniques in Supplier Selection: A Systematic Review of Literature.” Expert Systems with Applications 40: 3872–3885.
  • [34] Ashley, D.B., Bonner, J.J. (1987) Political risks in international construction Journal of Construction Engineering and Management, 113 (3), pp. 447-467.
  • [35] Cooper, D.F., MacDonald, D.H. and Chapman, C.B. (1985) “Risk analysis of a construction cost estimate” International Journal of Project Management 3(3), 141–149.
  • [36] Barnes, NMI (1983). How to allocate risks in construction contracts. Int. J. Project Manage., 1(1): 24-28.
  • [37] Han, S.H., Diekmann, J.E. (2001). “Approaches for Making Risk-Based Go/No-Go Decision for International Projects”, ASCE Journal of Construction Engineering and Management, 127(4), 300-308.
  • [38] Sauli H., Matti H., Mikko S. (2007) Comparison of Four Existing Concept Selection Methods Guidelines for a Decision Support Method Adapted to NPD Processes
  • [39] Diekmann, J.E. (1983). Probabilistic estimating: mathematics and applications. Journal of Construction Engineering and Management, 109(3), 297-308.
  • [40] Cioffi, D. F., Khamooshi, H. (2008). “A Practical Method to Determine Project Risk Contingency Budget.” Journal of the Operational Research Society., Advance Online Publication 19 March 2008.
  • [41] Skibniewski, M. J.; Chao, L. C. (1992). Evaluation of advanced construction technology with AHP method, Journal of Construction Engineering and Management 118: 577–593.
  • [42] Wang, Y.-M., K.-S. Chin, and J. P.-F. Leung. (2009) “A Note on the Application of the Data Envelopment Analytic Hierarchy Process for Supplier Selection.” International Journal of Production Research 47: 3121–3138.
  • [43] Muerza, V., D. de Arcocha, E. Larrodé, and. Moreno-Jiménez J. M. (2014) “The Multicriteria Selection of Products in Technological Diversification Strategies: An Application to the Spanish Automotive Industry Based on AHP.” Production Planning & Control 25: 715–728.
  • [44] Chan APC, Chan DWM, and Yeung JFY. (2009). Overview of the application of “fuzzy techniques” in construction management research. J Constr Eng Manage. 35(11):1241–1252.
  • [45] Al-Harbi K. (2001). Application of the AHP in project management. Int J Proj Manage. 19(1):19–27.
  • [46] Jato-Espino D, Castillo-Lopez E, Rodriguez-Hernandez J and Canteras-Jordana JC. (2014) A review of application of multicriteria decision making methods in construction. Automat Constr. 45:151–162.
  • [47] Shapira, A.; Goldenberg, M. (2005) AHP – based equipment selection model for construction projects, Journal of Construction Engineering and Management 131: pp. 1263–1273.
  • [48] Li J, Zou PXW. (2011) Fuzzy AHP-based risk assessment methodology for PPP projects. J Constr Eng Manage. 137 (12):1205–1209.
  • [49] Polat, G. (2016). Subcontractor selection using the integration of the AHP and PROMETHEE methods, Journal of Civil Engineering and Management 22(8): pp.1042–1054.
  • [50] Erdogan, S. A.; Šaparauskas, J.; and Turskis, Z. (2017). Decision making in construction management: AHP and Expert choice approach, Procedia Engineering 172: pp.270–276.
  • [51] Kwast-Kotlarek, U.; Hełdak, M. (2019) Evaluation of the Construction and Investment Process of a High-Pressure Gas Pipeline with Use of the Trenchless Method and Open Excavation Method. Analytic Hierarchy Process (AHP). Sustainability, 11, 2438.
  • [52] Siraj N.B., Fayek, A, R. (2019) Risk Identification and Common Risks in Construction: Literature Review and Content Analysis Journal of Construction Engineering and Management Volume 145 Issue 9
  • [53] Saaty, T. L. (1994) “How to Make a Decision: The Analytic Hierarchy Process.” Interfaces 24: pp. 19–43.
  • [54] Ghulam A. N., Painting N. (2017) Significant Factors Causing Cost Overruns in the Construction Industry in Afghanistan Procedia Engineering 182:510-517

Uluslararası İnşaat Projeleri için Risk Değerlendirmesi

Year 2023, , 44 - 51, 06.07.2023
https://doi.org/10.46460/ijiea.1114344

Abstract

Uluslararası projeler doğası gereği öngörülemeyen ve karmaşık risk senaryolarına maruz kalmaktadır. Bu çalışma, analitik hiyerarşi süreci (AHP) yöntemine dayanarak uluslararası müteahhitlik projelerindeki kritik risk faktörlerini değerlendirmeyi ve tanımlamayı amaçlamıştır. Öncelikle örnek ülke olarak seçilen Afganistan pazarındaki inşaat firmalarının karşı karşıya kaldığı zorlayıcı riskler meta-analiz yöntemi ile belirlenmiştir. Analiz sonucu elde edilen verilere göre AHP yöntemi kullanılarak risklerin öncelikleri ve birbirleri arasındaki önem derecesi tespit edilmiştir. Çalışmanın bulguları, yüksek riskli inşaat pazarlarına yatırım yapma kararı verirken karşılaşılan olası tehditler hakkında mevcut literatüre ve yatırımcılara güncel bilgiler vermektedir. Araştırma sonuçları yüklenicilerin yüksek riskli piyasalar için "teklif verme veya teklif vermeme kararları" stratejileri geliştirmelerine de yardımcı olabilir.

References

  • [1] Bing, L., Tiong, R.L.-K., Fan, W.W. and Chew, D.A.-S. (1999) Risk management in international construction joint ventures Journal of Construction Engineering and Management, 125 (4), pp. 277-284.
  • [2] Zhao, X., Hwang, B.-G., and Low, S.P (2014) Investigating enterprise risk management maturity in construction firms Journal of Construction Engineering and Management, 140 (8). art. No. 05014006.
  • [3] Hwang, B.-G., Zhao, X., and Chin, E.W.Y. (2017) International construction joint ventures between Singapore and developing countries Risk assessment and allocation preferences Engineering, Construction and Architectural Management, 24 (2), pp. 209-228.
  • [4] Gunhan, S., Arditi, D.. (2005) “Factors affecting international construction.” J. Constr. Eng. Manage., pp, 273–282.
  • [5] Deng, X., Low, S.P., Zhao, X., and Chang, T. (2018) Identifying micro variables contributing to political risks in international construction projects Engineering, Construction and Architectural Management, 25 (3), pp. 317-334.
  • [6] Ramcharran, H. (1998) “Obstacles and opportunities in international engineering services.” J. Manage. Eng., pp 38–47.
  • [7] Diab, M.F., Varma, A., and Panthi, K. (2017) Modeling the Construction Risk Ratings to Estimate the Contingency in Highway Projects Journal of Construction Engineering and Management, 143 (8), art. No. 04017041.
  • [8] Stephen, M., Picken, D. (2000) Using risk analysis to determine construction project contingencies Journal of Construction Engineering and Management, 126 (2), pp. 130-136.
  • [9] Mills, A. (2001) A systematic approach to risk management for construction Structural Survey, 19 (5), pp. 245-252.
  • [10] Chang, T., Hwang, B.-G., Deng, X., and Zhao, X. (2018) Identifying Political Risk Management Strategies in International Construction Projects (Open Access) Advances in Civil Engineering, 125 pp. 13-16.
  • [11] Crosthwaite, D. (2000) The global construction market: a cross-sectional analysis, Construction Management and Economics, 18, issue 5, pp. 619-627
  • [12] Duman, D. U., Green, S. D. (2018) Strategizing as Identity Work: Creating Heroes in International Contracting In: Gorse, C and Neilson, C J (Eds) Proceeding of the 34th Annual ARCOM Conference,
  • [13] Tayanç, T. (2011) Geography of Builders: Overseas Contracting Adventure of Turkish Construction Sector, History Foundation, Ankara
  • [14] TCA Turkish International Contracting- 2017 / March. https://www.tmb.org.tr/eng 24.01.2021
  • [15] Mak, S., Picken, D. (2000) Using risk analysis to determine construction project contingencies. Journal of Construction Engineering and Management, 126(2). pp.130–136.
  • [16] Project Management Institute (PMI). (2017). A guide to the project management body of knowledge (PMBOK® guide) – Sixth edition. Newtown Square, PA: Author.
  • [17] Park, H., Lee, K.-W., Jeong, H.D., and Han, S.H. (2014) Effect of institutional risks on the performance of international construction projects Construction Research Congress 2014: Construction in a Global Network- Proceedings of the 2014 Construction Research Congress, pp. 2126-2135.
  • [18] Liu, J., Zhao, X., and Yan, P. (2016) Risk paths in international construction projects: Case study from Chinese contractors Journal of Construction Engineering and Management, 142 (6), art. No. 05016002.
  • [19] Xiaopeng, D., Pheng, L. (2013) “Understanding the critical variables affecting the level of political risks in international construction projects.” KSCE J. Civ. Eng., 17(5), pp.895–907.
  • [20] Zhi, H. (1995) Risk management for overseas construction projects International Journal of Project Management, 13 (4), pp. 231-237.
  • [21] Akintoye, A. S., MacLeod, M. J. (1997) “Risk analysis and management in construction”. International Journal of Project Management, 15(1), pp.31-38.
  • [22] Wang, S.Q., Dulaimi M.F, Aguria M.Y. (2004) Risk management framework for construction projects in developing countries, Construction Management and Economics, 22:3, pp. 237-252,
  • [23] Taroun, A. (2014) Towards a better modelling and assessment of construction risk: Insights from a literature review International Journal of Project Management, 32 (1), pp. 101-115.
  • [24] Zhao, X., Hwang, B. and Low, S., (2015) “Enterprise risk management in international construction firms: drivers and hindrances", Engineering, Construction and Architectural Management, Vol. 22 No. 3, pp. 347-366.
  • [25] Lee, K.P.; Lee, H.S.; Park, M.; Kim, D.Y.; and Jung, M. (2017) Management-Reserve Estimation for International Construction Projects Based on Risk-Informed k-NN. J. Manag. Eng., 33.
  • [26] Hastak, M., Shaked, A (2000). “ICRAM-1: Model for international construction risk assessment.” J. Manage. Eng., pp. 59–69.
  • [27] El-Sayegh S. (2014) Project risk management practices in the UAE construction industry International Journal of Project Organization and Management 6(1/2): pp.121-137
  • [28] Ruqaya A., Carol C and Hanna, A. (2014) Evaluating impact of construction risks in the Arabian Gulf Region from perspective of multinational architecture, engineering and construction firms, Construction Management and Economics, 32:4, pp. 382-402,
  • [29] Zou, P.X.W., Chen, Y., and Chan, T., (2010) Understanding and improving your risk management capability: assessment model for construction organizations. J. Constr. Eng. Manag. 136 (8), 854–863.
  • [30] Deng, X., Low, S.P. (2014) Exploring critical variables that affect political risk level in international construction projects: Case study from Chinese contractors Journal of Professional Issues in Engineering Education and Practice, 140 (1), art. No. 04013002.
  • [31] Cano, A., and de la Cruz, M. P. (2002) “Integrated methodology for project risk management.” J. Constr. Eng. Manage., 128 6, 473–485.
  • [32] Ho, W. (2008) “Integrated Analytic Hierarchy Process and Its Applications – A Literature Review.” European Journal of Operational Research 186: 211–228
  • [33] Chai, J., J. N. K. Liu, and E. W. T. Ngai. (2013) “Application of Decision-making Techniques in Supplier Selection: A Systematic Review of Literature.” Expert Systems with Applications 40: 3872–3885.
  • [34] Ashley, D.B., Bonner, J.J. (1987) Political risks in international construction Journal of Construction Engineering and Management, 113 (3), pp. 447-467.
  • [35] Cooper, D.F., MacDonald, D.H. and Chapman, C.B. (1985) “Risk analysis of a construction cost estimate” International Journal of Project Management 3(3), 141–149.
  • [36] Barnes, NMI (1983). How to allocate risks in construction contracts. Int. J. Project Manage., 1(1): 24-28.
  • [37] Han, S.H., Diekmann, J.E. (2001). “Approaches for Making Risk-Based Go/No-Go Decision for International Projects”, ASCE Journal of Construction Engineering and Management, 127(4), 300-308.
  • [38] Sauli H., Matti H., Mikko S. (2007) Comparison of Four Existing Concept Selection Methods Guidelines for a Decision Support Method Adapted to NPD Processes
  • [39] Diekmann, J.E. (1983). Probabilistic estimating: mathematics and applications. Journal of Construction Engineering and Management, 109(3), 297-308.
  • [40] Cioffi, D. F., Khamooshi, H. (2008). “A Practical Method to Determine Project Risk Contingency Budget.” Journal of the Operational Research Society., Advance Online Publication 19 March 2008.
  • [41] Skibniewski, M. J.; Chao, L. C. (1992). Evaluation of advanced construction technology with AHP method, Journal of Construction Engineering and Management 118: 577–593.
  • [42] Wang, Y.-M., K.-S. Chin, and J. P.-F. Leung. (2009) “A Note on the Application of the Data Envelopment Analytic Hierarchy Process for Supplier Selection.” International Journal of Production Research 47: 3121–3138.
  • [43] Muerza, V., D. de Arcocha, E. Larrodé, and. Moreno-Jiménez J. M. (2014) “The Multicriteria Selection of Products in Technological Diversification Strategies: An Application to the Spanish Automotive Industry Based on AHP.” Production Planning & Control 25: 715–728.
  • [44] Chan APC, Chan DWM, and Yeung JFY. (2009). Overview of the application of “fuzzy techniques” in construction management research. J Constr Eng Manage. 35(11):1241–1252.
  • [45] Al-Harbi K. (2001). Application of the AHP in project management. Int J Proj Manage. 19(1):19–27.
  • [46] Jato-Espino D, Castillo-Lopez E, Rodriguez-Hernandez J and Canteras-Jordana JC. (2014) A review of application of multicriteria decision making methods in construction. Automat Constr. 45:151–162.
  • [47] Shapira, A.; Goldenberg, M. (2005) AHP – based equipment selection model for construction projects, Journal of Construction Engineering and Management 131: pp. 1263–1273.
  • [48] Li J, Zou PXW. (2011) Fuzzy AHP-based risk assessment methodology for PPP projects. J Constr Eng Manage. 137 (12):1205–1209.
  • [49] Polat, G. (2016). Subcontractor selection using the integration of the AHP and PROMETHEE methods, Journal of Civil Engineering and Management 22(8): pp.1042–1054.
  • [50] Erdogan, S. A.; Šaparauskas, J.; and Turskis, Z. (2017). Decision making in construction management: AHP and Expert choice approach, Procedia Engineering 172: pp.270–276.
  • [51] Kwast-Kotlarek, U.; Hełdak, M. (2019) Evaluation of the Construction and Investment Process of a High-Pressure Gas Pipeline with Use of the Trenchless Method and Open Excavation Method. Analytic Hierarchy Process (AHP). Sustainability, 11, 2438.
  • [52] Siraj N.B., Fayek, A, R. (2019) Risk Identification and Common Risks in Construction: Literature Review and Content Analysis Journal of Construction Engineering and Management Volume 145 Issue 9
  • [53] Saaty, T. L. (1994) “How to Make a Decision: The Analytic Hierarchy Process.” Interfaces 24: pp. 19–43.
  • [54] Ghulam A. N., Painting N. (2017) Significant Factors Causing Cost Overruns in the Construction Industry in Afghanistan Procedia Engineering 182:510-517
There are 54 citations in total.

Details

Primary Language English
Subjects Engineering
Journal Section Articles
Authors

Mehmet Nurettin Uğural 0000-0002-8037-7603

Early Pub Date June 30, 2023
Publication Date July 6, 2023
Submission Date May 10, 2022
Published in Issue Year 2023

Cite

APA Uğural, M. N. (2023). Risk Assessment for International Construction Projects. International Journal of Innovative Engineering Applications, 7(1), 44-51. https://doi.org/10.46460/ijiea.1114344
AMA Uğural MN. Risk Assessment for International Construction Projects. ijiea, IJIEA. July 2023;7(1):44-51. doi:10.46460/ijiea.1114344
Chicago Uğural, Mehmet Nurettin. “Risk Assessment for International Construction Projects”. International Journal of Innovative Engineering Applications 7, no. 1 (July 2023): 44-51. https://doi.org/10.46460/ijiea.1114344.
EndNote Uğural MN (July 1, 2023) Risk Assessment for International Construction Projects. International Journal of Innovative Engineering Applications 7 1 44–51.
IEEE M. N. Uğural, “Risk Assessment for International Construction Projects”, ijiea, IJIEA, vol. 7, no. 1, pp. 44–51, 2023, doi: 10.46460/ijiea.1114344.
ISNAD Uğural, Mehmet Nurettin. “Risk Assessment for International Construction Projects”. International Journal of Innovative Engineering Applications 7/1 (July 2023), 44-51. https://doi.org/10.46460/ijiea.1114344.
JAMA Uğural MN. Risk Assessment for International Construction Projects. ijiea, IJIEA. 2023;7:44–51.
MLA Uğural, Mehmet Nurettin. “Risk Assessment for International Construction Projects”. International Journal of Innovative Engineering Applications, vol. 7, no. 1, 2023, pp. 44-51, doi:10.46460/ijiea.1114344.
Vancouver Uğural MN. Risk Assessment for International Construction Projects. ijiea, IJIEA. 2023;7(1):44-51.