Establishing Risk Management Factors For Construction Projects in Iraq

International
Journal of Advanced
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in Engineering RESEARCH
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ISSN 0976
INTERNATIONAL
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6480(Print), ISSN 0976 6499(Online), Volume 6, Issue 1, January (2015), pp. 35-48 IAEME
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ISSN 0976 - 6480 (Print)

ISSN 0976 - 6499 (Online)
Volume 6, Issue 1, January (2015), pp. 35-48
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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:
35
International Journal of Advanced Research in Engineering and Technology (IJARET), ISSN 0976
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
36
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 countrys 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
37
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 privatizedinfrastructure 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.
38
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
39
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).
a (n/N)
Frequency Index (F.I) (%) =
X 100100
(1)
5
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).
a (n/N)
Severity Index (S.I) (%) =
x100100
(2)
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:
F.I (%) x S.I (%)
Importance Index (I.I) (%) =
(3)
100
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).
40
Table (1). The respondent's characteristics

Parameter
Type of organization
Client
Consultant
Contractor
Frequency
Cumulative %
22
21
32
29.33
28.00
42.67
29.33
57.33
100
Type of project
Housing
General buildings
Infrastructure
Industrial
Others
10
31
22
7
5
13.33
41.33
29.33
9.33
6.67
13.30
54.00
83.99
93.33
100
Working experience
0 5 years
6 10 years
11 15 years
16 20 years
More than 20 years
8
15
29
14
9
10.67
20.00
38.67
18.67
12.00
10.67
30.67
69.34
88.00
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
Bankruptcy of contractor
Depending on the bank and paying high
Loss due to fluctuation of interest rate
Loss due to fluctuation of exchange rate
Lack of experience in this type of contract
Changes in Bank formalities and
regulations
Insurance risk
Probability of risk
occurrence
Degree of
impact on risk
Total risk effect
F.I
73.42
66.82
59.63
60.36
64.78
Rank
1
2
6
5
3
S.I
74.15
67.65
58.66
61.74
65.34
Rank
1
2
7
6
3
I.I
54.44
45.20
34.98
37.27
42.33
Rank
1
2
7
5
3
60.73
62.36
37.87
59.35
60.78
36.07
41
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
Breach of contract by project parties
Lack of enforcement of legal judgment
Improper verification of contract
documents
Lack of knowledge of arbitration
Uncertainty and unfairness of
court justice
Probability of risk
occurrence
Degree of
impact on risk
Total risk
effect
F.I
60.12
54.52
Rank
1
3
S.I
58.67
53.11
Rank
1
4
I.I
35.27
28.96
Rank
1
3
55.25
57.67
31.86
50.15
52.36
26.26
51.39
53.76
27.63
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
Change of Top management
No past experience in similar projects
Short tendering time
Sub-contractor related problems
Improper project feasibility study
Improper project planning and budgeting
Improper project organization structure
Poor relation and disputes with client's
representative
Poor communication between clients and
other parties
Contractor's management problems
Time constraint
Project delay
Poor team work
Poor relation with government
departments
Probability
of risk
occurrence
F.I
Rank
64.26
13
62.39
14
70.29
6
73.92
3
72.79
4
76.88
1
69.63
7
63.78
Degree of
impact on risk
Total risk
effect
S.I
65.65
64.76
71.75
75.63
73.35
77.63
70.74
Rank
11
13
6
2
5
1
7
I.I
42.19
40.40
50.43
55.91
53.39
59.68
49.26
Rank
12
14
6
2
4
1
7
64.63
14
41.22
13
65.93
66.63
10
43.93
66.72
72.12
75.88
65.72
8
5
2
10
65.36
73.79
73.66
67.35
12
3
4
8
43.61
53.22
55.89
44.26
10
5
3
8
64.25
11
66.72
42.87
11
42
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
Competition from other companies
Fall short of expected income from project
Increase of accessoryfacilities price
Increase of labor costs
Increase of materials price
Inadequate forecast about market demand
Unfairness in tendering
Probability of risk
occurrence
F.I
68.22
58.66
63.74
78.26
80.05
63.13
78.11
Rank
4
7
5
2
1
6
3
Degree of
impact on risk
S.I
70.82
55.67
64.25
75.76
79.94
65.28
80.52
Rank
4
7
6
3
2
5
1
Total risk effect

I.I
48.30
32.66
40.95
59.29
63.99
41.21
62.89
Rank
4
7
6
3
1
5
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
Cost increase due to changes of Government
policies
Loss incurred due to corruption and
bribery
Loss incurred due to political changes
Loss due to bureaucracy for late approvals
Security measures
Probability
of risk
occurrence
Degree of
impact on risk
Total risk
effect
F.I
Rank
S.I
Rank
I.I
Rank
72.15
73.56
53.07
83.78
85.91
71.98
80.70
81.11
87.65
4
3
1
79.85
82.70
88.92
4
3
1
64.44
67.08
77.94
4
3
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).
43
Table (7) Risk in Construction industry Technical Risk

Type of risk
Accidents on site
Design changes
Equipment failure
Errors in design drawings
Difficulty in construction due to
complexity of design
Stiff environmental regulations
Incompetence of transportation facilities
Materials shortage
Obsoleteness of building equipment
Poor quality of procured materials
Shortage in supply of water
Shortage in supply fuel
Shortage in supply electricity
Unknown site physical conditions
Following government standards and codes
and practices
Wastage of materials by workers
Theft of materials at site
Site distance from urban area
Surplus materials handling
Architect Vs. Structural Engineer dispute
Shortage of skillful workers
Probability
of risk occurrence
F.I
Rank
65.12
11
78.26
1
71.52
3
68.15
7
Degree of impact
on risk
S.I
Rank
66.63
8
75.98
1
70.65
4
66.21
10
Total risk
effect
I.I
Rank
43.39
10
59.46
1
50.53
4
45.12
8
60.10
16
61.22
18
36.79
18
68.12
59.16
71.55
65.69
63.71
53.11
60.06
63.75
65.25
8
19
2
9
14
21
18
13
10
67.35
58.66
72.63
66.66
64.62
50.17
63.72
65.23
64.63
6
19
2
7
15
21
16
11
14
45.88
34.70
51.97
43.79
41.18
26.66
38.27
41.58
42.17
6
19
2
9
14
21
16
12
11
58.01
20
56.35
20
32.69
20
70.11
68.72
60.13
62.38
63.78
70.75
5
6
16
14
11
4
69.36
66.36
61.82
64.82
64.66
72.36
5
8
17
12
13
3
48.60
45.60
37.17
40.43
41.24
51.19
5
7
17
15
13
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
Any adverse impact on project due to climatic
conditions
Any impact on the environment due to the
project
Healthy working environment for the workers
Probability of risk
occurrence
Degree of impact
on risk
Total risk
effect
F.I
Rank
S.I
Rank
I.I
Rank
71.11
72.77
51.75
66.91
65.82
44.04
65.62
64.11
42.07
44
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
Un-official holidays
Problems due to adjacent or nearby projects
Local people support for the project
Probability of risk
occurrence
F.I
80.80
53.15
70.52
Rank
1
3
2
Degree of
impact on risk
Total risk effect
S.I
81.47
55.63
71.11
I.I
65.83
29.57
50.15
Rank
1
3
2
Rank
1
3
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
Security measures
Loss incurred due to corruption and bribery
Design changes
Sub-contractor related problems
Project delay
Bankruptcy of contractor
Improper project feasibility study
Time constraint
Cost increase due to changes of Government policies
Materials shortage
Any adverse impact on project due to climatic conditions
Shortage of skillful workers
Equipment failure
Short tendering time
Local people support for the project
Improper project organization structure
Wastage of materials by workers
Competition from other companies
Stiff environmental regulations
Risk Factor (I.I)

77.94
71.98
67.08
65.83
64.44
63.99
62.89
59.68
59.46
59.29
55.91
55.89
54.44
53.39
53.22
53.07
51.97
51.75
51.19
50.53
50.43
50.15
49.26
48.60
48.30
45.88
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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.
45
Table (11) Group ranking

Group
Political related risk factors
Market related risks factors
Social related risks factors
Management related risks factors
Environment related risks factors
Technical related risks factors
Financial related risks factors
Legal relate
No. of factors
Rank Ave
5
7
3
14
3
21
7
3
1
2
3
4
5
6
7
8
Average total risk

effect
66.902
49.898
48.516
48.304
45.953
42.781
41.165
29.996
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
Design changes
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.
46
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48

Establishing Risk Management Factors For Construction Projects in Iraq

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ESTABLISHING RISK MANAGEMENT FACTORS FOR

Failure to keep within the cost estimate.

6.2 The questionnaire structures

10. RESULTS AND DISCUSSION OF THE SURVEY

Table (1). The respondent's characteristics

10.2 The significant of risk factors

Total risk effect

10.2.2 Legal risk group

10.2.3 Management risk group

10.2.4 Market risk group

Total risk effect

10.2.5 Political risk group

10.2.6. The technical group

Table (7) Risk in Construction industry Technical Risk

10.2.7 Environment risk group

Table (8) Risk in Construction industry Environmental Risk

10.2.8 Social risk factors

Total risk effect

10.2.9 Ranking of most effective factors

Risk Factor (I.I)

10.2.10 the brief of group results

Table (11) Group ranking

Average total risk

11. CONCLUSIONS AND RECOMMENDATIONS

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