Republic of the Philippines

Misamis University

College of Engineering & Technology

Department of Civil Engineering
5R2R+386, H.T. Feliciano St, Ozamiz City, 7200 Misamis Occidental

CE 324: CE Laws, Ethics and Contracts

S.Y. 2022-2023, 2nd Semester

Activity No.: 2 .
Risk Management of Construction Projects: A Review

Risk implies future uncertainty about deviation from expected earnings or expected
outcome. Risk management is focused on anticipating what might not go to plan and putting in
place actions to reduce uncertainty to a tolerable level. It is the continuing process to identify,
analyze, evaluate, and treat loss exposures and monitor risk control and financial resources to
mitigate the adverse effects of loss.

Ryor (2013), in his study “Utilization of Risk Management Practices by Construction

Project Managers in the United States,” states that although there are numerous risk analysis
techniques available, construction project managers have a poor performance record when it
comes to managing the risks and uncertainties associated with the industry. Risks are an
unavoidable component of any construction project. As a result, the stakeholders have been
forced to deal with upsetting outcomes including schedule delays, budget hikes, and project
delivery that falls short of the required quality requirements. The goal of this study was to
determine the different risk management strategies that American construction project managers
have used, and then, based on the results, to identify factors that may be influencing the growing
use of risk management strategies in the industry. Despite the existence of numerous risk
management analytical tools, the study found that construction project managers do not seek
assistance in creating efficient risk mitigation plans because of a lack of knowledge, a lack of
information, and scepticism about the suitability of the models available. The research found that
the use of risk management strategies and the education level of project managers were
positively connected, but not significantly, with the number of years of professional experience.

The study “Risk Management in Construction Industry” conducted by Reddy (2015), has
the same aim with the study of Ryor, that is, to examine the most practical means of
implementing risk management in the construction industry. Reddy (2015), concluded in his
study that the majority of risk processes are carried out at this phase, and the most active group,
contractors, have a significant influence on the risk management process. The owners and
contractors invest little effort and time to assessing and strategically planning for known,
unknown, or probable risks. Without a proactive risk management procedure, issues that arise
throughout a project could lead to more delays and increased costs. Additionally, risk and its
consequences tend to change over the course of a project's life cycle, with certain risks remaining
constant and others increasing or decreasing as the project progresses. The performance of the
project may be improved by properly identifying and taking into account the risks that may arise
during the entire project life cycle. Along with identifying rational decision points throughout the
project life cycle, it's necessary to determine the best risk to take, the evaluation process, and the
timing.

Singh et al. (2017), in their study entitled “Risk Management in Construction Projects as
per Indian Scenario,” stated that the complex and dynamic project environments that characterize
the construction industry make for an environment that is very risk-prone. A variety of
technological, societal, and commercial concerns might affect the industry. In the construction
industry, there hasn't been much success managing these risks. As a result, those who operate in

ID NO.: NAME: DATE: SHEET:

2021058 Angelie B. Yabut March 10, 2023 1 of 11
 Republic of the Philippines
Misamis University

College of Engineering & Technology

Department of Civil Engineering
5R2R+386, H.T. Feliciano St, Ozamiz City, 7200 Misamis Occidental

CE 324: CE Laws, Ethics and Contracts

S.Y. 2022-2023, 2nd Semester

Activity No.: 2 .
the industry are subject to a variety of failures, including failure to adhere to operational and
quality requirements, cost overruns, and unexplained delays in project completion. Considering
this, it can be concluded that developing efficient methods of risk assessment and management
for the construction projects remains a difficult issue for those who engage with it. The purpose
of this study is to identify and assess current risks and uncertainties in the construction industry
through a thorough literature review. Researchers of this study concluded that due to a lack of
expertise and understanding, formal risk analysis and management procedures are rarely used in
the construction firm. The industry does not believe that these techniques can be used in
construction projects in a manner similar to how they are used in other industries. Contractors
and consultants mostly rely on their instinct and experience when assessing danger. Risk transfer
and risk elimination are the most often used risk response strategies. However, the respondents'
results revealed that these behaviors are responsible for project delays, poor quality, and low
productivity.

According to Lin et al. (2021), risks exist in all stages of a project. Risk factors have an
impact on the projected achievement rates of the three primary performance goals of schedule,
cost, and quality in a construction project because these projects are very dynamic and
complicated. Risk confirmation, analysis, and treatment are the three essential steps in a
thorough risk management process. The foundation of risk management is risk analysis. This
study used structural equation modeling to create a risk analysis model that considers the
likelihood that risk events will occur as well as how much they will impact a project from a
different perspective. The contractor dimension, followed by the subcontractor and design
dimensions, were found to have the greatest impact on a project's ultimate outcome. This
study suggests a brand-new approach to project risk analysis that considers the entire project into
consideration. To achieve the ultimate goal of resource conservation and the sustainable
operation of the construction project, risk managers can utilize the proposed model as a guide
when making decisions about project risks.

Construction, according to Bahamid et al. (2022), is a critical sector of any economy in

terms of value production, labor, and contributing to the gross national product. Construction
companies use a range of risk management techniques to reduce risk. Hence, an evaluation of
these processes is necessary to identify weaknesses. The purpose of this study is to identify the
risk management techniques currently employed in construction projects in Yemen.  The
majority of businesses' risk management practices are reactive, semipermanent, informal, and
unstructured, with no or few dedicated resources to handle risks. Risk management is not carried
out methodically, intentionally, or constantly. This strategy is contrary to acknowledged risk
management concepts.  However, the results point to a general understanding of risk
management and a readiness to take lessons from past mistakes. According to the analysis of the
results, risk identification techniques including judgment and historical data are used for risk
analysis, and the industry normally tries to transfer or minimize risks in Yemeni construction
projects. The outcomes highlighted the shortcomings in Yemen's project practices. Project
managers of large construction companies in Yemen require solid knowledge of and training in
internationally recognized systematic risk management techniques in order to ensure that
construction projects receive the best value for their money. 
ID NO.: NAME: DATE: SHEET:
2021058 Angelie B. Yabut March 10, 2023 1 of 11
 Republic of the Philippines
Misamis University

College of Engineering & Technology

Department of Civil Engineering
5R2R+386, H.T. Feliciano St, Ozamiz City, 7200 Misamis Occidental

CE 324: CE Laws, Ethics and Contracts

S.Y. 2022-2023, 2nd Semester

Activity No.: 2 .

ID NO.: NAME: DATE: SHEET:

2021058 Angelie B. Yabut March 10, 2023 1 of 11
 Republic of the Philippines
Misamis University

College of Engineering & Technology

Department of Civil Engineering
5R2R+386, H.T. Feliciano St, Ozamiz City, 7200 Misamis Occidental

CE 324: CE Laws, Ethics and Contracts

S.Y. 2022-2023, 2nd Semester

Activity No.: 2 .
The study of Ryor (2013), “Utilization of Risk Management Practices by Construction
Project Managers in the United States,” studies the different risk management strategies that
American construction project managers have used, and then, based on the results, to identify
factors that may be influencing the growing use of risk management strategies in the industry.
“Risk Management in Construction Industry” conducted by Reddy (2015), examine the most
practical means of implementing risk management in the construction industry. Singh et al.
(2017), in their study entitled “Risk Management in Construction Projects as per Indian
Scenario,” has the aim to identify and assess current risks and uncertainties in the construction
industry through a thorough literature review. Lin et al. (2021), aimed to identify the most
relevant risk factors for construction projects from a comprehensive perspective by examining
both the actual on-site operations of, and research findings on, Taiwanese construction projects
and categorized the risk factors into five dimensions, in his study entitled “Research for Risk
Management of Construction Projects in Taiwan.” Lastly, Bahamid et al. (2022), studied the
establishment of the existing risk management strategies used in Yemeni building projects. All
the five studies studied the implementation of risk management in a construction project.
Although studies have different goals, they all come up with one common result, that is, risk
management must be integrated in construction projects as this helps to make projects related to
construction successful, avoid delays and increase of cost due to inappropriate decision making
and lack of knowledge about risk management.

ID NO.: NAME: DATE: SHEET:

2021058 Angelie B. Yabut March 10, 2023 1 of 11
 Republic of the Philippines
Misamis University

College of Engineering & Technology

Department of Civil Engineering
5R2R+386, H.T. Feliciano St, Ozamiz City, 7200 Misamis Occidental

CE 324: CE Laws, Ethics and Contracts

S.Y. 2022-2023, 2nd Semester

Activity No.: 2 .

References:

1. Arukala, Suchith Reddy. (2015). Risk Management in Construction Industry - A Case Study.
International Journal of Innovative Research in Computer and Communication Engineering.
4. 10.15680/IJIRSET.2015.0410052.
2. Bahamid, R. A., Shu, I. D., Khoiry, M. A., Kassem, M. A., & Al-Sharafi, M. (2022). The
current risk management practices and knowledge in the construction industry. Buildings,
12(7), 1016. doi:https://doi.org/10.3390/buildings12071016
3. Chien-Liang Lin and Bey-Kun Chen (2021). Research for Risk Management of Construction
Projects in Taiwan. Sustainability, 13(4), 2034. https://doi.org/10.3390/su13042034
4. Ryor, M. M. (2013). Utilization of risk management practices by construction project
managers in the United States (Order No. 3567627). Available from ProQuest Central.
(1424273936).
5. Singh, Mayank & Deep, Shumank & Banerjee, Rajeev. (2017). Risk management in
construction projects as per Indian scenario. International Journal of Civil Engineering and
Technology. 8. 127-136.

ID NO.: NAME: DATE: SHEET:

2021058 Angelie B. Yabut March 10, 2023 1 of 11