Advertisement

International Journal of Civil Engineering

, Volume 17, Issue 3, pp 305–321 | Cite as

Project Risk Factors Facing Construction Management Firms

  • Kyungmo Park
  • Hyun Woo LeeEmail author
  • Kunhee Choi
  • Seung-Hyun Lee
Research paper
First Online:
  • 219 Downloads

Abstract

Very little is known about the project risk factors that affect construction management (CM) firms, which often struggle due to a lack of effective risk management practices. This study investigates the risk factors critical to project execution in CM firms and ranks them using the analytic hierarchy process (AHP) and failure mode and effects analysis (FMEA) methods. Interviews with executives at the top 15 Korean CM firms are carried out to identify major risk factors in the CM sector, and a survey is used to develop priority ranking. We find that payment delays and project delays are the two most critical risk factors affecting CM firms because of (1) lack of communication between headquarters and field offices, (2) shift of responsibility from headquarters to a field office, (3) absence of regular monitoring of project progress, and (4) ex-post management practices. The findings presented in this study should assist CM firms in establishing more robust risk management practices, thereby improving firms’ profitability, project performance, and customer satisfaction.

Keywords

Risk management Construction management Risk factors Analytic hierarchy process Failure mode and effects analysis Korea 
This is a preview of subscription content, log in to check access.

Notes

Acknowledgements

This research was supported by the Basic Science Research Program through the National Research Foundation of Korea funded by the Ministry of Science, ICT and Future Planning (No. 2015R1A5A1037548).

Compliance with ethical standards

Funding

National Research Foundation of Korea and the Ministry of Science, ICT & Future Planning (No. 2015R1A5A1037548).

References

  1. 1.
    Choi K, Haque M, Lee HW, Cho YK, Kwak YH (2013) Macroeconomic labor productivity and its impact on firm’s profitability. J Oper Res Soc 64:1258–1268. doi: 10.1057/jors.2012.157 CrossRefGoogle Scholar
  2. 2.
    Park K, Lee HW, Kim C (2014) Assessment of risk management practices of CM enterprises: the need for an enterprise-level risk management framework. Korean J Constr Eng Manage 15:66–73. doi: 10.6106/KJCEM.2014.15.3.066 CrossRefGoogle Scholar
  3. 3.
    Park K-M, Lee HW, Kim C-D (2014) Developing user interfaces of mobile PMIS modules based on technology demand analysis. J Korean Instit Build Constr 14:244–251. doi: 10.5345/JKIBC.2014.14.3.244 CrossRefGoogle Scholar
  4. 4.
    Kangari R (1995) Risk management perceptions and trends of U.S. construction. J Constr Eng Manage 121:422–429. doi: 10.1061/(ASCE)0733-9364 CrossRefGoogle Scholar
  5. 5.
    Kini D (2000) Global project management: Not business as usual. J Manage Eng 16:29–33. doi: 10.1061/(ASCE)0742-597X CrossRefGoogle Scholar
  6. 6.
    Tang W, Qiang M, Duffield CF, Young DM, Lu Y (2007) Risk management in the Chinese construction industry. J Constr Eng Manage 133:944–956. doi: 10.1061/(ASCE)0733-9364 CrossRefGoogle Scholar
  7. 7.
    Construction association of Korea (2002) http://www.cak.or.kr/main.do. Accessed 5 Oct 2012
  8. 8.
    Kim J (2007) Risk management in construction. Risk management determines the future of companies, vol 1. Won&Won Books, Seoul, Korea, pp 124–139Google Scholar
  9. 9.
    Sanvido V, Grobler F, Parfitt K, Guvenis M, Coyle M (1992) Critical success factors for construction projects. J Constr Eng Manage 118:94–111. doi: 10.1061/(ASCE)0733-9364 CrossRefGoogle Scholar
  10. 10.
    Abdelgawad M, Fayek AR (2012) Comprehensive hybrid framework for risk analysis in the construction industry using combined failure mode and effect analysis, fault trees, event trees, and fuzzy logic. J Constr Eng Manage 138:642–651. doi: 10.1061/(ASCE)CO.1943-7862.0000471 CrossRefGoogle Scholar
  11. 11.
    Akintoye AS, MacLeod MJ (1997) Risk analysis and management in construction. Int J Proj Manage 15:31–38. doi: 10.1016/S0263-7863(96)00035-X CrossRefGoogle Scholar
  12. 12.
    Pranee C (2010) Enterprise risk management. Int J Organ Innov 3:309–337Google Scholar
  13. 13.
    Liu JY, Zou PXW, Gong W (2013) Managing project risk at the enterprise level: exploratory case studies in China. J Constr Eng Manage 139:1268–1274. doi: 10.1061/(ASCE)CO.1943-7862.0000717 CrossRefGoogle Scholar
  14. 14.
    Van Wyk R, Bowen P, Akintoye A (2008) Project risk management practice: the case of a South African utility company. Int J Proj Manage 26:149–163. doi: 10.1016/j.ijproman.2007.03.011 CrossRefGoogle Scholar
  15. 15.
    Lyons T, Skitmore M (2004) Project risk management in the Queensland engineering construction industry: a survey. Int J Proj Manage 22:51–61. doi: 10.1016/S0263-7863(03)00005-X CrossRefGoogle Scholar
  16. 16.
    Baccarini D, Archer R (2001) The risk ranking of projects: a methodology. Int J Proj Manage 19:139–145. doi: 10.1016/S0263-7863(99)00074-5 CrossRefGoogle Scholar
  17. 17.
    Bing L, Tiong RL-K, Fan WW, Chew DA-S (1999) Risk management in international construction joint ventures. J Constr Eng Manage 125:277–284. doi: 10.1061/(ASCE)0733-9364 CrossRefGoogle Scholar
  18. 18.
    Aydogan G, Koksal A (2013) An analysis of international construction risk factors on partner selection by applying ANP approach. ICCREM 2015 Proc 658–669. doi: 10.1061/9780784413135.062
  19. 19.
    Choudhry RM, Iqbal K (2013) Identification of risk management system in construction industry in Pakistan. J Manage Eng 29:42–49. doi: 10.1061/(ASCE)ME.1943-5479.0000122 CrossRefGoogle Scholar
  20. 20.
    Tserng HP, Yin SYL, Dzeng RJ, Wou B, Tsai MD, Chen WY (2009) A study of ontology-based risk management framework of construction projects through project life cycle. Automat Constr 18:994–1008. doi: 10.1016/j.autcon.2009.05.005 CrossRefGoogle Scholar
  21. 21.
    Lundqvist SA (2014) An exploratory study of enterprise risk management: pillars of ERM. J Account Auditing Financ 29:393–429. doi: 10.1177/0148558X14535780 CrossRefGoogle Scholar
  22. 22.
    Zhao X, Singhaputtangkul N (2016) Effects of firm characteristics on enterprise risk management: case study of Chinese construction firms operating in Singapore. J Manage Eng 32:05016008-1–05016008-9. doi: 10.1061/(ASCE)ME.1943-5479.0000434 CrossRefGoogle Scholar
  23. 23.
    Zhao X, Hwang B-G, Low SP (2016) An enterprise risk management knowledge-based decision support system for construction firms. Eng Constr Archit Manage 23:369–384. doi: 10.1108/ECAM-03-2015-0042 CrossRefGoogle Scholar
  24. 24.
    Zhao X, Hwang B, Low SP (2013) Developing fuzzy enterprise risk management maturity model for construction firms. J Constr Eng Manage 139:1179–1189. doi: 10.1061/(ASCE)CO.1943-7862.0000712 CrossRefGoogle Scholar
  25. 25.
    Li Q, Wu Y, Ojiako U, Marshall A, Chipulu M (2014) Enterprise risk management and firm value within China’s insurance industry. Acta Commercii 14:1–10. doi: 10.4102/ac.v14i1.198 CrossRefGoogle Scholar
  26. 26.
    Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2004) Enterprise risk management framework. American Institute of Certified Public Accountants, New YorkGoogle Scholar
  27. 27.
    Cheung E, Chan APC (2011) Risk factors of public-private partnership projects in China: comparison between the water, power, and transportation sectors. J Urban Plan Dev 137:409–415. doi: 10.1061/(ASCE)UP.1943-5444.0000086 CrossRefGoogle Scholar
  28. 28.
    Li J, Zou P (2011) Fuzzy AHP-based risk assessment methodology for PPP projects. J Constr Eng Manage 137:1205–1209. doi: 10.1061/(ASCE)CO.1943-7862.0000362 CrossRefGoogle Scholar
  29. 29.
    Li F, Phoon K, Du X, Zhang M (2013) Improved AHP method and its application in risk identification. J Constr Eng Manage 139:312–320. doi: 10.1061/(ASCE)CO.1943-7862.0000605 CrossRefGoogle Scholar
  30. 30.
    Zou P, Zhang G (2009) Comparative study on the perception of construction safety risks in China and Australia. J Constr Eng Manage 135:620–627. doi: 10.1061/(ASCE)CO.1943-7862.0000019 CrossRefGoogle Scholar
  31. 31.
    Saaty TL (1980) The analytic hierarchy process, planning, priority setting, resource allocation. McGraw-Hill, New YorkzbMATHGoogle Scholar
  32. 32.
  33. 33.
    Park K, Kim C (2015) Development of standard systems through analysis of business process the risk factors for the Korean construction management firms. Korean J Constr Eng Manage 16:73–83. doi: 10.6106/KJCEM.2015.16.6.073 CrossRefGoogle Scholar
  34. 34.
    Satty TL (1986) Decision making for leaders: the analytic hierarchy process for decisions in a complex environment. RWS Publications, Pittsburgh, United States, pp 752–767Google Scholar
  35. 35.
    US Department of Defense (1980) Military standard: procedures for performing a failure mode effects and criticality analysis, MIL-STD-1929A, Washington, DCGoogle Scholar
  36. 36.
    Korea Ministry of Government Legislation (2014) Construction and technology promotion law. http://www.law.go.kr. Accessed 10 Sep 2014
  37. 37.
    Korea Ministry of Government Legislation (2014) Framework act on the construction industry. http://www.law.go.kr. Accessed 10 Sep 2014
  38. 38.
    Ministry of Land, Infrastructure and Transport (2015) Assessment of construction management firms. http://www.molit.go.kr/USR/BORD0201/m_34879/DTL.jsp?mode=view&idx=29265. Accessed 30 Aug 2015
  39. 39.
    Fang DP, Li MG, Fong PSW, Shen LY (2004) Risks in Chinese construction market: contractors’ perspective. J Constr Eng Manage 130:853–861. doi: 10.1061/(ASCE)0733-9364 CrossRefGoogle Scholar
  40. 40.
    Deng F, Liu G, Jin Z (2013) Factors formulating the competitiveness of the Chinese construction industry: empirical investigation. J Manage Eng 29:435–445. doi: 10.1061/(ASCE)ME.1943-5479.0000161 CrossRefGoogle Scholar
  41. 41.
    Davenport TH (1993) Process innovation: reengineering work through information technology, Ernst & Young Center for Information Technology and Strategy. Harvard Business School Press, Boston, MAGoogle Scholar
  42. 42.
    Ellis CA, Nutt GJ (1996) Workflow: the process spectrum. In: proceedings of the NSF workshop on workflow and process automation in information systems, Athens, GA, United States, pp 140–145Google Scholar
  43. 43.
    Park K-M (2016) The maintenance process model using BPMN method in public rental housing. J Korea Acad Indust Coop Soc 17:743–751. doi: 10.5762/KAIS.2016.17.4.743 Google Scholar
  44. 44.
    Financial Supervisory Service (2016) http://www.fss.or.kr/fss/kr/bsn/announce/info_list.jsp. Accessed 10 Aug 2016
  45. 45.
    Park K (2016) A study on the CM at risk business model using business model Canvas. Korean J Constr Eng Manage 17:23–31. doi: 10.6106/KJCEM.2016.17.3.023 CrossRefGoogle Scholar
  46. 46.
    Thep TL, MAHDJOUBI L, MASON J (2017) A framework to assist in the analysis of risks and rewards of adopting BIM for SMEs in the UK. J Civil Eng Manage 23:740–752. doi: 10.3846/13923730.2017.1281840 CrossRefGoogle Scholar
  47. 47.
    Jin R, Hancock CM, Tang L, Wanatowski D (2017) Investigation of BIM investment, returns, and risks in China’s AEC Industries. J Constr Eng Manage 143. doi: 10.1061/(ASCE)CO.1943-7862.0001408
  48. 48.
    Chong H-Y, Lee C-Y, Wang X (2017) A mixed review of the adoption of building information modelling (BIM) for sustainability. J Cle Pro 142:4114–4126. doi: 10.1016/j.jclepro.2016.09.222 CrossRefGoogle Scholar
  49. 49.
    Zou Y, Kiviniemi A, Jones SW (2016) Developing a tailored RBS linking to BIM for risk management of bridge projects. J Eng Constr Archi Manage 23:727–750CrossRefGoogle Scholar
  50. 50.
    Ahn YH, Kwak YH, Suk SJ (2016) Contractors’ transformation strategies for adopting building information modeling. J Manage Eng 32:1–13. doi: 10.1061/(ASCE)ME.1943-5479.0000390 CrossRefGoogle Scholar
  51. 51.
    Chong HY, Lopez R, Wang J, Zhao Z (2016) Comparative analysis on the adoption and use of BIM in road infrastructure projects. J Manage Eng 32(6). doi: 10.1061/(ASCE)ME.1943-5479.0000460
  52. 52.
    Park H-B (2009) Analysis on the status of research and development by technical field of construction management (CM) in domestic and overseas. Dissertation, Gyeongsang National UniversityGoogle Scholar

Copyright information

© Iran University of Science and Technology 2017

Authors and Affiliations

  • Kyungmo Park
    • 1
  • Hyun Woo Lee
    • 2
    Email author
  • Kunhee Choi
    • 3
  • Seung-Hyun Lee
    • 4
  1. 1.Innovation Durable Building and Infrastructure Research CenterHanyang UniversityAnsan-siRepublic of Korea
  2. 2.Department of Construction ManagementUniversity of WashingtonSeattleUSA
  3. 3.Department of Construction ScienceTexas A&M UniversityCollege StationUSA
  4. 4.School of Architectural EngineeringHong-ik UniversitySe-jongRepublic of Korea

Personalised recommendations

Cite article

Buy options