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since the probability and consequence of occurrence are usually not measurable parameters. Hence,
they need to be estimated either statistically or by other approaches [3].
Managing risks, as depicted in figure (1), is a systematic process for, identifying, qualitatively
and quantitatively analyzing, evaluating, monitoring, and controlling project risks. It also involves
operations, tools, and techniques that will help the project manager to minimize the probability and
consequences of adverse events throughout project lifecycle. Implementation of risk management
does not only bring a higher level of awareness of the consequences of risk, but also focuses on a
more structured approach, more effective centralized control and better transfer of risk information
between parties [4]. Efficiency of risk management for construction projects increases when the
management process is early performed in the life of the project.
Figure (1) Risk Management Processes [5]
RISK IDENTIFICATION AND ASSESSMENT
Identification of risks associated with a particular project commences with an understanding
of the project itself; its scope and objectives. Chapman [6] listed seven techniques that may be used
in identifying risk factors/events. The list includes semi-structured interviews, brainstorming
technique, nominal group technique, Delphi technique, identification tools (e.g. system dynamic
models), and historic records.
In order to effectively identify project risks, it’s recommended to break risk sources down
into a hierarchy form of levels and sub-levels to clearly provide enough details [7]. Therefore, based
on the concept of Work Breakdown Structure WBS, using for scheduling, a Hierarchical Risk
Breakdown Structure (HRBS) provides a number of benefits, by decomposing potential sources of
risk into layers of increasing details.
Through this study, risk identification is tackled by investigating the most significant risks
related to the construction projects in a form of HRBS for various levels. Using HRBS, as presented
in Figure (2), a proposed classification of risks into a couple of levels, (which are Internal Risk, and
External Risk), is established. The level of external risks is particularly for those, which are
relatively uncontrollable, and due to their nature, there is a need for continual scanning and
forecasting of these risks. For instance, economic risks, political risks, etc. The second level is
internal risks, which are relatively more controllable and vary between projects. 54 risk factors are
selected for this study; these are screened from both literature review and a survey that was
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conducted to construction practitioners in Yemen. These factors are divided into ten groups, in order
to match the special nature of construction projects in Yemen.
The term “risk analysis” is synonymous with “risk assessment” and is often used to describe
the process of the risk evaluation. Risk assessment provides additional insight about risks with
respect to their probability of occurrences and the consequences of impact on the project. It provides
quantitative inputs to assist in decision making with respect to risk response. Two levels of risk
assessment, based on the extent of detailing and quantification, qualitative risk analysis and
quantitative risk analysis [8].
O w ner R isk
P olit ica l R is k
R1 - O w ner inter fer en c e
R2 - Slow decision ma king
R3 - Cha ng e or der s during construc tio n
R4 - D elay in pr og r ess pa ym ents
R5 - A ddition al w or ks
R 39- Political in sta bility
R 40- Cha nge in re gulation s
an d law s
R 41- Cha nge in scope due to
G ove rnm e nt influenc e
R 42- A c cid en t during c onstr uction
R 43- Str ike s an d D iso rder s
C ont ract or R isk
R6 - L ack of contra ctor's exp er ience
R7 - Ca sh flow m ana gem ent
R8 - Incr ea sed n um ber of pr oje cts
R9 - Mista kes dur ing construc tion sta ge
R1 0- D elay in subcon tr actor 's w ork
R11- C onflicts be tw een con tr ac tor ’s a nd other par ties
C ons ult ant R is k
R1 2- L ack of consultant's e xperien ce
R1 3- D elay in r ev iew ing and a p proving design
R1 4- D elay an d slow super v isio n in m aking decision
R1 5- Poor con tr act ma nage m ent b y c onsultant
R1 6- D elay in a pproving m a jor ch a nges in the scope
of w ork
D esig n R is k
R1 7- L ack of design-te am e xper ien ce
R1 8- Insufficien t data c ollec tion an d surve y bef or e design
R1 9- D esign c han ge s
R2 0- D esign e rr or s an d om issions
R2 1- U n -use of advan ced engine ering design softw a re
R2 2- Va riations of a ctual quantitie s of w ork com par ed
w ith qua ntities in docum en ts
E co no mi c R is k
R4 4- In cre ase of in flation r ates
R45- H igh ta xation an d tax ra te
chan g e
R4 6- F ore ig n cur ren cy
f luctu ations
Fo rce M a je ure R isk
R 47- Ba d W ea th er
R 48- E ar thqua kes
R4 9- L andslides
R 5 0- U nfore seen site conditions
E nvi ro nm en t al R isk
R 51- Slow site clea ra nce
R 5 2- E n vir on m ental a nalysis
in com plete
R 5 3- Side effe cts d ue to projec t
activitie s
R54- E nvir on men ta l pr ote ction
due to pr o je ct pollu tions (n oise ,
sm oke, a nd w a stes c aused pr ojec t)
R eso urces o f P ro j ect R isk
R2 3R2 4R2 5R2 6R2 7R2 8R2 9R3 0-
D elay in de liver y of m a ter ials to site
Fluctua tions in the ma teria l's pr ices
Poor q ua lity of constr uction m ater ia ls
Shorta ge of la bor s a nd e quipm en ts of th e wor k site
Incr ea se of la bo r s pr ic es
L ow pr oductivity le vel of the site
Per sonal conflicts a m on g labor s
Ina dequate m odern e quipm ents
O rg ani za tio n R isk
R3 1- Poor m ana gem ent of pr oje ct site
R3 2- Ineffe ctive planning and scheduling
R3 3- L ack of eff ectiv e com m un ica tion and coordina tion
R3 4- Ina dequate m an a geria l skills
R3 5- Poor finan cial control on site
R3 6- T ra nsportation pr oble m s
R3 7- Poor site sa fety
R3 8- Ina ppr opriate projec t o rga nizational str ucture
Figure (2) Risk identification breakdown structure
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Qualitative risk analysis is the process of assessing the impact and likelihood of identified risk.
Through this process, risks are prioritized according to their potential affect on project objectives.
Furthermore, qualitative risk analysis is a way to determine the importance of addressing specific
risks and guiding risk responses. The respondents were requested to judge the significance or
expected loss of each risk [9]. Quantitative risk analysis is a way of numerically estimating the
probability that a project will meet its time and cost objectives. Quantitative analysis is based on a
simultaneous evaluation of the impact of all identified and quantified risks.
CONSTRUCTION PROJECTS IN YEMEN
The construction projects in Yemen is the fourth largest employer of workforce in the
country, amounting to 9-10% of the working population, the average annual growth rate of the sector
is about 5.4%, effectively contributing to the economic growth of Yemen. With relatively large
volume of investments presently in this sector as well as likely increase in external funding from
World Bank and other donor agencies for developmental projects, the demand for services in this
sector is bounded to increase steadily [10].
In the real estate sector, comprising both residential and commercial construction, there are
increasing in building construction activities, mostly for residential housing projects and office
buildings in Sana’a and other towns. Recently, large top end residential and commercial complexes
are under construction in Sana’a with financing by foreign investors. Currently, the investment by the
Government in infrastructure is about US$ 2 billion, as compared to US$ 250 million from the donor
agencies. Nonetheless, the actual output in terms of progress, quality and fund utilization is much
less primarily due to lack of proper project management, effective supervision and monitoring and
mostly relying on the contractors [10].
The types of projects commonly constructed in Yemen, and which are considered to be the
backbone of Yemen’s development efforts, include (Government buildings, Public housing,
Commercial buildings, Industrial facilities, Roads, Power plants, Dams, Irrigation system, and Water
purification plants).
RESEARCH METHODOLOGY
Due to the non-availability of organized information related to the occurrence of risk factors
and risk management of construction projects in Yemen, a questionnaire was designed based upon
literature to obtain information on the probability and impacts of the risk factors known to
professionals in construction projects. The approach of the questionnaire is well-recognized and
widely used in general management and project management research [11-17]. Several means were
employed to deliver the questionnaires to potential respondents. Direct (face-to-face) delivery was
used in most of the questionnaire filling to motivate respondents and to ensure the accuracy of
answers and improve response rate as stated by ([18] and [17]).
The questionnaire design was developed from literature review of past research focused on
risks in construction. The questionnaire was divided into three main parts. Part one includes general
information about the respondents while part two represents the main part of data collection to obtain
information on the probability of occurrence for each risk factor and its impact on the time and the
cost of the construction projects from the reality of participant experience. The proposed fifty four
risk factors were included as introduced in the HRBS as illustrated in Figure (2). Finally part three
sought information on the construction projects time and cost overruns of these projects which the
respondents have been involved.
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QUESTIONNAIRE AND RESPONSES SURVEY
After developing the questionnaire, it was necessary to be examined by experts in the field of
construction projects in Yemen to ensure its intelligibility and the understanding of the questions, and
to give comments on the design of the questionnaire. Five experienced professionals having average
experience of 30 years in the field of construction projects were involved in the pre-test using
interviews. Test professionals included 1 owner, 2 consultants and 2 contractors. Their comments
were used to find out the shortcoming and ambiguities in the first draft of the questionnaire. Their
suggestions with respect to the contents, structure, format and sequencing of the questions were
incorporated in the final questionnaire. The questionnaire was distributed personally and collected by
hand. However, direct (face-to-face) delivery was preferred to motivate respondents and ensure
completeness and accuracy of answers in addition to improve response rate.
After collecting the raw data of questionnaires, the data entered into computer spreadsheet,
and SPSS program was used to analyze the data. Out of 150 questionnaires were distributed and
responses to the questionnaire were then collected and analyzed. The total number of respondents
participating in this survey was 93 representing 62% as a general response rate for consultants,
contractors and owners. 26 % (24) consultants, 41 % (38) contractors, and 33 % (31) owners
participated in the questionnaire as shown at Fig (3).
Figure (3) Perecent of respondents in the questionnaire
EXPERIENCES OF RESPONDENTS
Experience of Respondents is measured in a number of years a respondent has been working
in the construction projects in Yemen. The aim of this section is to give an image of the strength of
respondents’ experience, and therefore indicate the degree of reliability of the data provided by them.
Table (1) and figure (4) show that 8.6 % (8) of the respondents have experience from 5 to 10
years at construction projects , 11.8 % (11) of respondents who have experience from 10 to 15 years,
25.8 % (24) of respondents have experience from 15 to 20 years, and 53 .8 % (50) of respondents
have experience over 20 years at construction projects, which in turn raises the reliability of the data
collected from the shared knowledge of long years of experience in the construction projects fields in
Yemen. Also to ensure that the survey results were credible, any replies from respondents with less
than five years of experience were discarded.
PROJECTS TYPES
Figure (5) shows that 29.83 % of respondents worked in Residential projects, 14.29% in
Commercial projects, 36.13% in Governmental projects and 19.75 % in other projects.
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Table (1) Respondent's Experiences of Construction projects in Yemen
Respondents Classes
Experience
in
Years
5 to 10
10 to 15
15 to 20
>20
Consultant
Contractor
Owner
All
No.
%
No.
%
No.
%
No.
%
3
6
4
11
12.5
25
16.7
45.8
3
3
14
18
7.9
7.9
36.8
47.4
2
2
6
21
6.5
6.5
19.3
67.7
8
11
24
50
8.6
11.8
25.8
53.8
Figure (4) Respondent's Experiences of Construction projects in Yemen
Figure (5) Type of works executed by the respondents
PROJECTS SIZES
In this paper a compromise range for construction projects in Yemen sizes are chosen as
follows (1$ = 214 RY):
Large projects which their budget is greater than 100 M RY,
Medium projects which their budget is ranges between 50 and 100 M RY, and
Small projects which their budget is less than 50 M RY.
Figure (6) shows the respondents who have dealt with the large projects (26.73%). Most of
the respondents have dealt with medium projects (43.56%), and the rest was for respondents who
have dealt with small projects (29.70%).
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Figure (6) Size of projects executed by the respondents
DATA ANALYSIS
The collected data got from part two in the questionnaire which concerns the identified risk
factors were in the form of five risk levels (very high, high, medium, low and very low).
The collected data were analyzed through three indices as follows [17]:
1-Probability Index (PI): An equation is used to assess or rank risk factors based on their probability
of occurrence as identified by the participants.
2-Impact Index for Time (IIT): An equation is used to assess or rank risk factors based on their
impact on the project time as identified by the participants.
3-Impact Index for Cost (IIC): An equation is used to assess or rank risk factors based on their
impact on the project cost as identified by the participants.
Description of these indices can be explored through the following equations:
PI=
Equation (1)
IIT=
Equation (2)
IIC=
Equation (3)
Where:
PI = is the probability index for a certain risk factor.
P = constant expressing the weight assigned to option ( ) on the probability of occurrence.
XP = variable expressing number of responded who selected option ( ) for Probability Of
occurrence.
IIT = is the impact index for time.
It = constant expressing the weight assigned to option ( ) on the degree of Impact time.
XIt = variable expressing number of responded who selected option ( ) for degree of Impact time.
IIC = is the impact index for cost.
IC = constant expressing the weight assigned to option ( ) on the degree of Impact cost.
XIc = variable expressing number of responded who selected option ( ) for degree of Impact cost.
A = heights weight (i.e. (.9) in this case).
N = total number the frequency of the th response.
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SPEARMAN'S RANK CORRELATION COEFFICIENT
Spearman’s rank correlation is a non-parametric test. Non-parametric tests are also referred to
as distribution free tests. These tests have the obvious advantage of not requiring the assumption of
normality or the assumption of homogeneity of variance. They compare medians rather than means
and, as a result, if the data have one or two outliers, their influence is negated.
In this research the Spearman’s Correlation is used. Correlation is a relationship- measure
among different parties or factors. It is used to show the degree of agreement among the different
parties [16]. The Spearman test is applied for the three pairs of groups (consultants, contractors and
owners) to ensure the strong agreements on the ranking based on probability of occurrence and the
impacts of the risk factors on the time and the cost of construction projects in Yemen.
Table (2) shows that there is a high degree of agreement among the three groups on the level
of probability of occurrence and the impacts on time and cost. Therefore, further attempt to analyze
the problems faced by the different groups of respondents is not necessary, and all the results are
positive which imply good agreements among the different groups. So, the analysis will be based on
data for all respondents.
Table (2) Spearman’s correlation coefficients
Group
probability Impact on time
consultants and Contractors
.611
. 660
Contractors and Owners
consultants and Owners
.601
.625
Impact on cost
.650
. 598
. 705
.706
.732
ANALYSIS OF RISK FACTORS
The top five risk factors due to their (PI) were: Increase of Inflation rates (PI=.848), Delay in
delivery of materials to site (PI=.799), Fluctuations in the material's prices (PI=.773), Political
instability (PI=.718), Foreign currency fluctuations (PI=.642).
The top five risk factors due to their (IIT) were: Delay in delivery of materials to site
(IIT=.846), Political instability (IIT=.833), Fluctuations in the material's prices (IIT=.728), Delay in
subcontractor's work (IIT=.685), Delay in progress payments (IIT=.656).
The top five risk factors due to their (IIC) were: Increase of Inflation rates (IIC=.868),
Fluctuations in the material's prices (IIC=.847), Political instability (IIC=.785), Foreign currency
fluctuations (IIC=.728), Delay in subcontractor's work (IIC=.685).
The Risk Factor Index (RF) for time and the Risk Factor Index for cost can be calculated
using the following equations respectively:
RF (time) = Risk Factor Index of Time
RF (time) = PI*IIT
Equation (4)
RF (cost) = Risk Factor Index of Cost
RF (cost) = PI*IIC
Equation (5)
Table (3) shows the ranking of the top 20 risk factors due to their Risk Factor indices. From
these rankings, many factors have high ranks and appear in first 10th of ranking due to their Risk
Factor indices for time and cost as such as Political instability, Fluctuations in the material's prices,
Delay in delivery of materials to site, Increase of Inflation rates, Delay in subcontractor's work,
Variations of actual quantities of work compared with quantities in documents, Insufficient data
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collection and survey before design, Transportation problems and Ineffective planning and
scheduling. However, Delay in progress payments appears in first 10th only due to RF (time). On the
other hand, Foreign currency fluctuations appears in first 10th only due to RF (cost).
Table (3) Ranking of top 20 factors due to their Risk Factor Index
Factor
No.
The Factors
RF
(time)
Rank
RF
(cost)
Rank
Group
R23
Delay in delivery of materials to site
.676
1
.479
4
Resources
R39
Political instability
.598
2
.564
3
Political
R24
Fluctuations in the material's prices
.563
3
.655
2
Resources
R44
Increase of Inflation rates
.467
4
.736
1
Economic
R10
Delay in subcontractor's work
.424
5
.410
6
Contractor
R4
Delay in progress payments
.419
6
.334
13
Owner
R22
Variations of actual quantities of work
compared
with
quantities
in
documents
.375
7
.409
7
Design
R18
Insufficient data collection
survey before design
.371
8
.397
8
Design
R36
Transportation problems
.367
9
.346
9
Organization
R32
Ineffective planning and scheduling
.360
10
.345
10
Organization
R42
Accident during construction
.358
11
.324
14
Political
R7
Cash flow management
.355
12
.303
18
Contractor
R5
Additional works
.352
13
.341
11
Owner
R6
Lack of contractor's experience
.349
14
.318
15
Contractor
R31
Poor management of project site
.348
15
.309
17
Organization
R16
Delay in approving major changes in
the scope of work
.346
16
.290
24
Consultant
R35
Poor financial control on site
.343
17
.339
12
Organization
R20
Design errors and omissions
.340
18
.310
16
Design
R1
Owner interference
.337
19
.301
19
Owner
R46
Foreign currency fluctuations
.330
20
.467
5
Economic
and
PROJECTS FACED TIME AND COST OVERRUNS
The participation of professionals in this survey is based on approximately 1069 projects they
have been involved in. However, the average number of projects for participants was 11 which mean
in general that most respondents have a very broad back ground about construction projects, and
sharing their knowledge leads to accurate identification of the most important risk factors.
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Volume 4, Issue 5, September - October (2013)
As shown in Figure (7), approximately 506 projects out of 1069 faced time overrun while 433
projects out of 1069 faced cost overrun. Number of projects faced time delay forms 47.33 % of the
total projects; the number of cost overrun projects represents 40.50 % of the total projects and
approximately 939 projects out of 1069 faced time overrun or cost overrun which forms 87.84 % of
the total projects. Those high percents indicate that construction projects in Yemen suffer from the
time cost overruns due to impact of many risks.
Figure (7) The percent of the projects faced time and cost overruns
CONCLUSIONS
Construction projects in developing countries are executed in a complex environment and
suffering from the effect of High levels of risks that are associated with this industry. The high
percentages of the time and cost overruns in the Yemen's construction projects indicate that
experience from impact of many risks. Formal risk analysis and management techniques are not
employed by Yemen's construction projects due to lack of documented data and knowledge in the
area.
With assistance of a practical survey, this research has identified and assessed the risks
affecting the construction projects in Yemen. A HRBS was introduced and classified fifty four risk
factors in ten groups as the expected risk factors affecting the construction projects in Yemen. Three
risk indices were used, providing an effective insight and clear picture of the risk profile involved in
these projects.
The Spearman’s rank correlation coefficient was used to test the strength of associations
among the rankings of the respondent groups, resulted in a high agreement among consultants,
contractors and owners to the most probable and severe risk factors ranking.
Results demonstrate that Delay in delivery of materials to site, Political instability,
Fluctuations in the material's prices, Increase of Inflation rates, and Delay in subcontractor's work,
are the top-ranked risk factors affecting project time and causing time overrun. While, Increase of
Inflation rates, Fluctuations in the material's prices, Political instability, Delay in delivery of
materials to site, and Foreign currency fluctuations, are the top-ranked risk factors affecting project
cost and causing cost overrun. Many risk factors attributed to rated high both for affecting project
time and cost. Results demonstrated that 47 % of the total projects faced time overrun while 40 % of
the total projects faced cost overrun in Yemen.
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Volume 4, Issue 5, September - October (2013)
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