Concepts of Risk In Construction Projects

Risk is a part of business endeavours because of uncertainty (Flanagan and Norman 1993; Fischer and Jordan 1996). Portfolio theory and capital market theory stipulate that risk consists of two types, First, systematic risk, which cannot be controlled, emanates from external factors such as acts of God, natural disasters, market risk, interest-rate risk, and purchasing-power risk. Second, unsystematic risk, which can be controlled, relates to organization-specific factors such as business risk and financial risk(Fischer and Jordan 1996). These forms of risk are fundamental to the construction and the insurance industries.(Tah et al. 1993). The construction project is a complex sector which characterized with low productivity, cost and time overruns and conflicts. The major challenges in construction project risk assessment which may attributed to knowledge requirements for determining the level of uncertainty and development of complex models to predict. To identifies the risk factors that influence the cost-effective management, operation, and maintenance of construction project, as well as how and when in the project life cycle the identified risk factors impact to the associated costs. The web- based tool can be used by decision -makers during the pre-planning stage of construction projects to estimate cost and duration implications of various risk occurrence scenarios, determine contingencies and prepare risk management plans. In this research the author considered all key articles in the related research streams in recent 30 years and analyzed the risk management views in order to identify key risk factors and its impact on the construction projects.