The risk assessment model for construction projects including value creation and protection aspects

Abstract

The article focuses on the identification and classification of key risk management criteria that represent the value creation and protection aspects for the construction industry. Nowadays, the assessment of the risk level of a construction project is especially important for the quality of construction projects as well as the growth of enterprises and the sector. To establish the most important criteria for the successful growth of the construction sector including value creation and protection aspects are developed. The article presents the developed and integrated knowledge system for the measurement of a risk level particular to construction projects. Enterprises implement different projects to achieve goals stipulated in their organizational charter. However, timely completion of such projects is rarely successful despite the reached financial and qualitative goals. One of the most important factors that lead to the incompletion of most projects is the lack of attention to the effects of risks, the aggregated effect of which becomes a major hurdle. In other words, the interactions among risks lead to the aggregated effect, which is greater than the total effects of individual risks. Risk assessment in an environment involves a systematic and comprehensive methodology for quantifying the probability of the occurrence of a particular adverse event and the magnitude of the associated consequence of its outcome. In an environment, risk assessment faces different types of uncertainties including aleatoric and epistemic that can be accounted by theories of probability, possibility, game and fuzzy set, respectively. The former type of uncertainty is often referred to as objective or stochastic whereas the latter is often referred to as subjective or state-of-knowledge. Strategic objectives of an enterprise are accomplished through portfolios of risks. However, the materialization of portfolio risks may affect a portfolio’s success and at the same time the success of the implemented activity. In life, each situation brings together many types of risks. Risk management approaches depend on the context of the risk environment and the business activity, i.e. construction. The new risk assessment model for construction projects is presented including value creation and protection aspects.