A data-driven approach to identify-quantify-analyse construction risk for Hong Kong NEC projects
Abstract
Project risks must be managed to deliver construction projects on time and within budget. In recent years, the New Engineering Contract (NEC) provides an alternate contracting method for procuring construction projects. As stipulated in the NEC contract, NEC risk register must be used to record any project risks. The risk register is designed to record each risk item in the context of textual description, likelihood, and consequence. However, it is time-consuming to identify, quantify, and analyse NEC project risks based on experience, questionnaire, simulation, and data-mining approach. Any method to fully utilise the records of NEC risk registers of past projects for managing NEC project risks remains unexplored. As such, a data-driven approach is proposed to categorise common risks of NEC projects and to analyse risk rating of risk categories by combining the use of text mining analysis and decision tree analysis. A practical case study in Hong Kong is used to illustrate the method of application. Top four common types of NEC project risks, which are ground and utilities, design information, structures, and workmanship, were identified, quantified, and analysed. The new approach helps NEC project planners to identify, quantify, and analyse NEC project risks time-efficiently.
Keyword : risk identification, risk quantification, risk analysis, risk register, risk category, risk rating, decision tree, text mining, New Engineering Contract
How to Cite
Siu, M.-F. F., Leung, W.-Y. J., & Chan, W.-M. D. (2018). A data-driven approach to identify-quantify-analyse construction risk for Hong Kong NEC projects. Journal of Civil Engineering and Management, 24(8), 592-606. https://doi.org/10.3846/jcem.2018.6483
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Hull, J. 1990. Application of risk analysis techniques in proposal assessment, International Journal of Project Management 8(3): 152–157. https://doi.org/10.1016/0263-7863(90)90016-5
Hwang, B. G.; Zhao, X.; Toh, L. P. 2014. Risk management in small construction projects in Singapore: status, barriers and impact, International Journal of Project Management 32(1): 116–124. https://doi.org/10.1016/j.ijproman.2013.01.007
International Business Machines (IBM). 2011. CHAID and exhaustive CHAID algorithms. New Orchard Road, Armonk, North Castle, New York, United States: International Business Machines Corporation.
International Business Machines (IBM). 2018. IBM SPSS Modeler. [Computer software]. New Orchard Road, Armonk, North Castle, New York, United States: International Business Machines Corporation.
Institution of Civil Engineers (ICE). 2013. The New engineering contract. 3rd ed. London: Thomas Telford.
Jannadi, O. A.; Almishari, S. 2003. Risk assessment in construction, Journal of Construction Engineering and Management 129(5): 492–500. https://doi.org/10.1061/(ASCE)0733-9364(2003)129:5(492)
Kangari, R. 1988. Construction risk management, Civil Engineering Systems 5(3): 114–120. https://doi.org/10.1080/02630258808970516
Kangari, R.; Riggs, L. 1989. Construction risk assessment by linguistics, IEEE Transactions on Engineering Management 36(2): 126–131. https://doi.org/10.1109/17.18829
Kass, G. 1980. An exploratory technique for investigating large quantities of categorical data, Journal of the Royal Statistical Society 29(2): 119–127. https://doi.org/10.2307/2986296
Kim, S.; Bajaj, D. 2000. Risk management in construction: an approach for contractors in South Korea, Cost Engineering 42(1): 38–44.
Kim, H.; Soibelman, L.; Grobler, F. 2008. Factor selection for delay analysis using knowledge discovery in databases, Automation in Construction 17(5): 550–560. https://doi.org/10.1016/j.autcon.2007.10.001
Li, N.; Fang, D.; Sun, Y. 2016. Cognitive psychological approach for risk assessment in construction projects, Journal of Management in Engineering 32(2): 4015037. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000397
Loh, W. H.; Ofori, G. 2000. Effect of registration on performance of construction subcontractors in Singapore, Engineering, Construction and Architectural Management 7(1): 29–40. https://doi.org/10.1046/j.1365-232x.2000.00130.x
Mahamid, I. 2011. Risk matrix for factors affecting time delay in road construction projects: owners’ perspective, Engineering, Construction and Architectural Management 18(6): 609–617. https://doi.org/10.1108/09699981111180917
Mahamid, I.; Al-ghonamy, A.; Aichouni, M. 2015. Risk matrix for delay causes in construction projects in Saudi Arabia, Research Journal of Applied Sciences, Engineering and Technology 9(8): 665–670. https://doi.org/10.19026/rjaset.9.1452
Mead, P. 2007. Current trends in risk allocation in construction projects and their implications for industry participants, Construction Law Journal 23(1): 23–45.
Mooney, C.; Mooney, E. 2014. Risk allocation in construction contracts – Irish public works, Proceedings of the Institution of Civil Engineers 167(2): 68–74. https://doi.org/10.1680/mpal.12.00025
Mubin, S.; Mubin, G. 2008. Risk analysis for construction and operation of gas pipeline projects in Pakistan, Pakistan Journal of Engineering and Applied Sciences 2: 22–37.
Mustafa, M.; Al-Bahar, J. 1991. Project risk assessment using the analytic hierarchy process, IEEE Transactions on Engineering Management 38(1): 46–52. https://doi.org/10.1109/17.65759
Project Management Institute (PMI). 2013. A guide to the project management body of knowledge (PMBOK® guide). 5th ed. Newtown Square, Pennsylvania, United States: Project Management Institute.
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Serpell, A.; Ferrada, X.; Rubio, N. L. 2017. Fostering the effective usage of risk management in construction, Journal of Civil Engineering and Management 23(7): 858–867. https://doi.org/10.3846/13923730.2017.1321578
Sharma, S.; Swain, N. 2011. Risk management in construction projects, Asia Pacific Business Review 7(3): 107–120. https://doi.org/10.1177/097324701100700310
Tah, J.; Carr, V. 2000. A proposal for construction project risk assessment using fuzzy logic, Construction Management and Economics 18(4): 491–500. https://doi.org/10.1080/01446190050024905
Tang, W.; Qiang, M.; Duffield, C.; Young, D. 2007. Risk management in the Chinese construction industry, Journal of Construction Engineering and Management 133(12): 944–956. https://doi.org/10.1061/(ASCE)0733-9364(2007)133:12(944)
Tavares, L. V.; Ferreira, J. A. A.; Coelho, J. S. 1998. On the optimal management of project risk, European Journal of Operational Research 107(2): 451–469. https://doi.org/10.1016/S0377-2217(97)00344-5
Wang, S.; Dulaimi, M.; Aguria, M. 2004. Risk management framework for construction projects in developing countries, Construction Management and Economics 22(3): 237–252. https://doi.org/10.1080/0144619032000124689
Wirba, E.; Tah, J.; Howes, R. 1996. Risk interdependencies and natural language computations, Engineering, Construction and Architectural Management 3(4): 251–269. https://doi.org/10.1108/eb021034
Wood, G.; Ellis, R. 2003. Risk management practices of leading UK cost consultants, Engineering, Construction and Architectural Management 10(4): 254–262. https://doi.org/10.1108/09699980310489960
Yildiz, A. E.; Dikmen, I.; Birgonul, M. T.; Ercoskun, K.; Alten, S. 2014. A knowledge-based risk mapping tool for cost estimation of international construction projects, Automation in Construction 43: 144–155. https://doi.org/10.1016/j.autcon.2014.03.010
Zhao, J.; Xin, C.; Yang, R. 2010. Risk assessment of mine shaft construction projects based on risk matrix, in 3rd International Conference on Information Management, Innovation Management and Industrial Engineering, 26–28 November 2010, Kunming, China, 4: 527–530. https://doi.org/10.1109/ICIII.2010.607
Ahmed, S.; Ahmad, R.; Darshi De Saram, D. 1999. Risk management trends in the Hong Kong construction industry: A comparison of contractors and owners perceptions, Engineering, Construction and Architectural Management 6(3): 225–234. https://doi.org/10.1108/eb021114
Akintoye, A. S.; MacLeod, M. J. 1997. Risk analysis and management in construction, International Journal of Project Management 15(1): 31–38. https://doi.org/10.1016/S0263-7863(96)00035-X
Alhajri, A.; Alshaibani, A. 2018. Causes of construction delay in petrochemical projects in KSA, Energies 11(7): 1652. https://doi.org/10.3390/en11071652
Al-Bahar, J.; Crandall, K. 1990. Systematic risk management approach for construction projects, Journal of Construction Engineering and Management 116(3): 533–546. https://doi.org/10.1061/(ASCE)0733-9364(1990)116:3(533)
Baccarini, D.; Archer, R. 2001. The risk ranking of projects: A methodology, International Journal of Project Management 19(3): 139–145. https://doi.org/10.1016/S0263-7863(99)00074-5
Bing, L.; Tiong, R. L. 1999. Risk management model for international construction joint ventures, Journal of Construction Engineering and Management 125(5): 377–384. https://doi.org/10.1061/(ASCE)0733-9364(1999)125:5(377)
Cagliano, A.; Grimaldi, S.; Rafele, C. 2014. Choosing project risk management techniques. A theoretical framework, Journal of Risk Research 18(2): 1–17.
Carrillo, P.; Harding, J.; Choudhary, A. 2011. Knowledge discovery from post-project reviews, Construction Management and Economics 29(7): 713–723. https://doi.org/10.1080/01446193.2011.588953
Chan, D. W. M.; Chan, A. P. C.; Lam, P. T. I.; Yeung, J. F. Y.; Chan, J. H. L. 2011. Risk ranking and analysis in target cost contracts: Empirical evidence from the construction industry, International Journal of Project Management 29(6): 751–763. https://doi.org/10.1016/j.ijproman.2010.08.003
Chapman, C. B.; Cooper, D. F. 1983. Risk engineering: basic controlled interval and memory models, Journal of the Operational Research Society 34(1): 51–60. https://doi.org/10.1057/jors.1983.7
Charoenngam, C.; Yeh, C. Y. 1999. Contractual risk and liability sharing in hydropower construction, International Journal of Project Management 17(1): 29–37. https://doi.org/10.1016/S0263-7863(97)00064-1
Chang, C. Y. 2014. Principal-agent model of risk allocation in construction contracts and its critique, Journal of Construction Engineering and Management 140(1): 04013032. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000779
Cheng, T.; Wang, Y.; Sun, Y. 2012. Development and application of tender evaluation decision-making and risk early warning system for water projects based on KDD, Advances in Engineering Software 48: 58–69. https://doi.org/10.1016/j.advengsoft.2012.02.003
Choudhry, R. M.; Iqbal, K. 2013. Identification of risk management system in construction industry in Pakistan, Journal of Management in Engineering 29(1): 42–49. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000122
Cooper, D. F.; Macdonald, D. H.; Chapman, C. B. 1985. Risk analysis of a construction cost estimate, International Journal of Project Management 3(3): 141–149. https://doi.org/10.1016/0263-7863(85)90065-1
Cretu, O.; Stewart, R.; Berends, T. 2011. Risk management for design and construction. Hoboken, New Jersey, United States: John Wiley and Sons, Inc. https://doi.org/10.1002/9781118984017
Cagno, E.; Caron, F.; Mancini, M. 2007. A multi-dimensional analysis of major risks in complex projects, Risk Management 9(1): 1–18. https://doi.org/10.1057/palgrave.rm.8250014
Ding, L.; Zhong, B.; Wu, S.; Luo, H. 2016. Construction risk knowledge management in BIM using ontology and semantic web technology, Safety Science 87: 202–213. https://doi.org/10.1016/j.ssci.2016.04.008
Franke, A. 1987. Risk analysis in project management, International Journal of Project Management 5(1): 29–34. https://doi.org/10.1016/0263-7863(87)90007-X
Han, S. H.; Kim, D. Y.; Kim, H.; Jang, W. S. 2008. A web-based integrated system for international project risk management, Automation in Construction 17(3): 342–356. https://doi.org/10.1016/j.autcon.2007.05.012
Hayes, R. W.; Science and Engineering Research Council; University of Manchester Institute of Science and Technology; Project Management Group. 1987. Risk management in engineering construction: Implications for project managers. London: Thomas Telford.
Hull, J. 1990. Application of risk analysis techniques in proposal assessment, International Journal of Project Management 8(3): 152–157. https://doi.org/10.1016/0263-7863(90)90016-5
Hwang, B. G.; Zhao, X.; Toh, L. P. 2014. Risk management in small construction projects in Singapore: status, barriers and impact, International Journal of Project Management 32(1): 116–124. https://doi.org/10.1016/j.ijproman.2013.01.007
International Business Machines (IBM). 2011. CHAID and exhaustive CHAID algorithms. New Orchard Road, Armonk, North Castle, New York, United States: International Business Machines Corporation.
International Business Machines (IBM). 2018. IBM SPSS Modeler. [Computer software]. New Orchard Road, Armonk, North Castle, New York, United States: International Business Machines Corporation.
Institution of Civil Engineers (ICE). 2013. The New engineering contract. 3rd ed. London: Thomas Telford.
Jannadi, O. A.; Almishari, S. 2003. Risk assessment in construction, Journal of Construction Engineering and Management 129(5): 492–500. https://doi.org/10.1061/(ASCE)0733-9364(2003)129:5(492)
Kangari, R. 1988. Construction risk management, Civil Engineering Systems 5(3): 114–120. https://doi.org/10.1080/02630258808970516
Kangari, R.; Riggs, L. 1989. Construction risk assessment by linguistics, IEEE Transactions on Engineering Management 36(2): 126–131. https://doi.org/10.1109/17.18829
Kass, G. 1980. An exploratory technique for investigating large quantities of categorical data, Journal of the Royal Statistical Society 29(2): 119–127. https://doi.org/10.2307/2986296
Kim, S.; Bajaj, D. 2000. Risk management in construction: an approach for contractors in South Korea, Cost Engineering 42(1): 38–44.
Kim, H.; Soibelman, L.; Grobler, F. 2008. Factor selection for delay analysis using knowledge discovery in databases, Automation in Construction 17(5): 550–560. https://doi.org/10.1016/j.autcon.2007.10.001
Li, N.; Fang, D.; Sun, Y. 2016. Cognitive psychological approach for risk assessment in construction projects, Journal of Management in Engineering 32(2): 4015037. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000397
Loh, W. H.; Ofori, G. 2000. Effect of registration on performance of construction subcontractors in Singapore, Engineering, Construction and Architectural Management 7(1): 29–40. https://doi.org/10.1046/j.1365-232x.2000.00130.x
Mahamid, I. 2011. Risk matrix for factors affecting time delay in road construction projects: owners’ perspective, Engineering, Construction and Architectural Management 18(6): 609–617. https://doi.org/10.1108/09699981111180917
Mahamid, I.; Al-ghonamy, A.; Aichouni, M. 2015. Risk matrix for delay causes in construction projects in Saudi Arabia, Research Journal of Applied Sciences, Engineering and Technology 9(8): 665–670. https://doi.org/10.19026/rjaset.9.1452
Mead, P. 2007. Current trends in risk allocation in construction projects and their implications for industry participants, Construction Law Journal 23(1): 23–45.
Mooney, C.; Mooney, E. 2014. Risk allocation in construction contracts – Irish public works, Proceedings of the Institution of Civil Engineers 167(2): 68–74. https://doi.org/10.1680/mpal.12.00025
Mubin, S.; Mubin, G. 2008. Risk analysis for construction and operation of gas pipeline projects in Pakistan, Pakistan Journal of Engineering and Applied Sciences 2: 22–37.
Mustafa, M.; Al-Bahar, J. 1991. Project risk assessment using the analytic hierarchy process, IEEE Transactions on Engineering Management 38(1): 46–52. https://doi.org/10.1109/17.65759
Project Management Institute (PMI). 2013. A guide to the project management body of knowledge (PMBOK® guide). 5th ed. Newtown Square, Pennsylvania, United States: Project Management Institute.
Sarvari, H.; Valipour, A.; Yahaya, N.; Md Noor, N. 2014. Risk identification and assessment in Malaysian public-private partnership projects, in The Second International Conference on Vulnerability and Risk Analysis and Management (ICVRAM) and The Sixth International Symposium on Uncertainty, Modeling, and Analysis (ISUMA), 13–16 July 2014, Liverpool, United Kingdom. https://doi.org/10.1061/9780784413609.045
Serpell, A.; Ferrada, X.; Rubio, N. L. 2017. Fostering the effective usage of risk management in construction, Journal of Civil Engineering and Management 23(7): 858–867. https://doi.org/10.3846/13923730.2017.1321578
Sharma, S.; Swain, N. 2011. Risk management in construction projects, Asia Pacific Business Review 7(3): 107–120. https://doi.org/10.1177/097324701100700310
Tah, J.; Carr, V. 2000. A proposal for construction project risk assessment using fuzzy logic, Construction Management and Economics 18(4): 491–500. https://doi.org/10.1080/01446190050024905
Tang, W.; Qiang, M.; Duffield, C.; Young, D. 2007. Risk management in the Chinese construction industry, Journal of Construction Engineering and Management 133(12): 944–956. https://doi.org/10.1061/(ASCE)0733-9364(2007)133:12(944)
Tavares, L. V.; Ferreira, J. A. A.; Coelho, J. S. 1998. On the optimal management of project risk, European Journal of Operational Research 107(2): 451–469. https://doi.org/10.1016/S0377-2217(97)00344-5
Wang, S.; Dulaimi, M.; Aguria, M. 2004. Risk management framework for construction projects in developing countries, Construction Management and Economics 22(3): 237–252. https://doi.org/10.1080/0144619032000124689
Wirba, E.; Tah, J.; Howes, R. 1996. Risk interdependencies and natural language computations, Engineering, Construction and Architectural Management 3(4): 251–269. https://doi.org/10.1108/eb021034
Wood, G.; Ellis, R. 2003. Risk management practices of leading UK cost consultants, Engineering, Construction and Architectural Management 10(4): 254–262. https://doi.org/10.1108/09699980310489960
Yildiz, A. E.; Dikmen, I.; Birgonul, M. T.; Ercoskun, K.; Alten, S. 2014. A knowledge-based risk mapping tool for cost estimation of international construction projects, Automation in Construction 43: 144–155. https://doi.org/10.1016/j.autcon.2014.03.010
Zhao, J.; Xin, C.; Yang, R. 2010. Risk assessment of mine shaft construction projects based on risk matrix, in 3rd International Conference on Information Management, Innovation Management and Industrial Engineering, 26–28 November 2010, Kunming, China, 4: 527–530. https://doi.org/10.1109/ICIII.2010.607