International Journal of Applied Engineering Research ISSN 0973-4562 Volume 11, Number 15 (2016) pp 8743-8753 © Research India Publications. http://www.ripublication.com

A decision support methodology for assessment of construction project risks Hafida Lmoussaoui* and Hicham Jamouli Laboratory of Industrial and Computer Engineering, National School of Applied Sciences, Agadir, Morocco. Address: ENSA, BP 1136, Agadir, Morocco

identification process. This method is intended to aid the risk management team to investigate the different risks which may be involved in construction projects. Then, a systematic approach based on the techniques of multi-criteria analysis is proposed to define the notions of “aggregate impact” and “weighted criticality” used for the risks assessment and prioritization. Theses frameworks serve to overcome the limits of current tools for the construction field. The remainder of this paper is organized as follows: Section 2 presents a literature review of the relevant approaches used for the risk identification and assessment and their limits in the case of a construction project. Section 3 describes the strengths of multi-criteria analysis and presents the “Analytic hierarchic Process” and “Weighted Product Model” methods. The proposed approaches are then described in detail in Section 4 and 5, and a case study of a real construction project is presented in section 6 to test their availability. Section 7 follows with a conclusion and provides the perspectives of this work.

Abstract The aim of this paper is to develop specialized approaches for identifying and assessing construction project risks. An approach called ‘Threedimensional Risk Identification’ is developed basing in a combination of three parameters: risk typology, project phases and stakeholders. Then, a framework is proposed for their assessment and prioritization basing on multiple criteria decision making methods to define the notions of ‘aggregate impact’ and ‘Weighted Criticality’. The outcome of this method is a three-dimensional framework that lists and classifies the construction project risks. It allows the project manager to detect the critical risk owners that must be overseen and monitored, to identify the project phases presenting a risk concentration and then to define another type of project critical path analysis. The notion of weighted criticality provides to the project manager a support for the construction project risks prioritization that overcomes the limits of the classical notion of criticality.

INTRODUCTION Construction projects are characterized as very complex projects where uncertainty comes from various sources. This complexity in both their structure and context is due to many features: • Multiple stakeholders involved during the project lifecycle, with different visions, simultaneous actions, and sometimes conflicting objectives [1]. • System's dynamics due to the strong influence of environment (ground, weather, etc) and interactions required with different stakeholders. • Prototypical character of the works • Project’s delay, which increases the likehood of undesirable events that impact its performance (change of standards, evolution of the objectives, economic, political and social constraints …) [2].

LITERATURE REVIEW Risk identification The risk identification phase consists on a systematic search for initial causes that could defeat the project objectives [5]. It is an important step in the risk management process. In fact, the absence of risk identification can push the project manager to operate in a reactive mode by draining important resources to mitigate the impact of unwanted outcomes. Also, there are the identified risks that will be assessed and monitored. Then, the success of a risk management process depends on the quality of this first phase [6]. However, the project risk identification is a delicate task whose difficulty is due to the inaccessibility of information. In fact, the listing of project risks is an extrapolation task based in the anticipation and imagination of situations that can threat a project [7]. Its difficulty is also related to the common practice of applying risk management in the beginning of the project that is a drafting stage when the schedule is still a prototype [8]. [9] stated that risk identification is both important and difficult and calls for creativity and imagination. They recommended the directed-thinking approach that stimulate imaginative thinking and draw on the experiences of different individuals such as interviewing, brainstorming and decision conferencing. In addition to these methods, some other techniques based on group decision making could be used for the risk identification as: Pin card, Gallery, Battle–Belmuden– Brainwriting (BBB), Collective Note Book (CNB) and Nominal Group Technique (NGT) [10][11].

To deal with these constraints, risk management is a systematic way of looking at areas of risk and consciously determining how each should be treated. It is a management tool that aims at identifying sources of risk and uncertainty, determining their impact, and developing appropriate management response [3]. It also lead the project manager to identify favorable alternative actions, increase confidence in achieving project objective, improve chances of success, reduce surprises, give more precise estimates (through reduced uncertainty) and reduce duplication of effort (through team awareness of risk control actions) [4]. A novel method called “Three-dimensional Risk Identification” is proposed in this paper to facilitate the risk

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International Journal of Applied Engineering Research ISSN 0973-4562 Volume 11, Number 15 (2016) pp 8743-8753 © Research India Publications. http://www.ripublication.com [19] proposed a specific classification where the project risks are decomposed into external risks, operational risks, risks related to project management, risks related to engineering and financial risks. Besides the source criterion, some researches have focused on the project aspect for the risk classification. In this context, [20] classifies risks into eight areas related to project management: • Expression of needs and their specifications. • Development strategy. • Project organization. • Contractual interfaces. • Project management. • Costs and delays. • Technical and operational performance. • Users and operating sites.

Moreover, other alternatives were proposed to identify risks such as risk typology [5]. In this setting, different classifications of risk have been developed over the years. A classification taking into account the nature, origin and impact of risks in the elements of the project was suggested by [12] that classifies the risks following their: • Nature: technical, financial, human, organizational, managerial • Origin: country, customer, product, supplier, government • Consequences: customer dissatisfaction, abandoning project • Detectability: the ability to predict the risk occurrence. • Controllability: selected or incurred risks. Many other approaches have considered the source of risk as the most important criterion when classifying risks. In fact, [13] distinguished internal risks associated to endogenous project processes and external risks associated to exogenous processes. The proposed typology is structured as follows: • Internal Risk: Management, social / organizational, design techniques, contractual or operations / maintenance • External Risk: Political / strategic, legal/ juridical, industrial policy, security, financial, media, external technology or technological evolution.

[21] proposed a typology that characterizes the risks according to the project progress. He divides them into two sections, those related to the project study and to project execution: • The study phase: The associated risks can be either internal risks caused by the vagueness of some tasks, ambiguity of objectives, inconsistency of specifications, poor planning of material and human resources or external risks such as political risks, risks of commercial obsolescence, regulatory risks and risks related to relations with subcontractors, external partners and customers. • The implementation phase: it includes the risks derived from the project dysfunctions (rules and procedures of project management, system of monitoring and controlling) and the risks due to a late detection of problems or to a misdiagnosis of the situation.

Project Management Institute [14] suggested four classes of risk: • Technical Risks related to the used process and technology. • External risks due to the business environment of the project, the market situation and the customers and suppliers relationships. • Corporate Risks arise from the project organization such as available resources, the project priority and its interdependencies with other projects. • Risks related to project management.

Risk assessment and prioritization Risk assessment and prioritization consist in assigning an importance level to each identified risk. The purpose is to define the most critical risks that must be mitigated and controlled. In this context, a risk is quantified using two-dimensional size (p,s) where p is a probability that gives the uncertainty measure related to the severity s of its consequences [20][22]. The risk assessment can be made through a criticality matrix that is obtained by crossing the levels of severity and probability of occurrence expressed on a rating scale of qualitative descriptions (Table 1).

[15] classified risks into three categories: • Market-related risks derive from the markets for revenues and financial markets. • Completion risks come from technical designs or technologies employed, construction cost and time overruns and operational problems. • Institutional risks arise from laws and regulations, opposition from environmental and local groups, and government bodies wanting to renegotiate contracts.

Table 1: Criticality Matrix NF EN 50126 Within the broader context of construction projects, several studies have been conducted to define a risk taxonomy adapted to their specifications. In this sitting, [16] distinguished technical, legal, natural, logistical, social, economic, financial, commercial and political risks. [17] categorized the construction project risks into static / dynamic, acceptable / unacceptable, internal / external, positive / negative, individual / collective and insurable / uninsurable. [18] classified risks into human, site, material and equipment risks.

P S Insignifiant Marginal Critical Catastrophic Incredible Negligible Negligible Negligible Negligible Unlikely Negligible Negligible Acceptable Acceptable Rare Negligible Acceptable Undesirable Undesirable Occasional Acceptable Undesirable Undesirable Unacceptable Likely Acceptable Undesirable Unacceptable Unacceptable Frequent Undesirable Unacceptable Unacceptable Unacceptable

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International Journal of Applied Engineering Research ISSN 0973-4562 Volume 11, Number 15 (2016) pp 8743-8753 © Research India Publications. http://www.ripublication.com The FARMER diagram is also used for the system vulnerability characterization. It represents risks using the couple "severity-likelihood" in the risk acceptability areas [23] (Figure 1).

0,5 0,3 0,1

Despite the practical use of the classical notion of criticality, its calculation principle is unsuitable to the requirements of a construction project. Indeed, this type of quantification has the following limitations:  The consequences are usually evaluated on a single dimension, which does not allow a global assessment of the situation [24].  Risk consequences impacts at least one of the project characteristics: cost, delay or quality. Knowing that their priorities differ for the construction projects depending on several parameters, the criticality formula, that represents a simple expected value of the probability of occurrence and impact, may give heterogeneous results that will cause errors in the decision making.  Different situations can lead to the same value of criticality, as the risk characterized by low frequency and high severity and risk characterized by high frequency and low severity. However, the probability of occurrence weight compared to the severity weight may change depending on the project context.  The interdependencies of risks are not taken account in this evaluation [24].

Figure 1: Farmer diagram Structure

Risk evaluation can also be made using methods derived from the FMEA [24]. There are based on the concept of criticality which is calculated from 3 notes: - A note of severity S. - A note of probability of occurrence O. - A note of failure detectability D. As for the criticality matrix, these notes are derived from qualitative scales referring to scores that are defined by the FMEA team. The criticality C is defined as the product of these three notes: C=SxOxD (1) Many recent researches still use this classical principle of criticality for the risk assessment. [25] define the Risk Priority Index (RPI) using the following equation: RPI= I x P = Ic x It x Is x P (2) Where P is the risk Probability, Ic the cost impact, It the time impact and Is the scope impact. [26] define the concept of relative risk concentration by: (3)

To overcome these limitations, an approach based on Multiple Criteria Decision Making Methods is proposed to define the notions of aggregate impact and weighted criticality. These parameters will be used to assess and prioritize the risks taking account of the project parameters: cost, delay and quality as well the risk characteristics: probability of occurrence, impact and non detectability.

MULTIPLE-CRITERIA DECISION-MAKING A multiple-criteria decision-making method (MCDM), as its name implies, is using in situations when several criteria must be considered [28]. To make rational decisions using multiple criteria, it must be ensured that the used functions create a consistent family of criteria. A family of criteria is consistent when it has the following three properties: • Exhaustivity: A family of N criteria is exhaustive if it covers all aspects leading to the actions evaluation [29]. • Cohesion: Both the cohesion between local preferences, modeled at the individual criterion level, and global preference modeled by the whole family of criteria [30]. • Non redundancy: This condition prohibits the presence of extraneous criteria in the studied family [30].

Where yij is the weight of risk factor category Fi causing an undesirable event Ej and xi is the number of risk factors by category Fi. i= 1... n et j= 1… m. Then, the risk level is calculated by the product of the probability of occurrence derived on the relative concentration value of the risk and the maximum value of its impacts on cost, time, quality and project environment. The corresponding formula is presented by: Risk (i) = Pi x Ii (4) [27] use a Probability Impact Matrix (PxI Matrix) that defines the risk level based on subjective values of the probability of occurrence and the impact of risk on the project objectives. Table 2 presents the proposed matrix. Table 2: Probability Impact Matrix Probability 0,9 0,7

0,03 0,05 0,10 0,20 0,40 0,02 0,03 0,06 0,12 0,24 0,01 0,01 0,02 0,04 0,08

There are several methods based on multiple criteria Decision Making that allow a decision maker to rank several options using several discriminating criteria [24]. They are grouped into three main categories according to the adopted approach [30]:

Impact 0,05 0,1 0,2 0,4 0,8 0,05 0,09 0,18 0,36 0,72 0,04 0,07 0,14 0,28 0,56

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International Journal of Applied Engineering Research ISSN 0973-4562 Volume 11, Number 15 (2016) pp 8743-8753 © Research India Publications. http://www.ripublication.com -

Unique synthesis criterion approach. Outranking synthesis approach. Interactive local judgment approach.

related to Rj using the values of Table 3. The matrix M has the following properties: mii= 1 and mji= 1/mij i,j= 1,2,3, …, N After completion of pairwise comparisons, the ratings are normalized and averaged. This comparison method is applied to all levels of the hierarchy. Afterwards, the option scores are combined with the criterion weights to produce an overall score for each option.  Logical consistency: Developing a decision hierarchy and establishing priorities must ensure consistency with respect to two principle aspects [34]: The homogeneity and adequacy of groupings and the consistency of preference intensities

For the project risks assessing, we choose the unique synthesis criterion approach using the two methods: Analytic Hierarchy Process (AHP) and Weighted Product Model (WPM). The AHP method is chosen for its simplicity, ease of understanding to solve a wide range of unstructured problems, flexibility and ability to blend quantitative and qualitative criteria in the same decision framework. It will be completed by the WPM method for defining the notions of the aggregate impact and the weighted criticality. The AHP method Principle of the method The Analytic Hierarchy Process method (AHP) was developed by Saaty in 1970 to provide a simple technique for solving complex problems by integrating the judgment and experience of the user in order to accelerate and facilitate the decision process [31]. Since then, this method has been recognized as one of the three most popular methods of quantitative analysis using qualitative factors [32].

The consistency index is defined by the following formula: (5) Where Cm is the average of consistencies Ci calculated using the equation 6: (6) Where: R= (ri,j), i,j = 1,…,N is the matrix defined by the product of each column of M and the weight of the corresponding criterion. The consistency ratio is deducted by the following equation:

Stages of implementation The basic procedure to carry out the AHP method consists on the following steps:  Developing a decision hierarchy: The first step is to decompose the decision problem into its constituent parts. The three major hierarchy levels are the goal, objectives and alternatives [33].  Establishing Priorities: In this step, each node is evaluated against each of its peers in relation to its parent node. These evaluations are called pairwise comparisons. We define the notion of RIC (Relative Importance of Criterion) or "weight" applied to a hierarchy that corresponds to the preference of the decision maker to a criterion compared to another using the rating scale shown in Table 3.

(7) Where Ca is a random index whose value depends on the size of the matrix according to the values presented in the table 4. Table 4: Values of random index N 1 2 3 4 5 6 7 8 9 10 Ca 0 0 0,58 0,9 1,12 1,24 1,32 1,41 1,45 1,49

The hierarchy is consistent when Rc is less than the values assigned in the table 5.

Table 3. Pairwise Comparison Scale Table 5: Acceptable consistency ratio Value Verbal Scale Explanation 1 Equal importance of both Two elements contribute elements equally. 3 Moderate importance of Experience and judgment one element over another favor one element over another. 5 Strong importance of one An element is strongly element over another favored 7 Very strong importance of An element is very strongly one element over another dominant 9 Extreme importance of An element is favored by at one element over another least an order of magnitude. 2, 4, 6, Intermediate values Used to compromise 8 between two judgments

Size of matrix Acceptable consistency ratio 3 0,05 4 0,08 5 et plus 0,10

The WPM method Weighted Product Model is a popular multi-criteria decision analysis method. As with all MCDM methods, it is used to compare a finite set of decision alternatives using several criteria. Each alternative is compared with the others by multiplying a number of ratios, one for each criterion. Each ratio is raised to the power equivalent to the relative weight of the corresponding criterion [35]. In general, the following product has to be calculated in order to compare two alternatives Ak and Al [36][37]:

From these values, we define the square matrix of dimension N, denoted M= (mi,j), where mi,j is the importance of risk Ri

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International Journal of Applied Engineering Research ISSN 0973-4562 Volume 11, Number 15 (2016) pp 8743-8753 © Research India Publications. http://www.ripublication.com the three components: Nature of risk, project phase and project stakeholder. (8) Where n is the number of criteria, m the number of alternatives, wj the weight of the criterion Cj, AK et AL two alternatives to be compared and aKj et aLj the alternatives values of AK and AL according to the j-th criterion. An alternative approach to the WPM method is to use only products without the previous ratios. Equation 9 presents the modified formula: (9)

THE TRI APPROACH OF THE PROJECT RISK IDENTIFICATION The typologies presented in section 2.1 can be grouped into two categories: • "Risk" oriented approaches [12][13][14][15][16][18] [19] that take the project as a single entity and focus on the intrinsic characteristics of risks. • "Project" Oriented approaches [20][21] that focus on the project phases for the risk identification.

Figure 3: Expected synergy for the risk identification

Then, the TRI (Three-dimensional Risk Identification) method consists in combining, for each stakeholder of the project, the risk typologies and the project phases to identify all the possible risks. This combination will be made with a matrix, which allows for each project phase to overfly various types of risk who can arise. While filling the line-column intersection of this matrix, we can define the risks bound to every phase of the project and related to the stakeholder studied that will be named the risk owner. Then, a risk “r” will be described by a triplet (s, t, p) such as:

These approaches may have limitations in the case of a construction project but complement one another for exhaustive risk identification. An effective risk identification process must also involve stakeholders influence. They are defined as any group or individual who can affect or is affected by the achievement of the organization's objectives [38]. Figure 2 defines the stakeholders involved in a construction project and their different interactions.

Where: S: Set of project stakeholders. T: Set of project risk typologies. P: Set of project phases obtained by a Work Breakdown Structure decomposition. Let EXIST_R a function whose parameters are the three elements s, t and p. it returns “1” if a risk is identified according to this triplet and “0” if it is not identified.

Figure 2: Stakeholders of a construction project “Other stakeholders” refers to other actors implicated in the construction project process either with contractual links such as engineering, Control Office, Insurance and Financing Establishment or administrative links such as regulatory authorities or technical committees. Figure 3 shows the expected synergy from the combination of

Let also ADD_R the function defined by: FUNCTION ADD_R (ri ϵ R, R ϵ R ) if Ǝ r ϵ R / r = = ri then R