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Risk assessment of international construction projects using the analytic network process

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2007
Bu-Qammaz, Amani Suliman
This thesis offers a comprehensive risk assessment methodology that provides a decision support tool, directed for Turkish construction organizations, which can be utilized through the bidding decisions for international construction projects. Within this context the analytic network process technique is implemented to develop a risk assessment model, which is used to derive the relative priorities of the risk factors associated with international construction projects. The findings of the risk assessment model have demonstrated that the most significant sources of risk are vagueness of contract conditions about risk allocation, client, and immaturity of legal system in the host country. Factors such as low % of advance payment, geographical distance, and bribery were found to be relatively insignificant. An international construction project risk rating software application is then developed. The application incorporates the derived priorities from the risk assessment model to calculate a risk rating for a given international construction project. To increase the credibility of the results a risk rating adjustment methodology was integrated into the application. Its purpose is to count for the potential influencing factors that may increase the risk level of a given project. The influencing factors which were considered are the company’s experience, contract type, level of the available project data from the outset, and project delivery system. The application is also structured to enhance the organizational learning practices. It improves the process of the organizational memory formation with respect to postproject risk data by developing a database of risk information of the rated projects for future references. The reliability of the application was tested with post-projects risk data and was found to be satisfactory.