Quantification of construction project risks by analysis of past dispute cases

Most of the existing risk assessment models identify the critical risks by analyzing expert opinions. Only a few research works have evaluated risks using hard data from previous projects. The aim of this research is to develop a risk assessment model that uses project data to facilitate quantification of risks assessed. From analysis of literature on 'risks' and 'claims' it was noted that the nature of claims are similar to impact of risks, claim amount indicates monetary estimates of impact, and the evidences for making claims indicate occurrence of risks. Hence, the potential of claim statements as basic source of data for risk assessment was recognized. To develop the model, 276 claims from 28 arbitration awards were analysed. Document analysis and grounded theory approach was adopted to code the statements of claims into risks and their impacts. The extracted data was compiled by mapping the claims with the risks in matrix form. In this research, frequency of risks denotes number of claims affected by each risk whereas impact of each risk is expressed as percentage of contract sum. Scope variation and schedule delays were identified as most frequent risks. Average impact due to scope variation along with unpaid work was seven percent of contract sum. The findings of the research converge with the critical risks identified though opinion survey and observations made in live projects. This research demonstrates an innovative approach to analyze past data on claims and disputes for project risk management. Significance of the research lies in the fact that it utilizes data already available with the industry and identifies risks which are most difficult to manage. However, a larger set of claims needs to be analyzed to obtain comprehensive list of risks.