A Risk Allocation Model for Construction Projects in Yemen

Abstract

Construction projects in Yemen always experience high levels of risk due to their complex and dynamic environments. This, in turn, impacts projects in both time and cost. Obviously, risk allocation is usually poorly assigned to project parties; leading to terrible disputes among them. Moreover, there are no suitable risk allocation models that suit the nature of Yemen's construction industry. This work endeavors to propose and apply a Risk Allocation Model (RAM), based on a simple mechanism for allocating critical risks to the responsible party in the project. In addition, the RAM aims to compare among projects, which is more risky. The construction of RAM is based on Delphi method by the expert's judgment of construction projects. Fifty four risk factors, over ten groups, are identified and used in the model development. All factors are analyzed and weighted by deploying Weighted Risk Factor (WRF) which combines the effect of a risk factor probability and its effect on time and cost. The model results identified the most important risk factors to be allocated to owner, contractor or shared between them, as well as the suitable risk action for each factor. The model is applied on a real case study through two construction projects in Yemen to test the validation. A complete comparison between the two projects is presented and a decision is introduced for contractor based on projects time and cost overruns, WRF, and risk allocated to contractor. The results emphasized that the model is easy to understand and use by the parties involved in construction projects. Further, it is characterized by flexibility in the event of variables. The RAM outcomes thus help decision-makers to come to the appropriate decision during the trade-off among different projects.

Keywords: Risk allocation, Delphi method, Construction projects, Decision-making, Yemen.