Which Risk Management Is Most Crucial for Controlling Project Cost?

Abstract

Risk identification, assessment, and mitigation have been widely used for effective risk management in international construction projects. However, contractors sometimes cannot know what risk exists, and even when they identify the risk, they sometimes do not know the impact on project cost or how well it can be mitigated after award. Thus, this study analyzes 20,008 risk data points, which are composed of checked risk before bid, actual risk after award, and residual risk after mitigation, and shows that 15% of unidentified risks before a bid actually happen as risks after award, 33% of identified risks are underassessed, and 62% of actual risks are not mitigated after award. This study examines the influence of risk identification performance on assessment and mitigation performance and which risk management phase impacts cost performance more. This study also shows risk factors that are not well identified, assessed, and mitigated. These results help in managing practical risk control and identify which risk control should be studied further.