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Project Risk Management during Construction Stage According to

International contract (FIDIC)

Article · October 2022

DOI: 10.5281/zenodo.7635679

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 International Journal of Civil and Structural Engineering Research ISSN 2348-7607 (Online)
Vol. 10, Issue 2, pp: (76-93), Month: October 2022 - March 2023, Available at: [Link]

Project Risk Management during Construction

Stage According to International contract
(FIDIC)
Rizk Elimam A. Younis1, Hesham Abdelkhalek2, Ahmed Mohammed Abdelalim3
Postgraduate student (Master) – faculty of engineering at Mataria, Helwan University, Cairo, Egypt
1

2
Professor of Construction Project Management, Faculty of Engineering at Alexandria, Alexandria University,
Alexandria, Egypt
3
Associate professor of construction Engineering and Project Management, faculty of engineering at Mataria, Helwan
University, Cairo, Egypt.
DOI: [Link]
Published Date: 13-February-2023

Abstract: Whereas the construction industry represents a significant proportion of national income in comparison
with other industries, and project management during the construction stage has a very important role through
which most of the project cost is spent out, therefore the project management team has to use the best techniques in
project management to get the best results. Risk Management which requires more time and effort in the
preliminary stage in order to avoid or mitigate risks that may occur during construction, all project stakeholders
are taking responsibility for risks during the construction stage, so it is important to take care of risk management
and allocation between client and contractor according to contractual terms and conditions to achieve the project.
There are many types of contracts that govern the relationship between the contractual parties either locally or
internationally, study proposed FIDIC contracts to govern the relationship during construction. Study proposed risk
management process to Plan Risk Management, Identify Risks, Risk Allocation, Perform Qualitative Risk Analysis,
Perform Quantitative Risk Analysis, Implement Risk Responses, and Monitor. Instead of Plan Risk Management,
Identify Risks, Perform Qualitative Risk Analysis, Perform Quantitative Risk Analysis, Implement Risk Responses,
Monitor Risks, as mentioned in PMBOK 6th edition. risk management flow chart for governance during the
construction, and automate project risk management reports and interactive dashboard that demonstrate project
progresses.
Keywords: construction industry, project management team, Risk Management.

1. INTRODUCTION
the urgent need for developing countries to plan, which leads to long-term and short-term goals to meet the increasing
demand for various services and provide a quality of life for citizens, so all organization involved are necessary developed.
Whether it is a government, private or public-private partnership or investment, which includes the development of policies,
methodologies, tools and technologies to achieve the growing demand for the provision of these services, which requires
continuous improvement at all levels, Organizational management, Portfolio management, Program management, and
Project management, to achieve goals and benefits. Increasing demand for the provision of these services, we see a
significant development in the size of Organizational working on project construction from small to medium and large, each
of which operates individually or jointly in the labor market, according to the size of the projects, whether they are small,
medium or large, which are sometimes described as gigantic. In view of the growing increase in the size of projects, which
leads to an increase in the budgets required to achieve these goals, the need for project management arose.

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In addition, the FIDIC contract was selected to know the obligations and requirements of risk management for each of the
contract parties. The risk management was compared with three of the contracts, namely the construction contract (the red
book), the design and construction of stations contract (yellow book), and the engineering, procurement and construction
contract / turnkey (silver book). In order to find out the commitment of each of the contracting parties in project risk
management and its consequences. And since the construction stage is one of the most important stages where most of the
work is carried out and most of the project budget is spent, the study focused on managing risks during construction, as well
as automating follow-up reports during the work period in order to manage risks efficiently and effectively so that the
project management can take the necessary measures to respond to risks in propar time.

2. RISK MANAGEMENT
Risk management means defining the possibility of risk occurrence, the extent and degree of impact of this risk on the
project in the various stages of project work, and how to prioritize them given that they are in the world of uncertainty - in
the sense of expecting occurrence - and choosing the methods, methodologies and tools that can be used to manage risks in
their interrelated processes in terms of the methodology and policy of the organization to bear Or avoiding the risks and
permissible limits in the various work of the organization since the beginning of the first stage of developing the action plan
for risk management, through the definition of risks, then analyzing the risks, then assessing the risks, planning the response,
applying the response plan when the risk occurs, and monitoring and controlling the processes of risk management, in order
to avoid the problems arising such as the project outside Budget/forecast/estimate/bid, deadline for design, build and
occupancy approvals, or failure to meet required technical standards for quality, function, fitness for purpose, safety and
environmental conservation. Many project management organizations have been interested in developing systems and
standards for risk management, including ISO 31000 issued by the International Standards and Metrology Organization and
Australian and New Zealand [Link]/NZS 4360 Risk Management and Project Risk Analysis and Management Guide
issued by the Project Management Organization of England, Best Practices issued by PMI Project Management Body of
Knowledge 6th edition. In this research, we will discuss a brief definition and comparison of five international risk
management specifications.

3. CONTRACTING FOR PROJECTS CONSTRUCTION

Construction projects vary according to their nature - in terms of the accuracy of the design proposed for construction, the
cost of the project, the expected time for project completion, the degree of employer intervention during the project period,
and according to the responsibilities assigned to each of the parties to the contract, and according to the applicable laws and
regulations. Therefore, contracting methods for construction differ. Projects, and accordingly, the levels of responsibility
and the distribution of risks differ between each of employer and contractor. We present here a part of it. There is the
traditional method of contracting, for which a detailed design is prepared by the employer, contracting with a contractor to
carry out procurement work, appointing a contractor for construction and conducting the necessary tests for operation, and
the end of the project is the success of the tests. Including integrated projects and the turnkey system in contracting, in
which human resources, systems and investment structuring are integrated and integrated to complete a specific project.
This method accommodates all stages of the project within the obligations of design, manufacture, supply, construction and
tests in order to ensure obtaining the optimal cost for the project. Including the traditional method, but employer chooses
the general contractor according to the criteria prepared in advance such as qualifications, previous experience and the best
value, and the ability to carry out feasibility studies and design services and review the design in terms of the possibility of
its construction and supply (GC), and with him a manager is appointed to implement the contract (CM), and because of his
capabilities, contracting in this way reduces the potential risks of the contract to the employer, and given the qualifications
and experience of the general contractor, when 60% to 90% of the design is completed, contractors specialized in
manufacturing, supplying and construction can By starting to work on achieving the scope of work specified for each of
them according to their competence. Including design-build (DB) in contracting, and the design and construction are
evaluated through contracting with one party appointed by employer according to pre-established criteria such as previous
qualifications and experience, the best value, and the ability to carry out feasibility studies, design and design review
services and from In terms of the possibility of its construction and supply, and the business owner can appoint a consultant
on his behalf in following up the work "Egyptian Code"

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Table No. (01) Characteristics of types of contracts in the Egyptian code

Design and Management Construction
S|N properties traditional
construction contractor management
1 Distribution of responsibility among
middle Limited high high
the parties to the contract
2 Available market size for cost
middle Limited middle Big
selection
3 timing of cost verification middle early late late
4 The need for early identification of
No yes No No
the employer's requests accurately
5 Having independent assistance in
preparing a brief description of the yes No yes yes
design
6 starting speed slow fast fast fast
7 Flexibility to make changes Reasonable limited Reasonable good
8 Provide standard documentation yes yes yes limited
9 Ability to prepare proposals in stages
with limited commitments that build Reasonable limited Reasonable good
over time
10 There are means of cost control good weak Reasonable good
11 Having experience in construction to
Medium good good good
assist design
12 Program management Preparation of
weak good good good
designs
13 The ability to influence the selection
limited Nothing good good
of competent contractors
14 Existence of means to control the
Medium Medium Medium good
quality of materials and labor
15 The existence of opportunities for
contractor to benefit from liquid yes yes yes No
funds
16 The existence of a financial incentive
for contractor to increase the strong strong Weak rare
effectiveness of performance
17 Possibility of disagreements High Medium Medium Rare

4. RISK MANAGEMENT IN SOME INTERNATIONAL STANDARDS AND CODES

4.1 The Egyptian Code for Construction Projects Management, Code No. 311-2009
I am interested in the Egyptian code for project management #20 Managing risks in the various phases of the project since
the start of the studies for the project and passing through the construction of the project and the delivery of the project and
the end of the guarantee period, as it included in the second chapter 2-6-5 risk management, which included the methodology
followed by the Egyptian code for risk management by following the processes of planning, identification and analysis of
both types And quantitative, as well as responding to it, following it up and monitoring it during the project stages, and that
these operations do not take place once, but are repeated during work periods in the different stages of the project.
4.2 Australian and New Zealand Standards AS/NZS 4360 Risk Management
It stands for Australian/New Zealand specification #.23 By developing an integrated framework that the project is part of
in the sense that it sets the general context for the organization and therefore it did not allocate risk management for projects,
which is very similar in its approach to ISO 31000 of 2009 and includes the stages of risk management according to the
Australian and New Zealand specifications, creating the context, identifying risks, and analyzing risks , risk assessment,
risk treatment, monitoring and auditing, communication and advisory.

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4.3 PMI Project Management Body of Knowledge 6th edition

The PMI concerned with risk management, as it devotes a separate chapter No. (11) to it in the Project Management
Knowledge Guide, sixth edition #20, which includes in detail the processes, inputs, outputs, and tools used to manage
project risks, and the ranks of risk management processes starting from risk management planning, risk definition,
qualitative risk analysis, quantitative risk analysis, risk response plan development, risk response application, and risk
follow-up.
4.4 Project risk analysis and management guide Second edition 2010
And he (Project Risk Analysis and Management Guide) the guide issued by the Project Management Organization in
England (APM association for project management) #19, which placed risk management of great importance and devoted
a complete and detailed guide to project risk management. Risk management processes include initiating risk management
processes, risk definition, and risk assessment risks, risk response planning, response construction, and risk operations
management.
4.5 ISO 31000 for the year2021
This standard is followed by the International Organization for Standardization and Metrology, which singled out risk
management with a general framework between the principles of risk management and the framework and processes
through which risks are managed. These processes harmonize together so that risks are managed efficiently and effectively
by working together with the principles, general framework and risk management, as the principles include value creation,
Part integration with organizational processes, part of decision-making, deals with uncertain events, systematic, organized
and timely, based on the best available information, taking into account human and cultural factors, transparent and
comprehensive, dynamic, iterative and responsive to change, and facilitates continuous improvement. It includes risk
management processes in its various stages from inception and on an ongoing basis, establishing and establishing the
context, risk definition, risk analysis, risk assessment, risk treatment, monitoring and review.
4.6 Comparison of risk management in the four sources
By comparing the selected methodologies, which are among the best international practices, the comparison was presented
in Figure No. (01) According to the following:

Figure No. (1) Comparison of risk management methodologies

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It is clear from Figure No. (01) that the Australian and New Zealand standards AS/NZS 4360 for risk management and ISO
31000 for the year 2021 and through their operations in risk management they are concerned with the risk management of
the organization and neither of them mentioned what is related to project risk management, and that risk management for
the project in all its stages has been mentioned in the Egyptian code for managing construction projects Code No. 311-
2009, and the guide issued by the Project Management Organization in England issued by (APM association for project
management). It also came in the Project Management Knowledge Guide of the American Project Management Institute,
and chapter eleven was devoted to it.
Since we are in the process of studying the risks during construction of the project, we will address them through the
methodology of the Project Management Knowledge Guide of the PMI#20, because it contains details of project risk
management, and it will be the methodology used until the completion of this study.

5. RISK MANAGEMENT DURING CONSTRUCTION

5.1 Introduction
Since the construction stage is an important and essential stage in construction projects, as the stages of construction projects
begin with the initial design, then the final design, then the offering, awarding and contracting stage, then the construction
stage, then the testing and operation stage, then the handover stage, and during the construction stage the project activities
are completed, and this stage consumes the largest part time and cost of the project. It was very important to manage risks
for construction.
Risk management is concerned with studying the risks that may occur in all activities, processes, resources, time, climate
and location of the project, and all administrative aspects of the components of the project in construction, including project
integration management, project scope management, time, cost, quality, resources, communications, procurement,
stakeholders, finance, security, occupational safety, environment and finance. And if the procedures required for risk
management are ignored or neglected in whole or in part, it may result in many problems that negatively affect the progress
of operations during construction, because the management of all project inputs in construction must be done in an integrated
manner to obtain the highest efficiency for managing the phase. .
5.2 Risk management processes during construction
Risk management processes during construction include the management of expected events - uncertain - that may affect
the project with a positive or negative impact on the project objectives and the extent to which the organization accepts the
impact resulting from the expected event during the implementation of risk management processes. It begins with the
definition of risks, then risk analysis and risk assessment Response planning, construction of the response plan when a risk
occurs, monitoring and control of risk management processes, and these processes are continuous and recurring and do not
take place once throughout construction, but rather start from receiving the project site and continue repeatedly until project
delivery.
5.3 Project risk management planning
Risk management planning is the process through which risks are known, and this process aims to ensure that the processes
used are clear and appropriate to the nature of the project and its importance to the organization and stakeholders, and that
risk management works clearly. This process is implemented once and reviewed again if it occurs. Significant change in
the project, or if it is found that the plan is not working well, and this stage is concerned with obtaining a risk management
plan, which is one of the plans that make up the project management plan, which includes how to prepare and implement
risk management activities and includes a risk management strategy - and explains the general method of risk management
in the project, and the methodology Risk management - which defines the methodology, method, sources of information,
tasks and responsibilities of the risk management team and their roles, costs and includes how to spend on risk management
activities and how to deal with project reserves, timing and answers how often we will repeat the risk management
procedures Risks and the inclusion of risk data in the timetable, and risk classification - which is to create a specific
mechanism for classifying risks in the project, which has been defined as the project risk segmentation structure, the degree
of acceptance by those involved in taking risks, what are the dividing lines for risks and the degree of risk tolerance for the
project as a whole, and setting a clear definition of the degrees of probabilities and vulnerability to risks It depends on the
different objectives of the project and when do we move from one level to another, and it is usually divided into five levels
in large projects: very weak, weak, medium, high, and very high, as shown in Figure No. (02), and these limits are often set
by the organization and / Or those involved in managing the project so that it is agreed upon.
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Figure No. (02) Example of definition for probability and impact

And the matrix of probability and impact, and this matrix also determines the degree of risk from the organization, whether
it is a threat or an opportunity, and the ease of classification, as in Figure No. (03)

Figure No. (03) Example Possibility and Impact matrix with scoring scheme
And the models used in managing the various risks, such as a risk register, periodic reports, the risk response plan, the
alternative plan, follow-up on the reserve, and how to follow up and audit risk management processes.
5.4 Defining project risks
This process is concerned with defining the risks that the project will be exposed to and the details available for each risk
separately. This process results in a project risk register, which includes the definition of the risk, its classification, the
probability of its occurrence, the degree of its impact on any project objectives, what is the strategy used to deal with it and
, and it varies according to the size of the project. The project and its nature, and it also results in a project risk report, which
shows the degree of risk for the project and the data on the sources of the total risks to be dealt with.
5.5 Qualitative assessment of project risks
This process includes the analysis of all the data reached on the risk, especially the probability of occurrence, the timing of
occurrence and the degree of impact. This is done through the risk management team and the participation of stakeholders
through meetings, data collection, data classification and personal interviews. Risks, which are of course reflected in the
quality of risk management in the project, and this data includes, for example, evaluating the quality of risk data in terms
of accuracy and reliability, evaluating the likelihood and impact of risks, strategic impact, evaluating the possibility of
controlling the risk, the possibility of managing it easily, and the time of its occurrence in the [Link] evaluation requires
the skills of a team that has knowledge of this process, or the use of experts if they are unable to do so. In the first place,
the team of workers or experts should have the first priority in front of them is the interest of the project without prejudice
to personal opinions, and this stage results in updating the risk register and updating the hypothesis record. And update
project problem log and risk report.
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5.6 Quantitative assessment of project risks

It is a process in which a numerical (numerical) analysis of the joint impact of individual project risks on the overall project
objectives that have been identified by qualitative analysis, and thus we can know the degree of total exposure to risks in
the project. Note that this process is not required for all projects, according to the Knowledge Guide for Project Management.
This process requires a baseline of project scope, schedule, and project cost. This type of analysis is suitable for large
projects and/or with a high degree of complexity and/or strategic projects and/or for which quantitative analysis is requested
as a contractual condition of the project contract. Where the quantitative analysis of the project is conducted before and
after developing the project risk response plan to verify the effectiveness of the risk response plan.

Figure No. (04) Example S-Curve from quantitative cost risk analysis
Sensitivity analysis is also used, through which the risks to which the project is exposed are arranged in terms of the greatest
impact on the project objectives and results in a cyclonic chart as shown in Figure No. (05)

Figure No. (05) Example tornado diagram

Decision tree analysis is also used in the event that there are multiple options and the need to choose from them, using
branches that represent the decisions taken for each option and the result thereof, where the path is chosen on the basis of
the monetary value of each branch, and the end of each branch is the net value of the path. This process results in the degree
of total exposure to risks in the project, which shows us the chances of success of the project, as well as the amount of total
reserve that must be provided for the project to provide a certain level of confidence, and to obtain a list that determines the
priorities of individual risks for the project. This information constitutes an important input for the next process of risk
management, which is planning to respond to risks.

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5.7 Planning the response to project risks

It is the process during which the options and strategies necessary to be taken to address the total and individual exposure
to risks in the project and to determine the appropriate ways to provide resources as needed - to reduce or prevent threats
that negatively affect the project, as well as to maximize the use of possible opportunities during the construction of the
project, and many tools are used in this process On top of which is expert consultation and data collection by various means,
as well as strategies for confronting risks. These are mentioned in Table No. (2) and when they are used, whether for threats,
opportunities, and/or overall risks for the project.
Table No. (02) Risk Response Strategies
Strategy total
Description of the strategy opportunities
name threats risk
1 Escalate. suitable for events in which decisions must be
taken at higher administrative level than the
powers of the project manager, such as the
program manager, or at the institutional level,
and therefore the project manager must
yes yes yes
determine who will make the decision
according to the organizational structure and
direct him to take the decision in the strategy
that will be implemented in the project and who
Then it is ascended.
2 Avoidance used when the project team works to avoid the
potential threat, by changing the goal, canceling
part of the project scope, or extending the
yes yes
project schedule to completely avoid the threat,
which reduces the probability of its occurrence
to zero.
3 Transfer used to transfer the threat to a third party to
manage the potential impact of the threat and
yes yes
the famous method of transferring the impact of
the threat to insurance and guarantees.
4 Mitigat used to reduce the probability of induction and
/or mitigate the impact resulting from the threat,
and examples of mitigation include planning at
yes yes
a more detailed level, conducting more tests,
and redesigning more than once to mitigate the
threats that are likely to occur.
5 Accept which the work team decides to accept the
threat with one of two types of acceptance,
either positive or active acceptance, by
providing a financial or time reserve to be used yes yes yes
in the event of a threat. Passive acceptance is
acceptance without taking any precautionary
action.
6 Exploit used in high-priority opportunities, and the
organization wants to ensure the realization of
this opportunity, in order to achieve the benefit
arising from the opportunity by ensuring its
yes yes
occurrence by raising the probability of
occurrence to 100%. One of the most popular
ways is to refer the project management to a
talented project manager to reduce the time
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Strategy total
Description of the strategy opportunities
name threats risk
and/or use one of the modern technologies that
reduce the duration and time of the project.
7 Share includes sharing the opportunity with a third
party who shares the benefit accrued from the
opportunity. Examples of the methods used are
yes yes
the establishment of a partnership from a
specialized company, or the appointment of a
subcontractor.
8 Enhance used to try to increase the probability of
occurrence and/or the impact resulting from the
opportunity. The opportunity can be improved
yes yes
by focusing on its causes. One of the methods
used is to increase resources to finish the project
earlier than the original end.
5.8 Decision making
One of the most important benefits that we gain from effective risk management is taking precautionary measures and
formulating the decisions required to be taken before the risk occurs, and thus to formulate good and effective decisions. In
a way that leads to choosing the appropriate and effective decision, and the decisions taken to choose the different response
methods result in several outputs, the most important of which are the required changes to the project management plan,
and the required change in the project documents.
5.9 Project risk response plan implementation
This process is concerned with managing the response that has been chosen and according to what has been planned, to the
expected total or partial risk in order to increase the expected benefit from the opportunities as well as reduce or avoid the
negative effects expected from the threats. In order to ensure the success of the risk response application process, the project
work team, the project manager, and the person responsible for implementing the risk response plan must communicate and
communicate in a dynamic and effective manner, to verify the construction of the response plan as planned.
5.10 Monitoring and controlling project risk management processes
One of the most important processes at all is the process of monitoring and controlling the risk management processes in
the project. During this process, new risks are constantly monitored, re-evaluated, response plans are drawn up, the
construction of response plans is followed up and their effectiveness, and the risks with low probability and impact are
monitored, and are they on the watch list? The same inputs during the planning period, whether the probability of occurrence
and the amount of impact change by increase, then it is planned, or decreased or ended, and it is removed from the watch
list, and during this process the project reserve and the senior management reserve related to the project are followed up, as
well as the allocated resources from the work team, subcontractors and insurance companies, are followed up. And
continuous updating of the risk register. This process results in reports of project risk performance and its impact on project
performance reports, and what this requires in terms of change orders and updating of the project construction management
plan and subsequent updates of project documents, as well as updating the procedures and models of the organization and
the risk segmentation structure.

6. ALLOCATION OF RISK IN FIDIC CONTRACTS

6.1 Types of FIDIC Contracts:
The FIDIC organization has different forms of contracts that suit the nature of the projects, the requirements of the employer,
the responsibilities that will be borne by each of the contracting parties, and the obligations of each party. We will discuss
the risks in construction and how the different formulas of FIDIC contracts dealt with them in the three books (Red, Yellow,
and Silver). Therefore, a brief definition of each formula must be briefly defined as follows:

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6.2 Red Book (Construction Contracts), 2nd 2007

It is the traditional contract model #25 in which employer prepares the designs through his team or his representative for
the project, and in this type of contract employer appoints the engineer to manage and supervise the contract whose work
has been awarded to contractor in accordance with the conditions. This form of the contract is suitable for projects in which
an accurate description of the components of the project and the activities to be implemented is available, such as building
projects and other projects that meet the same conditions, including electromechanical works. The cost calculation in this
form of contracting is often based on the engineering measurement of the executed works. It is called a balanced contract
in which both employer and contractor share the risks in their respective areas.
6.3 Yellow Book (Station Design and Construction Contracts) 2nd 2007
It is the form of the contract in which contractor performs the design and construction works of the project#26, and employer
appoints the engineer for the purposes of the contract, and this form of the contract is suitable for projects that need expertise
in a specific field and have specialized companies, and employer does not have sufficient knowledge of the requirements
of the project. Civil as well, and this form of contracting can also be used in projects in which employer desires that
contractor be responsible for the design and construction works, whatever the nature of the works in the project. The cost
calculation is often rigorous due to the lack of full clarity of the scope of work when contracting, and contractor bears the
bulk of the project risks given that he is responsible for most of the contracting requirements.
6.4 Silver Book (Engineering Business Contracts, Supplies, Execution / Turnkey) 2nd 2007
It is the form of the contract for integrated projects (design, procurement works, and construction), and it is called turnkey
# 27, in which contractor is responsible for all works (design, procurement works, and construction) and in it, employer
appoints a representative to follow up on the project work. This form of contracting is suitable for power plant projects,
infrastructure, factories, development and development projects, and the cost calculation is often linear due to the lack of
full clarity of the scope of work when contracting, in which contractor bears the bulk of the project risks given that he
performs most of the contracting requirements.
6.5 Choose the appropriate contract type from FIDIC contracts
the volume of work within the scope of work specified for the project in terms of being small, medium or large, as projects
in the modern era have reached gigantic sizes, in which the project reaches several billion, in various fields of development
such as infrastructure work and the development of cities and various stations, which requires With him, new types of
contracts or the development of existing contract formulas to suit and meet the needs of managing these projects, as the
FIDIC organization has given special attention to this because of its long-standing experience in drafting and designing
contracts that suit projects and various contractual relationships based on the obligations and responsibilities of each
employer And contractor. If employer wishes to contractual relationship, it may contain part of the work in the contract
according to the need of the contract, so the appropriate choice for the contract is the red book. But if the business owner
wishes to be present continuously to follow up on the work in the project, then he appoints only the engineer and contracts
with contractor on the design and construction works to reduce the costs he bears, so the appropriate contract is the design
and construction contract, which is the yellow book, and often the price for this contract by the syllabus. But if employer
desires to place most of the responsibility on contractor and he is not fully present, then he appoints an engineer as his
representative only and contracts with contractor on the design, supply and construction works (turnkey) to reduce the costs
incurred by him, and thus the appropriate contract is the design, supply and construction contract (Key delivery) which is
the silver book, and the price for this contract is often fixed.
6.6 Risks in FIDIC Contracts
The FIDIC contract formulas took care of the risks during construction of the project their great importance in the project
life cycle, as it unites the efforts of the project participants from the employer, the engineer and contractor in order for all
of them to achieve the goal because of for which the project was established through managing the responsibilities and
duties of each party in the project during the various steps in construction The project and by applying the controls of the
contract formula signed between the two parties to overcome the risks that may occur to the project by following up well
on the plans that have been developed and applying a consistent and clear methodology for all participants in construction
to reduce problems that may occur as a result of the inability to overcome these risks and limit the delay in the schedule For
the project as well as limiting changes and claims that negatively affect the project objectives in terms of time, cost and
quality. This was evident from allocating the FIDIC contract formulas as a chapter on the risks of the project in its various
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stages. We specifically mention construction in the different contract formulas in the three books (Red, Yellow, and Silver)
according to the nature of the work and the responsibilities that both parties to the contract undertake. I singled out a chapter
for it on the general conditions. (Chapter XVII) entitled Risks and Liability, and it includes six paragraphs, which are
compensation contractor's care of the works And Employer risks and employer risk consequences Intellectual and industrial
property rights and limitation of liability
6.7 Selected FIDIC contracts comparison in terms of allocate risk
By the FIDIC contract, how are these risks distributed between each of employer or Contractor separately during
construction , and what are the risks that employer and contractor share during construction , and according to the type of
contract used to complete the works, the tasks and responsibilities vary, and through researching the references that dealt
with this aspect, it was mentioned in the International Construction Law # 29, which classified the risks and the
consequences of their occurrence, whether it was time, direct costs, indirect costs, or profits during the expected chapters
of the contract. The share of each employer and contractor was distributed according to the red, silver and yellow FIDIC
contracts according to Table No. (03).
Table No. (03) shows a comparison of the risk tolerance of employer and contractor in the FIDIC contract formats

E: Employer C: Contractor S : Sharing

Clause Identification of risk Red Book Yellow Book Silver Book
Delayed Drawings or
1.9
Instructions (by the E - -
Red Book
Employer
1.9 Errors in the Employer’s
- E C
Yellow Book Requirements
2.1 Right of access to the site E E E
Setting out (of original points,
4.7 E E C
lines and levels of reference)
S S
Time = E Time = E
Unforeseeable Physical
4.12 Costs = E Costs = E C
Conditions
Overhead = E Overhead = E
Profit = C Profit = C
S S S
Time = E Time = E Time = E
4.24 Fossils Costs = E Costs = E Costs = E
Overhead = E Overhead = E Overhead = E
Profit = C Profit = C Profit = C
Employer’s Delay in Performing
7.4 E E E
Tests
Rejection of Plant, Material or
7.5 C C C
Workmanship
S S S
Time = E Time = E Time = E
Extension of Time for
8.4 Costs = C Costs = C Costs = C
Completion
Overhead = C Overhead = C Overhead = C
Profit = C Profit = C Profit = C
S
S
Time = E
Exceptionally Adverse Time = E
8.4 Costs = C C
Climatic Conditions Costs = C
Overhead = C
Overhead =
Profit = C
Time = E Time = E Time = E
Costs = C Costs = C Costs = C
8.5 Delays Caused by Authorities
Overhead = C Overhead = C Overhead = C
Profit = C Profit = C Profit = C
8.6 Insufficient Rate of Progress C C C
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E: Employer C: Contractor S : Sharing

Clause Identification of risk Red Book Yellow Book Silver Book
S S S
Time = E Time = E Time = E
8.9 Consequences of Suspension Costs = E Costs = E Costs = E
Overhead = E Overhead = E Overhead = E
Profit = C Profit = C Profit = C
Failure to Pass Tests on
9.4 C C C
Completion
Taking Over of Parts of The
10.2 E E E
Works
Interference with Tests on
10.3 E E E
Completion
11.4 Failure to Remedy Defects C C C
S S S
Time = C Time = C Time = C
Contractor to Search for the
11.8 Costs = E Costs = E Costs = E
Cause of any Defect
Overhead = E Overhead = E Overhead = E
Profit = E Profit = E Profit = E
12.3 Evaluation E or C - -
S
Time = C
12.4 Red Omission of any Work according
Costs = E - -
Book to Variation
Overhead = E
Profit = C
12.4
Failure to Pass Tests after
Yellow & - C C
Completion
Silver Book
S S S
Time = C Time = C Time = C
13.3 Variation Procedure Costs = E Costs = E Costs = E
Overhead = E Overhead = E Overhead = E
Profit = C Profit = C Profit = C
S S S
Time = E Time = E Time = E
Adjustments for
13.7 Costs = E Costs = E Costs = E
Changes in Legislation
Overhead = E Overhead = E Overhead = E
Profit = C Profit = C Profit = C
Adjustments for Changes in
13.8 E or C E or C C
Costs (Indexation)
14.8 Delayed Payment E E E
Payment after Employer’s
15.4 C C C
Termination
Contractor’s Entitlement to
16.1 E E E
Suspend Work
Payment after Contractor’s
16.4 E E E
Termination
17.1 Indemnities E or C E or C E or C
Consequences of
17.4 E E E
Employer’s Risks
S S S
Time = E Time = E Time = E
Consequences of Force
19.4 Costs = E Costs = E Costs = E
Majeure
Overhead = E Overhead = E Overhead = E
Profit = C Profit = C Profit = C

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Thus, this table can be used as a guide in distributing risks between both employer and contractor, and these results in
reducing the periods used to resolve disputes arising from the disagreement in estimating the risk outcomes. The researcher
also suggests adding a process of risk distribution within the risk management processes to effectively complete the process
of risk management governance between the two contracting parties.

7. RISK MANAGEMENT PROCESSES GOVERNANCE

Recommending the use of the risk management processes flow chart, which regulates the relationship between each the
employer, the engineer and contractor, as it includes the governance of the risk management operations and the necessary
approvals from employer to know what the project faces of potential risks and what these risks can affect the objectives of
the project and the plans required to respond to these risks and what should be done on each of the employer, contractor
and engineer at every stage.
Figure No. (06) Process flow chart for managing risks in construction projects

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8. RISK MANAGEMENT PROCESSES REPORT AUTOMATION

Automation of risk management follow-up reporting processes and presentation of results to the final dashboard
(Dashboard) for departments at different levels in different geographical ranges using Microsoft BI software, which gives
real-time data to decision-makers promptly and helps to make proper decisions to deal with project risks. As shown in figure
numbers 07, 08, 09, and 10:

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Figure No. (07) Roles and responsibility flow chart Figure No. (08) Programs used

Figure No. (09) Dashboard distribution Flow chart Figure No. (10) dashboard sample

9. CONCLUSION
Through the previous study and comparisons of the attempt to manage risks in construction according to international
standards and best practices, the researcher concluded that for the work to be completed during the project construction
phase with the required quality, the allocated cost, and within the specified period, risk management must be activated and
the requirements of risk management should be integrated into the project contract and the risks of each owner should be
identified. Work and contractor and make the necessary plans to manage them and define the processes of identifying and
evaluating risks during the bidding phase of the project so that there is a future vision for construction before entering it,
and then when starting construction , the expected risks during the phase have been defined in advance and the required
reserve has been put in place to manage them in the event of their occurrence. The researcher recommends a proposal to
add a process to the risk management processes, which is the distribution of risks between each of employer and contractor
and the arrangement of risk management processes to be planning for risk management, risk definition, risk distribution,
qualitative risk analysis, quantitative risk analysis, risk response plan development, and risk application. Responding to
risks and following up on risks, instead of the arrangement included in the Project Management Knowledge Guide chosen
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for the study, which is planning for risk management, defining risks, conducting a qualitative risk analysis, conducting a
quantitative risk analysis, developing a risk response plan, applying risk response, and following up on risks, and thus it is
practical Distributing risks between both employer and contractor is a proactive step to reduce change orders that occur in
the project as a result of things or events that were not expected by both parties, and thus time, cost and quality are managed
more efficiently than if the risk management had not been pre-distributed, and thus claims are reduced. Financial and
temporal The operations chart presented by the researcher is one of the most important tools for the governance of risk
management operations, which, once activated, shows the tasks and responsibilities of both employer and contractor, and
thus the operations are managed efficiently and effectively. The automation of risk management follow-up reports and
display of results is the final data dashboard (Dashboard) for departments at different levels in different geographical ranges
using Microsoft BI and other programs used which gives real-time data to decision-makers early and contributes to rational
decision-making dealing with project risks.
REFERENCES
Books
[1] Michael M. Bissonette, Project Risk Management A Practical Construction Approach, 2016
[2] Ori Schibi, Managing Stakeholder Expectations for Project Success Chapter:8 Managing Risk Effectively: What's
Missing from Current Risk Management Methodologies, 2014
[3] Tom Kendrick, Identifying and Managing Project Risk: Essential Tools for Failure-Proofing Your Project, 2015
[4] Ted Klastorin and Gary Mitchell, Project Management: A Risk-Management Approach, 2020
[5] Roland Wanner, Project Risk Management: The Most Important Methods and Tools for Successful Projects, 2015
[6] Dale Cooper, Pauline Bosnich, Project Risk Management Guidelines: Managing Risk with ISO 31000 and IEC 62198,
2nd Edition, 2014
[7] First Edition, Lukas Klee, International Construction contract Law, 2018
Standers
[8] Project Management Institute, The Standard for Risk Management in Portfolios, Programs, and Projects, 2019
[9] Project Management Institute, Practice Standard for Project Risk Management, 2009
[10] Project Management Institute, A Guide to The Project Management Body of Knowledge (PMBOK® Guide) Sixth
Edition, 2017
[11] American Society of Civil Engineers, Quality in The Construction Project A Guide for Owners, Designers, and
Constructors Third Edition, 2012
[12] International Organization for Standardization (ISO), ISO 31000 - Risk management - Principles and Guidelines, 2021
[13] Office of Statewide Project Management Improvement (OSPMI) Project Risk Management Handbook Second
Edition, Rev. 0, 2007
[14] Egyptian Project Management Committee, Construction Project Management, Egyptian Code, 2009
FIDIC Books
[15] Fidic, FIDIC - Red Book, Conditions of Contract For Construction, For Building and Engineering works Designed
By Employer 2nd edition, 2017
[16] Fidic, FIDIC - Yellow Book Conditions of Contract, For Plant and Design - Build 2nd edition, 2017
[17] Fidic, FIDIC- Silver Book, Conditions of EPC and Turnkey Projects 2nd edition,2017
[18] Fidic, FIDIC-Risk Management Manual 1 st edition, 1997
Papers
[19] Heedae PARK, Kang-Wook LEE, H. David JEONG, and Seung Heon, Effect of Institutional Risks on the
Performance of International Construction Projects, 2014
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[20] Iwona Rybka, Elżbieta Bondar, Department of Environmental Engineering and Geodesy, Wroclaw University of
Environmental and Life Sciences, Planning of the Risk Handling Methods Related to Alterations to Project,
Documentation, 2013
[21] M. MOAZZAMI, R. DEHGHAN and JY RUWANPURA, Department of Civil Engineering, the University of
Calgary, Canada, Contractual Risks in Fast Track Projects, 2011
[22] Ewelina Gajewska, Michaela Ropel, Risk Management Practices in a Construction Project - a case study, 2011
[23] Li Bing, A. Akintoye, PJ Edwards, C. Hardcastle, The allocation of risk in PPP/PFI construction projects in the UK,
2005
[24] Guo Zhanglin, Hu yazhen, Liu Jun'e, The analysis of contractor's risk clause based on the FIDIC construction contract,
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[25] Hemanta Doloi, Understanding impacts of time and cost related construction risks on operational performance of PPP
projects, 2012
[26] AACE International Recommended Practice 67R-11, Contract Risk Allocation - As Applied in Engineering,
Procurement, and Construction, 2014
[27] George E. Baram, Project Execution Risks in EPC/Turnkeys Contracts and the Project Manager's Roles and
Responsibilities, 2005
[28] Rashad Zein and Luc Heymans, Quantifying Risks Related to the Execution of Mega Projects, 2012
[29] Hua Zhao1, Yi-lin YIN 2, A Dynamic Mechanism of Risk Allocation of Construction Project from Perspective of
Incomplete Contract Theory: A Theoretical Model, 2011
[30] Ali F. Bakr, Khaled El Hagla, Ayda Nayer Abo Rawash, Heuristic approach for risk assessment modeling: EPCCM
application (Engineer Procure Construct Contract Management), 2012
Other Books
[31] Gamal El-Din Nassar, Claims, Disputes And Arbitration
[32] Gamal El-Din Nassar, Conditions of contract for Construction
Web sites
[33] @RISK manual version 7.5, Palisade Corporation [Link] 2022
[34] Deltek, Inc [Link] 2022
[35] Barbecana, Inc. [Link] 2022
[36] Oracle,Inc [Link] 2022
[37] RiskyProject Professional User Guide, Intaver Institute [Link] 2022
[38] RiskyProject Professional Lite Guide, Intaver Institute [Link] 2022
[39] RiskyProject Professional Enterprise Guide, Intaver Institute [Link] 2022
[40] Safran Risk manual, Safran Software Solutions [Link] 2022
[41] Vose Software web site [Link] 2022
[42] [Link] 2022
[43] [Link] 2022
[44] [Link] 2022
[45] [Link] 2022
[46] [Link] 2022
[47] [Link] 2022
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