*4.3. Ranking of Risks*

Risks that are associated with building construction projects in Saudi Arabia were assessed and ranked in terms of project delay and project cost overruns by calculating the Relative Importance Index (*RII*) of the probability of occurrence (*P*) for each risk, *RII* of impact of the risk on project time (*IT*), and (*RII*) of impact of the risk on project cost (*IC*). Then, Risk Importance (*RI*) was calculated for each risk in terms of project time (delay) and project cost (cost overruns), being subsequently ranked, as shown in Table A2 (Appendix B). The top ten risk factors that led to delay and cost overruns in building construction projects are shown in Table 3.

**Table 3.** Top 10 Risk factors that lead to delay and cost overruns in building construction projects.


As a result of Risk Importance classification (high, moderate, and low), seven risk factors that were the most significant risks factors contributing to completion delay of building construction projects were (1) contractor's financial difficulties (*RI* = 0.692), (2) owner's delay in making progress payments for completed works (*RI* = 0.672), (3) contract awarded to lowest bidder (*RI* = 0.631), (4) change orders during construction (*RI* = 0.627), (5) ineffective planning and scheduling of project by contractor (*RI* = 0.627), (6) shortage of manpower (*RI* = 0.608), and (7) contractor's poor site management and supervision (*RI* = 0.601). On the other hand, there were two significant risks factors contributing to cost overruns: (1) change orders during construction (*RI* = 0.622) and (2) contract awarded to lowest bidder (*RI* = 0.601). The top ten risk factors that led to delay and cost overruns in building construction projects are shown in Table 3.

The most significant risks factors identified in this study are related to contractors (financial difficulties, ineffective planning and scheduling of projects, and poor site management and supervision), clients (delay in making payments, awarding contracts to the lowest bidder, and changing orders during construction), and labour (shortage of manpower). Contractors' financial difficulties (ineffective cash flow management) was ranked as the first major risk factor in this study. Shash and Qarra [71] conducted a study that revealed that 40% of contractors in Saudi Arabia experience financial failure due to poor cash flow management. Saudi contractors' classification system classifies contractors to a five-grade scale. Although these grades determine the maximum project budget size that allow contractors to bid for (an upper limit), it does not consider the maximum number of projects (the total financial limit of all awarded projects) [39]. Consequently, some contractors use the cash flow of one project to finance different project deficits [71]. This result is in line with some of the investigated studies [2,71–73]. The Saudi contractors need to adopt effective cash flow management practices that require planning, monitoring, and controlling cash inflow and outflow at both the company and project levels to achieve financial success and avoid project deficits.

The second ranked risk factor is the owners' delay in making progress payments to the contractor for completed works (payment delays). Most Saudi construction contractors suffer from progress payment delays. Although Saudi contractors receive 5.0% of the contract price at the beginning as an advance payment from the project's owner, the progress payments are the key sources of cash inflow to resolve deficit cash flow and avoid or minimise outsource finance. Delayed progress payments and high expenses of construction project leads to delaying construction work progress and increasing the project costs unless the contractor is capable financially. Approval process (65%) and bureaucracy (25%) are the primary reasons for delays in owners' progress payments [71]. This result is supported by [52,60,71,74].

Contracts awarded to the lowest bidder was ranked as the third most significant risk to building construction projects in Saudi Arabia. This risk can be attributed to the government's tender and procurement system and the contractors' classification system in Saudi Arabia. This practice creates uncertainty due to a lack of experience, lack of financial capability, incompetent contractors, and suicide tendering. It is supported by studies in different contexts and was also identified by [7,60,74] in Saudi Arabia as the most important significant risk factor in Saudi Arabia.

Changing orders during construction were considered the fourth most important risk for project delay in this study. It was also identified by [7] Assaf in Saudi Arabia and by [75] in Kuwait as the most significant risk factor causing project delays. Change orders usually lead to change project schedules and contract prices, claims and disputes, and poor quality of work. Khalifa and Mahamid [20] identified the factors causing change orders in Saudi Arabia. The top causes of change orders are owners' additional work, design errors and omissions, lack of coordination, defective workmanship, owners' financial difficulties, and differing site conditions.

Ineffective project planning and scheduling by contractors was ranked as the fifth among the top risk factors in this study. It was also identified by [7,70,74] in Saudi Arabia and by [2] in Malaysia as the most important risk factor. The shortage of manpower (skilled, semi-skilled, and unskilled) was ranked the sixth major risk factor in this study, which is similar to the findings observed in [42]. However, studies [68,76] identified shortage of labour as being less influential compared to the other factors among the top ten terms of risk. Disruptions in supply chain and movement of labour due to the recent COVID-19 pandemic could be one of the reasons for the higher ranking for shortage of labour. Although COVID-19 may be considered as a force majeure risk, the impact it caused may affect all three stakeholders, including clients, consultants, and contractors. Furthermore, the number of risk factors identified in Saudi Arabia in previous studies [68,76,77] was from 45 to 60, and they were mostly related to owners (clients) and contractors. Finally, contractors' poor site management and supervision was ranked as the seventh most important risk factor in this study. It was identified by [72] in Vietnam and by [2] in Malaysia.

Changing orders during construction and contracts awarded to the lowest bidder were ranked as the first and second most significant risks to construction projects in Saudi Arabia that caused project cost overruns, which were client-related risks. This result is supported by previous research conducted by [52,54].

Furthermore, from the perspective of the three groups of respondents (clients, consultants, and contractors), they indicated the risks related to their areas with low *RI* compared to the other groups (as shown in Table A3, Appendix B). For instance, *RI* for almost all the client-related risks was less than 0.6, as rated by the participants who were in this category, whereas some of these risks were rated with an that was *RI* more than 0.6 by consultants and contractors. However, no major differences among the groups were identified in rating the risks pertaining to designer-related, labour-related, material-related, equipment-related, and external risk factors. Table A3 (Appendix B) presents the ranking according to the perspectives of the three groups of respondents.

Among the identified risk groups, contractor-related risks were identified to be the major risk factors causing both time and cost overruns. Considering the remaining categories, materials-related, labour-related, consultant-related, and external risks had greater impact on cost overruns; materials-related, force-majeure, and consultant-related risks had greater impact of time overruns. The findings clearly indicated the disruptions in supply chain, which may be attributed to the recent pandemic and issues in planning and implementation.

In addition, analysing the risks of each group in order to identify the most important group of risk in building projects in Saudi Arabia, as shown below in Table 4.


**Table 4.** The most important group of risk factors.

The results revealed four groups as the most important groups with score more than 0.45, which include client-related risks, contractor-related risks, labour-related risks, and design-related risks, all of which were found to have a greater impact on both cost and time overruns. Client-related risks were ranked highest in government-funded projects. However, this finding contrasts with some studies on Saudi Arabian construction where contractor-related risks were given the highest importance [69,74], while in [22] clientrelated risks were identified as being in this place. Contractor-related risks have been elicited as being the second most important risk in this study, which contrasts with its

rankings in other studies [69,70,74]; however, it was identified as being one of the most significant risks in [43]. Moreover, labour- and design-related risks were identified as being significant in studies [43,78] conducted in Saudi Arabia, while other studies [69,70,74] did not find this to be the case.

The risk factors identified in this study, although they reflected similar risks identified in other recent studies in different project types in Saudi Arabia, had few differences identified in terms of the nature of significant risks and their priority. For instance, in the study focusing on the oil and gas industry [15], client-related risks included changes in design and contractor-related risk, and poor planning and implementation were identified as the significant risks; On the other hand, in the study focusing on manufacturing and building projects [17], contractor-related risks including financial difficulties and delays in procurement of raw-materials were identified to be significant risks. In another project related to roads construction, poor planning and poor labour productivity and unskilled labour were identified to be the significant risks. Lean practices can be an effective approach in this context for improving the planning and implementation of construction projects in Saudi Arabia, as it can result in social, economic, and environmental benefits [79]. Although lean practices were identified to be effective in different countries [79,80], different barriers such as traditional practices, client related, technological, performance and knowledge, and costrelated barriers were identified, which limit the implementation of lean practices in Saudi Arabia [81]. Therefore, there is a need to address these barriers for effective implementation of lean practices for addressing the various types of risks in Saudi Arabian construction industries. It is evident from these studies that the nature of risks and its significance may change with the types of projects and countries; therefore, risk management strategies and approaches have to be adjusted accordingly.

These research findings provide a good lesson to not only Saudi Arabia but also the construction industries in other countries, especially the Middle East countries, where there is a lack of skilled resources, high dependency on expatriates, and rising demand for new construction projects. Furthermore, the findings in this study contrasted with studies conducted in other developing countries. For instance, in Malaysia [2,61], design and contract risks were identified to be of high priority, followed by labour risks. However, with increase in FDIs, the clients of the governments may require different changes or raise issues in agreements that may lead to an increase in such risks, as identified in this study in Saudi Arabia, which is focusing on acquiring huge FDIs. Similar results may be identified in China [59], where client risks and contractor-related risks were identified to be the significant risks. Therefore, for developing countries looking for FDIs in the construction industry, client-related risks may emerge as top risks in the near future. While other risks such as material and labour-related risks would be commonly identified in developing countries with limited technical and human resources [55].
