A management approach to enhance international project risk assessments

G. Edward Gibson, Jr., Ph.D., P.E.,
University of Texas at Austin

Yamile Jackson, Ph.D.,
Ringstones Consulting International

Ellsworth F. Vines,
Dick Corporation

Proceedings of the PMI Research Conference 11-14 July 2004 – London, UK

Introduction

Assessing and managing risk is a complex and critical task for international construction projects. Driven by such factors as new markets, domestic competition, and trade liberalization, U.S. owners and contractors have aggressively pursued international business opportunities and projects. International work requires owners to assess a diverse set of political, geographic, economic, environmental, regulatory, and cultural risk factors when contemplating an international capital project. In addition, contractors must consider a similar set of risk factors in determining whether to undertake such projects, and how to price and schedule the work if they do. A limited body of knowledge and research has been undertaken to address these issues, and current efforts to assess and evaluate the risks associated with international construction are fragmented and fail to provide adequate assistance to project managers.

The Construction Industry Institute (CII)—with additional support from the Center for Construction Industry Studies (CCIS), and the Design, Procurement, and Construction Specific Interest Group (D-P-C SIG) of the Project Management Institute (PMI®)—appointed a research team (CII Project Team 181) in April 2001 to improve risk identification and assessment procedures for international construction. To achieve its goals, PT 181 established the following objectives:

  • Develop a process to identify and assess risks specific to international projects using standard terminology;
  • Develop a list of risk elements specific to international projects;
  • Create a structured process to help identify, measure, and track risks from an early stage of project development though operation of the facility.

Completed in December 2003, PT 181 produced the International Project Risk Assessment (IPRA) tool (CII Implementation Resource 181-2 [CII, 2003a] and CII Research Report 181-11 [CII, 2003b]). The tool and supporting documentation provides a systematic method to identify, assess, and determine the relative importance of international-specific risks across the project's life cycle and spectrum of participants to allow for subsequent mitigation. The associated research report describes in detail the research performed including the methodology, data analysis, and value of the research to industry.

The IPRA is the first management tool of its kind that allows for the identification and assessment of the life-cycle risk issues specific to international construction for both owners and contractors. Furthermore, the tool is unique because the created baseline relative impact values are based upon empirical data using industry expert inputs reporting on actual projects, and the IPRA identifies the risk factors of highest importance to the project team. The IPRA fits within the project risk management area of A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (PMI, 2000), specifically in regards to risk identification and risk quantification, and to a lesser extent risk response development and control.

A mid-term status report of the research investigation was presented at the 2002 PMI Research Conference that emphasized the problem statement, hypotheses, and research methodology (Walewski, Gibson, & Vines, 2002). This paper provides an overview of the IPRA tool development and research findings, and a brief explanation on how the tool is used. Also included are recommendations to practitioners who are pursuing international projects as well as areas for future research. This research investigation has shown that the tools and techniques developed by the research team can assist in improving the overall success of international capital projects.

The IPRA Tool

Background

The investigation began with an extensive literature review on the topics of risk identification, assessment, and management, as well as issues related to international construction. Information was also gleaned from industry practices for assessing international project risks and CII‘s globalization forums to gain additional insight on these issues.

To further evaluate the approaches that organizations use to manage the risks incurred on international projects, the team conducted 26 structured interviews with mid- to upper-level management personnel, including eight each from contractor and owner organizations, and the remainder distributed among legal, professional service, financial, and insurance experts. Construction industry experience of interviewees ranged from 20 to more than 50 years, and all participants had at least 10 years of working experience with international projects of various types and sizes (Walewski & Gibson, 2003).

The literature and these interviews showed that a variety of techniques and practices exist to identify and assess risks that occur on international projects, but there was no standard technique or practice specifically targeted for such projects (CII, 1989; Walewski et al., 2002). Decisions on country-specific risks are often made by top management and separated from other business, technical, and operational risks of the project. Few project participants have a complete understanding of the portfolio of risks that happen on such projects, and a life cycle view of the risks is uncommon. As such, compartmentalization of the risks occurs, and international projects are often organized and managed in ways that create information and communication disconnects.

Development of the Tool

A detailed list of the risk elements that impact the project's life cycle (planning, design, construction, and operations) of international facilities was developed with five primary sources: the expertise of the research team, literature review results, the structured interviews, input from 10 CII Globalization Committee members, and further review by industry representatives. Initial topic categories were gathered from previous research and the structured interviews and screened using the research team's expertise. The final list of international risks was further refined and an agreement reached regarding exact terms and nomenclature of element definitions. Once this part was completed, separate reviews were performed by Globalization Committee members and vetted again by participants during a series of workshops.

The final list consists of 82 elements grouped into 14 Categories and further grouped into four main sections that reflect the project's life cycle. This list, which forms the basis of the IPRA tool, is presented in Exhibit 1. This list can be considered very comprehensive for pursuing capital projects outside of one's home jurisdiction. Each section, category, and element of the IPRA has a corresponding detailed description to assist project participants in gaining an understanding of the issues related to that component of the risk being considered. The IPRA assessment sheets and element descriptions are used in concert by the research team to identify and assess specific risk factors, including the likelihood of occurrence and relative impact for each element.

The research team hypothesized that all elements are not equally important with respect to their relative impact on overall project success. These issues are different depending on the project type and location as well. Members of PT 181 believed there would be significant benefit if a standard baseline (impact) risk value could be determined for each element. A standard guidance value of a risk's effect on the project would be of assistance when the risk is unknown by project participants, and could also provide a framework to rank order risk elements on the project for subsequent mitigation.

IPRA Structure

Exhibit 1. IPRA Structure

In practice, the likelihood of occurrence for a particular risk is usually not known with absolute precision because of a lack of information or uncertainty of the situation. As a result, the research team agreed that looking back to the time of contract formation (i.e., the point in time when the facility owner contracted for detailed design and/or construction) on completed projects would be the most useful strategic point to determine the level of risk that existed.

When taking a retrospective view of risk at a given point in time, uncertainty is no longer an issue because the event has either taken place or not occurred, and the likelihood of occurrence component of risk assessment is no longer an unknown being assessed in a predictive manner. In essence, the retrospective look at risk leads to a determination of relative impact to the project. With adequate input from experts across a multitude of international projects, an aggregate baseline impact factor could be developed for each IPRA element. Then, as a predictive tool, likelihood of occurrence would always have to be assessed and the impact component of risk would be either this predetermined aggregate baseline level or a self-determined level by project participants.

Workshops

The authors determined that the best way to develop reasonable and credible relative impact values for each element was to rely on the expertise of a broad range of construction industry experts. From September 2002 to January 2003, PT 181 hosted four risk assessment workshops. Held in various locations in North America, a total of 44 industry executives with extensive international experience reporting results on approximately $23 billion worth of projects from 20 different countries were involved. Participants represented 25 organizations and were made up of 26 contractor and 18 owner representatives. In addition to having an owner/contractor balance, a fairly equitable distribution of project types and locations was achieved.

Each participant completed a series of documents at the workshops. In addition to personal history, participants were asked to consider and document a typical international project that they had recently completed for the organization they represented. The details regarding the workshops and the projects used for this effort are provided in CII Research Report 181-11 (CII, 2003b).

Workshop participants proceeded in order through the 82 elements with each IPRA element description reviewed in the context of their project. An analysis of the data created a rank-order of the IPRA elements by their relative impact and these were sorted from 1 to 82. Relative impact designations were developed for the 82 IPRA elements. The overall rankings were broken into five levels of corresponding relative impact that were given letter designations ranging from A to E, with A = Negligible, B = Minor, C = Moderate, D = Significant, and E = Extreme, corresponding to degrees of impact as defined in Exhibit 2. The baseline relative impact values of the significant and extreme elements are given in Appendix A. A detailed discussion of this development effort is beyond the scope of this paper; for more information on how these values were developed please see CII Research Report 181-11 (CII, 2003b).

Relative Impact Definitions

Exhibit 2. Relative Impact Definitions

In summary, responses from the workshops were evaluated and the collective input was used to develop a baseline relative impact value for each IPRA risk element. The relative impact value is composed of the element's rank based on its potential impact to the project within its category, section, and the overall IPRA tool. Several statistical tests—described in detail in CII 181-11—were performed and the relative impact values were incorporated into the final version of the IPRA worksheets.

Likelihood of occurrence values were also developed by dividing probability that the identified risk will occur into the following five designations (with numerical range from 1 to 5): 1 = Very Low (<10%), 2 = Low (10% to <35%), 3 = Medium (35% to <65%), 4 = High (65% to <90%), and 5 = Very High (90% or greater). These designations are based on the research team's review and assessment of the literature and industry practices in determining and assigning risk probabilities. Exhibit 3 gives the probability division for the likelihood of occurrence used in the IPRA.

Division for Likelihood of Occurrence in the IPRA

Exhibit 3. Division for Likelihood of Occurrence in the IPRA

As a supplement to the workshops, the October 2002 CII Emerging Markets Forum in Baltimore, Maryland, USA, provided an opportunity for 29 industry representatives to test the mechanics of using the IPRA tool and element descriptions on a case study cement production facility located in Bulgaria. Forum participants were also asked to assess and comment on the theory, structure, and usefulness PT 181‘s work. Introducing the IPRA to the Forum participants and having them participate in this case study evaluation provided value. The case study issues and expectations of Forum participants were well defined during an introduction to the IPRA. These factors combined with an interactive group discussion on assessing the project risks and then reporting the results helped to: (1) create a high level of interest in the IPRA, (2) check the thoroughness of the tool, and (3) provide an excellent opportunity to observe the personal interaction of participants when using the tool. In the concluding discussion session at the Forum, participants made it clear that their preference was for the IPRA tool to provide separate assessment scales for likelihood of occurrence and relative impact for each element.

Consistency Testing

To verify the usefulness and to assess the viability of the baseline relative impact values, the IPRA was tested on completed and ongoing capital projects. Data from 22 projects from 18 countries, representing greater than $4.2 billion in project value, were used to test the efficacy of the IPRA. This sample included a retrospective look at 15 recently completed projects and observation of IPRA use on seven projects that were ongoing at the time of the study. Further details and summary information on the test projects are provided in CII Research Report 181-11 (CII, 2003b).

The completed test projects were a convenience sample nominated by research team members and others. On each sample project, historical project data were collected for all 82 project risk elements at the time of contract formation. These data were used to build risk profiles for each of the 82 elements so that a rank ordering for the test projects could be developed and compared to the baseline rankings developed using the workshop data.

In general, the relative impacts of the 82 risk issues on these test projects were similar to the predicted baseline relative impact values. There were, however, some differences. The test sample consisted mainly of projects from developing nations with experienced owner and contractor involvement. Therefore, some risk elements related to working in a developing country (mostly in Section III of the IPRA), and those risk elements related to funding and marketing (mostly in Section I of the IPRA) were significantly different than predicted by the baselines. This assessment underscores the need to tailor the baseline values to the project at hand and to ensure that experienced individuals are available to perform the assessment.

Detailed documentation and tracking of individual project risks was not done on most projects in the test sample by the organizations involved. Therefore, a standardized project profile was developed for each project to identify which IPRA elements had the most significant impact on project performance.

Respondents were asked to identify risk issues not addressed at contract formation that had severe or extreme impacts on cost, schedule, and/or business drivers for the sample projects and Exhibit 4 gives a summary of these IPRA risk elements, listed by frequency of occurrence. The respondents also were asked to identify the unforeseen severe and extreme risks that existed at the contract formation phase of their projects, the impacts of those issues to the project's ultimate performance, and mitigation steps taken. A selected sub-sample of these unforeseen issues is given in Exhibit 5.

Frequency of IPRA elements identified during testing, having a significant project impact not addressed at the time of contract formation (N = 15)

Exhibit 4. Frequency of IPRA elements identified during testing, having a significant project impact not addressed at the time of contract formation (N = 15)

Selected Examples of Unforeseen Project Risk Issues Impacting Performance

Exhibit 5. Selected Examples of Unforeseen Project Risk Issues Impacting Performance

In addition, detailed risk status reports were developed as outputs of the full IPRA assessments for the ongoing projects used in the sample. These assessment sessions took from one to four hours each and proved that the tool was an effective mechanism to identify and evaluate a wide spectrum of risks on real international projects using either a team or an individual project participant. In each case, the IPRA gave project participants a viable platform to discuss project specific issues and helped identify critical risk issues. Members of the research team were involved directly in observing the usage of the tool on most of these projects and used the information to modify the assessment sheet slightly and to help in writing instructions on its application for field use.

As summarized in Exhibit 6, the research team performed a variety of activities and received input from 113 different industry experts in developing and testing the IPRA. Although the consistency test used a relatively small nonrandom sample of 22 projects, and is susceptible to bias, the collective results from this phase of the research show that the tool is a comprehensive and sound method to identify and assess the relative impact of the majority of risk issues encountered on international capital facilities (CII, 2004).

Summary of PT 181 Activities and Industry Input

Exhibit 6. Summary of PT 181 Activities and Industry Input

Though the IPRA provides an excellent basis for performing risk assessment on international projects, this research investigation points out that there is no single blueprint for assessing the risks associated with international projects. Use of the IPRA tool must be tailored to adjust for country, user, and business sector concerns. The tool can assist with the identification of issues not typically considered, but does not lead to improvement unless experienced team members use excellent project management practices along with a structured mitigation process to address these issues.

Application and Use of the IPRA

Because risks can arise throughout the project life cycle, effective risk management is an iterative process and not limited to a one-time analysis. Given the evolving nature of risk, the primary value of the tool is highest during the program decision and pre-project planning phases and to be most effective, the authors recommend that the IPRA should be deployed at three points on the project timeline: (1) program decision, (2) validation of project feasibility, and (3) decision to proceed with detailed engineering and construction. Secondary use of the tool could occur during project execution and operations. In addition, the tool can be used as a checklist at anytime. Exhibit 7 illustrates where the tool is most applicable during the project life cycle.

Application of the IPRA during the Project Life Cycle Preparation

Exhibit 7. Application of the IPRA during the Project Life Cycle Preparation

Preparation

Individuals involved with the project should become familiar with the format of the IPRA and use the IPRA Project Assessment Worksheets when evaluating a project. Two worksheets are available—the difference being that participants have the option of selecting their own relative impact level or using the baseline relative impact for each element. Exhibit 8 gives an example of the structure of the IPRA Assessment Sheet that includes the baseline. The baseline is intended for use when specific values are unavailable or when project participants have little knowledge of the potential consequences. (Users of the non-baseline assessment sheets determine their own level of relative impact and no baseline is provided.) The mechanics of this process and completing an assessment are outlined in Exhibit 8.

Example IPRA Assessment Sheet, Category I.A. Business Plan, with Baseline Values How to Assess a Project

Exhibit 8. Example IPRA Assessment Sheet, Category I.A. Business Plan, with Baseline Values How to Assess a Project

How to Assess a Project

To assess the project each of the 82 elements must be addressed. To evaluate an individual element using either of the detailed assessment sheets, reviewers first read its explanation in the IPRA Risk Elements Descriptions document. For each of the 82 elements, detailed descriptions are provided and examples are shown as checklists to clarify concepts and facilitate the understanding of their impact. These checklists are not all-inclusive and the user may supplement them as necessary.

The project is evaluated based on the issues raised by the team using the element descriptions and associated checklists as guides. This process requires common sense and reasonable judgment. The IPRA is a process tool to help identify and assess risks associated with international projects, but does not provide solutions to these issues because they are unique to the jurisdiction and beyond the scope of this development effort. It should be noted that one of the key aspects of performing an adequate assessment is to make sure that knowledgeable participants are included, including business, project management, and operations.

The likelihood of occurrence combined with the relative impact at the time of the assessment determines the relative importance of the risk. The difference between the perceived and actual risks of any IPRA element depends on the level of knowledge of the project participants and includes such things as:

  • Availability of information;
  • Experience and expertise of project participants;
  • Understanding of the issues creating the risk;
  • Extent to which the risks are stable or subject to change;
  • Reliability of assumptions.

The team evaluates each IPRA element based on the perception of the known or perceived risk at the time of the assessment. Although these variables, likelihood of occurrence and relative impact, may be challenging to judge, the project participants should reach consensus for each element given the knowledge available.

The assessment worksheet has fields for the evaluation of likelihood of occurrence and includes six preassigned values, ranging from a 1 (very low) to a 5 (very high) probability, and a NA value corresponding to Not Applicable for the given element. All the elements should be evaluated except for those items that are truly not applicable to the project. If the individual element is not applicable, the corresponding (NA) box is checked.

Depending on the nature of the element and the specifics of a project, likelihood of occurrence can be expressed as a probability that an event can happen, or a chance that an element's existing status will change and require risk mitigation steps to take place in response to issues identified by the element description. The likelihood consists of identifying all the possible risks that may significantly impact the project's success. The project team should consider the description, then ask the question, “Will this issue cause mitigation methods to be employed because: (1) events are likely to occur, and/or (2) information is not known?” Elements that have a Very High, High, or Medium-level probability of occurrence generally require the project team's attention when the relative impacts are low or greater.

Assessment participants should recognize that the likelihood of occurrence can be anticipated for certain IPRA elements, whereas for others, the likelihood is uncertain and the probability of its occurrence is not well-defined or even unknown. Often not enough information exists to determine or assess the likelihood of occurrence. In these cases, it is recommended that participants be conservative in their assessment and rate the likelihood as having a higher chance. These elements obviously need to be investigated further. Once the likelihood of occurrence for the element has been determined, the corresponding box is checked.

For the relative impact section of the assessment worksheet, the project team has the choice of using either the preassigned baseline relative impact or the project-specific relative impact. These values are in response to the perceived or actual impact that may occur if the given risk materializes. As with likelihood of occurrence, assessment participants should recognize that the relative impact may be known for certain IPRA elements, but for others the consequences of the element occurring and how it influences the project can be ill-defined or even unknown. Situations will exist where not enough information exists to determine or assess relative impact. In these cases, it is recommended that participants use the baseline relative impact rating. When the baseline rating is not used, the project team chooses a project-specific relative impact level. The project team should consider the IPRA description, and then ask the question, “If the issue occurs, how will it impact cost, schedule, and the relative success of the project?”

As discussed, the steps above are repeated for each of the 82 IPRA elements. Major issues or irregularities should be noted by the project team and this information would be used to develop risk monitoring, control, and mitigation measures. The combination of these two values (likelihood of occurrence and relative impact) will help to determine the relative importance of risk for the given element on the project. This combination is shown in Exhibit 9. The appropriate relative importance risk level can be found by locating the coordinates of the likelihood of occurrence (L) and relative impact (I). Once the relative importance for the element has been determined, it is indicated in the specific location on the risk matrix. Risk items that plot in the upper right corner of the risk matrix represent the greatest risk to the project, while those in the lower left are of lesser concern. Subsequently, elements with higher relative importance need to be mitigated by the project team.

IPRA Risk Matrix

Exhibit 9. IPRA Risk Matrix

The IPRA gives the assessment team a process to gauge the relative importance of the risks. It should be noted that the relative importance of a specific risk may change during the life cycle of the project and therefore mitigation methods may need to be adjusted accordingly. Using this guidance, the assessment team determines the type and level of mitigation for the individual elements. Elements with high relative importance need to be further addressed.

A risk register can be used to track and ensure mitigation occurs. The intent of using the risk register is to identify and track specific risks of concern that result from an IPRA assessment systematically. Because risk mitigation was not included in the research teams’ scope of work, a high-level methodology to identify and track individual risk issues was undertaken by the research team and further details are provided in CII Implementation Resource 181-2 (CII, 2003a).

Philosophy of Use

Ideally the project team conducts an IPRA evaluation at strategic points in the project. A neutral facilitator familiar with the process, along with appropriate members of the project team, optimizes the assessment and limits in-house biases. The facilitator also provides objective feedback to the team and controls the pace of the meeting. When this arrangement is not feasible, the alternate approach is to have key individuals evaluate the project separately and then come together for consensus. Although personal reviews can be biased, using the IPRA from an individual point of view can be of merit.

The IPRA is best used as a tool to help project participants facilitate risk identification and determine their relative importance. The team should strive for consensus around each element before moving to the next. If action needs to be taken on an element, these should be captured on a flip chart or other method of recording action items. Using the IPRA early in the project life cycle will identify many areas of risk and gives the project team a road map for control and mitigation. In this early phase, several important issues can affect the overall viability of the project.

The IPRA is a mechanism that can be used to identify or discover risks specific to international ventures and organize its work to diffuse future risks. It also can provide an effective means of “handing off” the project to other entities or helping maintain continuity as new project participants are added to the project.

The IPRA assessment worksheet serves as a basis for risk mitigation by the project team. The IPRA risk matrix can be used as a summary roll-up for senior management, in effect, helping to bridge the communication gap concerning project understanding. In addition to the risk matrix, the summary should also contain a brief write-up commenting on the specific areas of concern and summarize the IPRA analysis. In particular the assessment can give attention to the elements that show higher relative importance in the relative impact zones D and E, as well as likelihood zones 3 through 5 of the risk matrix.

Conclusions

The contributions from over 113 individuals from 58 different organizations have highlighted the complexity of international projects and the diversity of risk assessment and management techniques employed. Most contractors and owners engage in some type of risk assessment, although the depth and quality vary. Most organizations reported a process in place for early identification of risks, although few were able to translate this to management actions. Few organizations used this initial assessment of risk to create or enhance risk-based decision-making. No standard terminology exists and typically there are no procedures in place to carry forward lessons learned.

The value of identifying and managing overarching project risks, rather than each participant giving exclusive consideration to only risks within their influence, was acknowledged by many but practiced by few. Project participants are often segmented into project phases that create information and communication disconnects. Combined with historically adversarial owner-contractor relationships, new risks go unnoticed or are not addressed, exacerbating disconnects between the project team and executive management. As a result, few project participants have an understanding of all the risks involved. Many of the risks that influence international project fall outside of those typically found on domestic projects. As such, almost all participants in this research agreed that an improved process is needed to identify and assess international risks and there would be benefit of having a structured tool/process. PT 181 believes that effective risk management improves project performance on international projects in terms of cost, schedule, and meeting business objectives.

Risk Management to Improve Project Performance

For international construction projects, the following risk response is proposed as a critical phase of the overarching risk management process. These are suggested actions that can help the project team effectively implement the IPRA:

  1. Organize and formalize a risk management process and keep it as simple as possible. The project manager for an international construction project must create the proper context and environment for the risk assessment and management process to occur.
  2. Begin early to be most effective. Most successful projects take the time and allocate resources to collectively identify, analyze and develop risk mitigation and control approaches during the early, formative stages of the project.
  3. Keep a broad perspective to get the diversified input required. It may be necessary to bring in special expertise from outside the project to get fresh insights and perspectives into the risks. Brainstorming sessions guided by a person trained in conducting such sessions may be beneficial.
  4. Undertake adequate pre-project planning, analysis, and engineering. CII considers pre-project planning to be a best practice. Tools such as the Project Development Rating Index (PDRI) are complementary to the IPRA (CII, 1996, 1999).
  5. Partner with owner and contractor management. In too many international construction projects the relationship between the investor, project sponsor/owner, the project management contractor, the designer, and the construction contractor is not optimal for effective risk management.
  6. Recognize that certain projects are more prone to risk and that experience in a jurisdiction is important. Projects having one or more of the following factors are significantly more likely to need a comprehensive, detailed risk management process:
    • Substantial resources;
    • Significant novelty;
    • Long planning horizons;
    • Large size;
    • Complexity;
    • Several organizations;
    • New jurisdiction for one or more major project participants;
    • Significant political issues.

    Many international construction projects have several of these characteristics, and in general, the more experience an organization has within a jurisdiction, the better its ability to manage risks.

  7. Document project risks effectively. Owners and contractors can profit by keeping records of their risk management results on various projects. These results are of much more value if they are shared. Given this shared knowledge, the result is more efficient project implementation and lower overall costs.

The IPRA is intended to assist all project participants in proactively managing international project risks during the project life cycle of a capital facility. In effect, it serves as an “aide memoir” for project participants and allows its users to develop effective risk mitigation strategies as part of an overall project development process.

Recommendations for Future Research

Through the course of this research, several topics have been identified as potential areas for further study. The first is to develop a systematic and objective mechanism for measuring how specific risk elements impact project cost and schedule. Few organizations track how risks influence performance and true validation of risk and performance impacts require the monitoring of projects from initial assessment through project completion and post-mortem. Tracking likelihood of occurrence and relative impact of risks and their associated project performance impacts from ongoing projects would allow for an analysis of those risk factors having the most influence on project performance.

In addition, jurisdictionally specific issues impact risk and an area for future research is to address regional and/or country differences with regards to the risk types, likelihood, and impact.

Risk identification and assessment are only part of the overall risk management strategy. Risk analysis, response, and mitigation measures are critical to the risk management process. However, these components were not a focus of this research. Identifying which risk analysis techniques and risk mitigation measures are the most effective are recommended areas for future research. Based on the findings of this research, applying the IPRA tool to ongoing international projects and monitoring its accuracy is the most desirable method to validate the model.

The authors suggest that the IPRA should be applied extensively in a specific industry sector. For example, current research shows that growth in the pharmaceutical industry is global and facilities are high-risk investments. Owners and contractors of such facilities would benefit by using the IPRA tool to identify potential areas of risk during the early phases of project development that may otherwise go undetected and ultimately result in severe negative consequences. Subsequently, an understanding of the risk issues specific to similar project types could lead to increased project performance within that industry sector.

Construction Industry Institute (CII). (1989). Management of project risks and uncertainties (Publication 6-8). Austin, TX: Construction Industry Institute.

Construction Industry Institute (CII). (1996). Project definition rating index (PDRI) (Research Report 113-11).Austin, TX: Construction Industry Institute.

Construction Industry Institute (CII). (1999). Development of the project definition rating index (PDRI) for building projects (Research Report 155-11). Austin, TX: Construction Industry Institute.

Construction Industry Institute (CII). (2003a). International project risk assessment (IPRA) tool (Implementation Resource 181-2). Austin, TX: Construction Industry Institute.

Construction Industry Institute (CII). (2003b). Risk assessment for international projects (Research Report 181-11). Austin, TX: Construction Industry Institute.

Construction Industry Institute (CII). (2004). International project risk assessment: A management approach (Research Summary 181-1). Austin, TX: Construction Industry Institute.

Project Management Institute (PMI). (2000). A guide to the project management body of knowledge (PMBOK® Guide) - 2000 Edition). Newton Square, PA: Project Management Institute.

Walewski, J., Gibson, G., & Vines, E. (2002). Improving international capital project risk analysis and management. Proceedings of the Project Management Institute Research Conference 2002, Seattle, WA, 493-501.

Walewski, J., & Gibson, G. (2003). International project risk assessment: Methods, procedures, and critical factors (Report 31). University of Texas at Austin: Center for Construction Industry Studies.

Appendix A

Rank Order of IPRA Risk Elements by Relative Impact, Extreme and Severe Elements

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