FINANCIAL RISK ASSESSMENT FOR A CONSTRUCTION PROJECT

Abstract

This study illustrates the application of a multi-criteria decision analysis tool known as the Decision-making Trial and Evaluation Laboratory (DEMATEL) with the extension of the Interpretative Structure Model (ISM). Due to the complexity of financial risk elements in a construction project, where one component may influence others to varying degrees, traditional decision analysis tools that overlook the interrelationships among risk factors will need to be more robust to identify significant risks systematically. This study selected a building project in China, with twenty-six staff people as decision-makers. Twenty-eight risk variables from nine categories in the literature should be examined. The findings indicate that DEMATEL can identify causal and effectual factors. The ISM shows us the risk factors in eight levels. The first level is the direct affect risk factors; the second is the indirect affect risk factors; and the third is the fundamental risk factors. The hierarchical structure model from the ISM is very useful for management in allocating its limited resources to manage risk factors. Finally, DEMATEL-ISM shows us its powerful decision-making technique for the complicated system.

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