Criteria for Determining the Transfer of Construction Risk Based on Risk Occurrence Probability

International Journal of Civil Engineering

© 2025 by SSRG - IJCE Journal

Volume 12 Issue 7

Year of Publication : 2025

Authors : Zhenjie Zhao, Joon-Shik Moon, Kim Byung-Soo

10.14445/23488352/IJCE-V12I7P101

How to Cite?

Zhenjie Zhao, Joon-Shik Moon, Kim Byung-Soo, "Criteria for Determining the Transfer of Construction Risk Based on Risk Occurrence Probability," SSRG International Journal of Civil Engineering, vol. 12,  no. 7, pp. 1-15, 2025. Crossref, https://doi.org/10.14445/23488352/IJCE-V12I7P101

Abstract:

This study explores risk transfer strategies in construction project management, aiming to establish evaluation criteria for effectively transferring known and unknown risks to third parties such as insurance companies or contractors. By cost-benefit analysis of historical insurance claims data and integrating the PERT network method, the study determines when risk transfer is economically beneficial, especially in large infrastructure projects facing natural disasters. The results show that risk transfer is optimal when the insurance compensation to risk probability ratio is less than the insurance premium or the probability of risk occurrence is within the calculated threshold. This study provides a judgment benchmark for risk transfer in the risk response program of construction management, which greatly helps project managers and project planners improve the efficiency of risk response.

Keywords:

Cost-Benefit Analysis, PERT Network Method, Risk Management, Risk Probability, Risk Transfer.

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