1 Construction Risk Modeling and Assessment: Insights from a Literature Review Abdulmaten Taroun, Jian-Bo Yang and David Lowe Manchester Business School, The University of Manchester, Manchester, M156PB, UK Abdulmaten.taroun@postgrad.mbs.ac.uk Abstract: Although risk assessment is probably the most difficult component of the Risk Management process, it is potentially the most useful. A critical review of the literature published on the topic over the last 27 years has revealed significant results, summarized as follows. Variants of Probability-Impact modeling are predominant; while traditionally the focus was on objective probability gradually subjective probability has become dominant. Risk analysis of project duration or cost is prevalent; the analysis of project performance risk is hardly mentioned in literature. Further, no risk assessment approach was discovered that deploys a common scale to simultaneously assess the alternative impacts of a risk on the various project objectives. Most of the existing approaches provide a risk rating; very few actually quantify risk. The limitations of the existing theories and tools indicate the need for improved alternatives. We conclude that the use of ‘risk cost’ as a common scale within a belief- based decision making framework would be an innovative solution, overcoming current shortcomings and generally improving construction risk assessment. Keywords: Risk Assessment, Risk Modelling, Risk Cost, Dempster-Shafer Theory of Evidence, Literature Review. 1 Introduction “No construction project is risk free. Risk can be managed, minimized, shared, transferred or accepted. It can not be ignored” (Latham 1994). Moreover, construction, it is held, is exposed to more risk and uncertainty than perhaps any other industry sector (Flanagan and Norman 1993). It involves numerous stakeholders, long production durations and an open production system, entailing significant interaction between internal and external environments (BS 6079-4:2006). Such organizational and technological complexity generates enormous risks (Zou et al. 2007). It appears that risk assessment is a controversial issue (Baloi and Price 2003); however, it is frequently considered to be the most useful part of the risk management (RM) process (Smith et al. 2006). Traditionally the focus has been on quantitative risk analysis (Tah and Carr 2001) despite the difficulties encountered in obtaining objective probabilities in the construction industry, where projects are very often one-off enterprises (Flanagan and Norman 1993). As a result, project managers are obliged to rely on the elicitation of subjective probabilities (Winch 2003). Therefore, as a probabilistic approach cannot be utilized to quantify risks, individual knowledge, experience, intuitive judgment and rules of thumb should be structured to facilitate risk assessment (Dikmen et al. 2007b). This paper reviews the existing literature on construction risk modelling and assessment. Its aims being to highlight developments in these areas, discover their