# Construction Management Risk System (CMRS) for Construction Management (CM) Firms
## 3 Analysis of Risk Factors and System Functions According to Field Operation Management of CM Firms
### Deduction of Risk Factors and Evaluation of Risks for System Development  
To deduce the risk factors that occur when managing field operations, 15 directors in charge of field operation management at different companies were interviewed one-on-one, obtaining a 100% response rate. After deducing the risk factors, a risk evaluation was performed. For this, field operation managers from 15 different firms were surveyed on a Likert 10-point-scale basis: 75 survey copies were distributed, and 58 copies were collected, obtaining a 77% collection rate. The importance of each risk factor was analyzed using Expert Choice 11.5, and their occurrence, detection, and severity were evaluated through a FMEA, which is a widely used risk analysis technique. The risk priority number (RPN) is evaluated by multiplying values obtained from the FMEA [31]. Six risk factors that occur during field operation management were deduced and defined. Table 1 shows the risk evaluation results. The risk evaluation results revealed that payment delay was the greatest risk factor that CM firms could deal with during field operation management, followed by project delay, legal disputes with clients, customer dissatisfaction with field services, contract revocation, and legal disputes with partner companies. The reason why payment delay appears to be the biggest risk factor is that CM firms receive the contractor's payment on the date agreed by the contract after manpower has been deployed. Thus, the degree of risk faced by CM firms with insufficient financial resources when the contractor's payment is delayed by several months due to financial conditions is significantly large. Project delays were also found to be a significant risk as they generate receivables. That is, when \begin{table}
\begin{tabular}{c c c c c c} \hline \hline
**Risk Factor** & **Importance** & **Occurrence** & **Detection** & **Severity** & **Modified RPN 1** \\ \hline Payment delay & 0.026 & 5.224 & 7.068 & 7.758 & 64.738 \\ Project delay & 0.169 & 5.258 & 6.482 & 6.448 & 37.140 \\ Legal dispute with a client & 0.178 & 3.120 & 7.482 & 7.965 & 33.096 \\ Customer dissatisfaction with field service & 0.138 & 5.275 & 6.620 & 6.793 & 32.736 \\ Contract revocation & 0.150 & 2.913 & 7.672 & 8.189 & 27.452 \\ Legal dispute with a partner company & 0.075 & 3.758 & 5.017 & 5.051 & 7.142 \\ \hline \hline \end{tabular}  
* Modified RPN = Importance \(\times\) Occurrence \(\times\) Detection \(\times\) Severity.  
\end{table} 
Table 1: Risk factor priority of CM (construction management) firms field operations. Figure 3: Fish-bone diagram for problem of risk management. projects are delayed (due to financial conditions, occurrence of field accidents, licensing delays, etc.) after concluding a contract with the contractor, CM firms are unable to receive payment regarding manpower deployment upon the agreed date. The impact of legal disputes with clients is reduced when they are solved through consultation and mediation; however, if they must be solved by a court, additional expenses are generated, manpower has to be deployed to handle the case, and the company image falls. For such problems, the degree of risk of legal disputes with clients was found to be significant. Customer dissatisfaction with field services was found to be a high risk under analysis because it could generate customer claims which, in turn, deteriorate the company image and could have a negative impact on future order-receiving activities. Contract revocation was found to have a negative impact on CM firms. That is, when projects are canceled because the contractor considers CM services to be unnecessary or has financial problems, it causes a decline in revenues and difficulties in personnel relocation to other sites. Legal disputes with partner companies were found to have a negative impact (albeit small compared to the other risks) because when disagreements occur between consortiums when executing a project, disputes between companies arise and work productivity declines.