# Construction Management Risk System (CMRS) for Construction Management (CM) Firms
## 1 Introduction  
The construction industry has unique characteristics that differentiate it from other industry sectors [1]. It has order-based production, fixed production times, established locations for operations, non-repetitive tasks, and low productivity compared to other industries [2; 3]. These unique characteristics have acted as barriers to enacting a new paradigm. To overcome this problem, construction firms around the US have performed research since 1980 in order to apply information technology (IT) to the construction industry. Recently, as a result of this research, a mobile IT application [4] has been developed for use in the construction industry. These new IT technologies that are being applied to the construction industry contribute to productivity improvement and technological enhancement and their importance is ever increasing [5]. The Korean construction industry has also expressed the need for technological development and national policies for construction information standardization in order to improve the construction techniques and to implement IT environments. Through the basic construction industry law (1996), the development of a comprehensive construction information system and the use of IT systems in the construction industry were legalized, contributing to the development of construction techniques and the promotion of the construction market. As the construction market started being promoted inthe early 2000s, the construction management (CM) market achieved a rapid growth of 630%, going from US$10,469 million in 2001, to US$660,469 million in 2012 [6]. Contributing to this growth, many CM firms began to emerge. According to research conducted by the Ministry of Land, Infrastructure and Transport [7], by 2013, 32% of CM firms held more than 300 regular employees, 25% had assets of more than US$5 million, and their size and assets were continuously growing. However, after the global financial crisis in 2008, the amount of orders in CM market decreased by more than US$97 million, intensifying the competition between CM firms, in turn resulting in decreases of profit rates and increases in the uncertainty of the construction industry [8]. For these reasons, the need for risk management in CM firms was presented in order to minimize firms' losses. However, according to an analysis performed by [PERSON] et al. [9] on the risk management situation of Korean CM firms, most Korean CM firms have no risk departments, managers, or risk management procedures; moreover, it was confirmed that they did not invest in risk management training, and they could not systematically and effectively manage the risks owing to the lack of risk management systems. Thus, this analysis presents the need to develop and implement standard operating systems and risk management systems. The absence of a risk management system has a negative impact on CM firms and prevents them from responding systematically and reasonably to risks that occur during field operations [10]. Considering that managing potential risks can reduce uncertainty and minimize losses [11], it is essential to develop new countermeasures by creating effective risk management systems and implementing them in construction sites so that risk management can play a central role in achieving stable earnings. Thus, in this study, the main risk factors that must be managed were defined by deducing risk factors that could occur during field operation management at CM firms and performing an assessment of risks. Additionally, a system functional block diagram is presented and its functions are defined based on main risk factors. Based upon this data, an analysis on both the date flow diagram (DFD) and the entity relationship diagram (ERD) was performed, resulting in the development of the construction management risk system (CMRS).