Skip to main content
SpringerLink
Log in

Integrating text mining and system dynamics to evaluate financial risks of construction contracts

  • Original Research
  • Published:
Artificial Intelligence and Law Aims and scope Submit manuscript

Abstract

Financial risks are among the most important risks in the construction industry projects, which significantly impact project objectives, including project cost. Besides, financial risks have many interactions with each other and project parameters, which must be taken into account to analyze risks correctly. In addition, a source of financial risks in a project is the contract, which is the most important project document. Identifying terms related to financial risks in a contract and considering their effects on the risk management process is an essential issue that has been neglected. Hence, an integrated model for evaluating financial risks and their related contractual clauses were presented. To this end, the effect of financial risks on the project cost was simulated using a system dynamics model. Moreover, terms related to financial risks in a contract text were identified and extracted using text mining, and their effect was included in the system dynamics model. The model was implemented in a hospital construction project in Tehran as a case study, and its results were analyzed. The innovation of the research is integrating text mining and the system dynamics model to investigate the effect of financial risks and related contractual clauses on the project cost.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8

Similar content being viewed by others

References

  • Abotaleb IS, El-adaway IH (2018) Managing construction projects through dynamic modeling: reviewing the existing body of knowledge and deriving future research directions. J Manag Eng 34(6):04018033

    Article  Google Scholar 

  • Ade N, Peres SC (2022) A review of human reliability assessment methods for proposed application in quantitative risk analysis of offshore industries. Int J Ind Ergon 87:103238

    Article  Google Scholar 

  • Ahmad S, Simonovic SP (2004) Spatial system dynamics: new approach for simulation of water resources systems. J Comput Civ Eng 18(4):331–340

    Article  Google Scholar 

  • Aladağ H, Işık Z (2019) Design and construction risks in BOT type mega transportation projects. Eng Constr Architect Manage

  • Aladağ H, Işik Z (2017) Role of financial risks in BOT megatransportation projects in developing countries. J Manag Eng 33(4):04017007

    Article  Google Scholar 

  • Bagherian-Marandi N, Ravanshadnia M, Akbarzadeh-T M-R (2021) Two-layered fuzzy logic-based model for predicting court decisions in construction contract disputes. Artific Intell Law 29(4):453–484

    Article  Google Scholar 

  • Bagthariya J, Shah J (2022) Identifications of different risks associated with infrastructure projects: a review

  • Bahamid R, Doh S (2017) A review of risk management process in construction projects of developing countries. In: IOP conference series: materials science and engineering, IOP Publishing.

  • Banaitienė N, Banaitis A, Norkus A (2011) Risk management in projects: peculiarities of Lithuanian construction companies. Int J Strateg Prop Manag 15(1):60–73

    Article  Google Scholar 

  • Bao XY, Man JP, Wang QC (2013) Comprehensive evaluation of risks in green building based on the fuzzy comprehensive evaluation. Appl Mech Mater 368:1154–1157

    Article  Google Scholar 

  • Boateng P, Chen Z, Ogunlana S, Ikediashi D (2012) A system dynamics approach to risks description in megaprojects development. Org Technol Manage Constr Int J

  • Buckland M, Gey F (1994) The relationship between recall and precision. J Am Soc Inf Sci 45(1):12–19

    Article  Google Scholar 

  • Cui Z, Wang H, Xu J (2022) Risk assessment and dynamic simulation of concentralized distribution logistics of the cruise construction build-in material. Trends Maritime Technol Eng 2:21–33

    Article  Google Scholar 

  • Dabirian S, Abbaspour S, Khanzadi M, Ahmadi M (2019) Dynamic modelling of human resource allocation in construction projects. Int J Constr Manage, pp 1–10

  • De Marco A, Rafele C, Thaheem MJ (2015) Dynamic management of risk contingency in complex design-build projects. J Constr Eng Manag 142(2):04015080

    Article  Google Scholar 

  • Ecem Yildiz A, Dikmen I, Talat Birgonul M (2020) Using system dynamics for strategic performance management in construction. J Manag Eng 36(2):04019051

    Article  Google Scholar 

  • El-Hoteiby A, Hosny O, Waly A (2017) Particular conditions to cover potential risks of construction projects. J Leg Aff Disput Resolut Eng Constr 9(3):05017002

    Article  Google Scholar 

  • El-Sayegh SM, Mansour MH (2015) Risk assessment and allocation in highway construction projects in the UAE. J Manag Eng 31(6):04015004

    Article  Google Scholar 

  • Eshun BTB, Chan AP (2021) An evaluation of project risk dynamics in sino-africa public infrastructure delivery; a causal loop and interpretive structural modelling approach (ISM-CLD). Sustainability 13(19):10822

    Article  Google Scholar 

  • Etemadinia H, Tavakolan M (2018) Using a hybrid system dynamics and interpretive structural modeling for risk analysis of design phase of the construction projects. Int J Constr Manage, pp 1–20

  • Faraji A, Rashidi M, Perera S (2021) Text mining risk assessment-based model to conduct uncertainty analysis of the general conditions of contract in housing construction projects: case study of the NSW GC21. J Archit Eng 27(3):04021025

    Article  Google Scholar 

  • Ford DN, Sterman JD (1998) Dynamic modeling of product development processes. Syst Dyn Rev J Syst Dyn Soc 14(1):31–68

    Article  Google Scholar 

  • Ford DN (1995) The dynamics of project management: an investigation of the impacts of projects process and coordination on performance, Massachusetts Institute of Technology Boston

  • Forrester J (1961) Industrial dynamics. MIT Press, Cambridge

    Google Scholar 

  • Gao X, Singh MP, Mehra P (2011) Mining business contracts for service exceptions. IEEE Trans Serv Comput 5(3):333–344

    Article  Google Scholar 

  • Guan L, Abbasi A, Ryan MJ (2020) Analyzing green building project risk interdependencies using interpretive structural modeling. J Clean Prod 256:120372

    Article  Google Scholar 

  • Investopedia. (2021, Mar 24, 2021). "Financial Risk."

  • Iqbal S, Choudhry RM, Holschemacher K, Ali A, Tamošaitienė J (2015) Risk management in construction projects. Technol Econ Dev Econ 21(1):65–78

    Article  Google Scholar 

  • Iyer KC, Sagheer M (2010) Hierarchical structuring of PPP risks using interpretative structural modeling. J Constr Eng Manag 136(2):151–159

    Article  Google Scholar 

  • Jaya I, Alaloul WS, Musarat MA (2021) Role of inflation in construction: a systematic review. In: Proceedings of the international conference on civil, offshore and environmental engineering. Springer

  • Khodabakhshian A, Puolitaival T, Kestle L (2023) Deterministic and probabilistic risk management approaches in construction projects: a systematic literature review and comparative analysis. Buildings 13(5):1312

    Article  Google Scholar 

  • Kim S, Chang S, Castro-Lacouture D (2020) Dynamic modeling for analyzing impacts of skilled labor shortage on construction project management. J Manag Eng 36(1):04019035

    Article  Google Scholar 

  • Le PT, Kirytopoulos K, Chileshe N, Rameezdeen R (2019) Taxonomy of risks in PPP transportation projects: a systematic literature review. Int J Constr Manage, pp 1–16

  • Le PT, Chileshe N, Kirytopoulos K, Rameezdeen R (2020a) Exploring the underlying relationship among risks in BOT transportation projects in developing countries: the case of Vietnam. J Financ Manage Property Constr

  • Le PT, Chileshe N, Kirytopoulos K, Rameezdeen R (2020b) Investigating the significance of risks in BOT transportation projects in Vietnam. Eng Constr Architect Manage

  • Lee J, Yi J-S, Son J (2019) Development of automatic-extraction model of poisonous clauses in international construction contracts using rule-based NLP. J Comput Civ Eng 33(3):04019003

    Article  Google Scholar 

  • Lee J, Ham Y, Yi J-S, Son J (2020) Effective risk positioning through automated identification of missing contract conditions from the contractor’s perspective based on FIDIC contract cases. J Manag Eng 36(3):05020003

    Article  Google Scholar 

  • Leon H, Osman H, Georgy M, Elsaid M (2017) System dynamics approach for forecasting performance of construction projects. J Manag Eng 34(1):04017049

    Article  Google Scholar 

  • Li Z, Li N, Cimellaro GP, Fang D (2020) System dynamics modeling-based approach for assessing seismic resilience of hospitals: methodology and a case in China. J Manag Eng 36(5):04020050

    Article  Google Scholar 

  • Lishner I, Shtub A (2021) The compounding effect of multiple disruptions on construction projects. Int J Constr Manage, pp 1–8

  • Lyneis JM, Cooper KG, Els SA (2001) Strategic management of complex projects: a case study using system dynamics. Syst Dyn Rev J Syst Dyn Soc 17(3):237–260

    Article  Google Scholar 

  • Mathew S, Tran D, Nguyen LD (2018) Examining impact of risk on cost growth in design-build projects using structural equation modeling. Constr Res Congress

  • Mohammadrezaytayebi S, Sebt MH, Afshar MR (2021) Introducing a system dynamic–based model of quality estimation for construction industry subcontractors’ works. Int J Constr Manage, pp 1–15

  • Motawa I, Anumba C, Lee S, Peña-Mora F (2007) An integrated system for change management in construction. Autom Constr 16(3):368–377

    Article  Google Scholar 

  • Nasir MK, Hadikusumo BH (2018) System dynamics model of contractual relationships between owner and contractor in construction projects. J Manag Eng 35(1):04018052

    Article  Google Scholar 

  • Nasirzadeh F, Afshar A, Khanzadi M, Howick S (2008) Integrating system dynamics and fuzzy logic modelling for construction risk management. Constr Manag Econ 26(11):1197–1212

    Article  Google Scholar 

  • Nasirzadeh F, Khanzadi M, Rezaie M (2014) Dynamic modeling of the quantitative risk allocation in construction projects. Int J Project Manage 32(3):442–451

    Article  Google Scholar 

  • Nasirzadeh F, Khanzadi M, Mir M (2018) A hybrid simulation framework for modelling construction projects using agent-based modelling and system dynamics: an application to model construction workers’ safety behavior. Int J Constr Manag 18(2):132–143

    Google Scholar 

  • Nguyen HD, Macchion L (2023) Risk management in green building: a review of the current state of research and future directions. Environ Dev Sustain 25(3):2136–2172

    Article  Google Scholar 

  • Nguyen DA, Garvin MJ, Gonzalez EE (2018) Risk allocation in US public-private partnership highway project contracts. J Constr Eng Manag 144(5):04018017

    Article  Google Scholar 

  • Rashedi R, Hegazy T (2016) Holistic analysis of infrastructure deterioration and rehabilitation using system dynamics. J Infrastruct Syst 22(1):04015016

    Article  Google Scholar 

  • Rasheed N, Shahzad W, Khalfan M, Rotimi JOB (2022) Risk identification, assessment, and allocation in PPP projects: a systematic review. Buildings 12(8):1109

    Article  Google Scholar 

  • Renn O (1998) Three decades of risk research: accomplishments and new challenges. J Risk Res 1(1):49–71

    Article  Google Scholar 

  • Shafieezadeh M, Kalantar Hormozi M, Hassannayebi E, Ahmadi L, Soleymani M, Gholizad A (2020) A system dynamics simulation model to evaluate project planning policies. Int J Model Simul 40(3):201–216

    Article  Google Scholar 

  • Shafiei I, Eshtehardian E, Nasirzadeh F, Arabi S (2020) Dynamic modeling to reduce the cost of quality in construction projects. Int J Constr Manage, pp 1–14

  • Sheikha FA, Inkpen D (2010) Automatic classification of documents by formality. In Proceedings of the 6th international conference on natural language processing and knowledge engineering (nlpke-2010), IEEE

  • Shenglin M (2023) Risk identification and management in EPC project: a comprehensive review and recommendation. J Eng Res Rep 25(1):80–89

    Google Scholar 

  • Shrestha A, Chan T-K, Aibinu AA, Chen C, Martek I (2017) Risks in PPP water projects in China: perspective of local governments. J Constr Eng Manag 143(7):05017006

    Article  Google Scholar 

  • Siraj NB, Fayek AR (2019) Risk identification and common risks in construction: literature review and content analysis. J Constr Eng Manag 145(9):03119004

    Article  Google Scholar 

  • Siraj NB, Fayek AR (2021) Hybrid fuzzy system dynamics model for analyzing the impacts of interrelated risk and opportunity events on project contingency. Can J Civ Eng 48(8):979–992

    Article  Google Scholar 

  • Sterman J (2000) Business dynamics: systems thinking and modeling for a complex world, vol 19, Irwin/McGraw-Hill, Boston

  • Sterman J (2010) Business dynamics, Irwin/McGraw-Hill

  • Tagarelli A, Simeri A (2022) Unsupervised law article mining based on deep pre-trained language representation models with application to the Italian civil code. Artific Intell Law 30(3):417–473

    Article  Google Scholar 

  • Thamhain H (2013) Managing risks in complex projects. Proj Manag J 44(2):20–35

    Article  Google Scholar 

  • Wan J, Liu Y (2014) A system dynamics model for risk analysis during project construction process. Open J Soc Sci 2(06):451

    Google Scholar 

  • Wang J, Yuan H (2016) System dynamics approach for investigating the risk effects on schedule delay in infrastructure projects. J Manag Eng 33(1):04016029

    Article  Google Scholar 

  • Williams TP, Gong J (2014) Predicting construction cost overruns using text mining, numerical data and ensemble classifiers. Autom Constr 43:23–29

    Article  Google Scholar 

  • Wu G, Qiang G, Zuo J, Zhao X, Chang R (2018) What are the key indicators of mega sustainable construction projects? A stakeholder-network perspective. Sustainability 10(8):2939

    Article  Google Scholar 

  • Wu X, Yuan H, Wang G, Li S, Wu G (2019) Impacts of lean construction on safety systems: a system dynamics approach. Int J Environ Res Public Health 16(2):221

    Article  Google Scholar 

  • Xu Y, Sun C, Skibniewski MJ, Chan AP, Yeung JF, Cheng H (2012) System dynamics (SD)-based concession pricing model for PPP highway projects. Int J Project Manage 30(2):240–251

    Article  Google Scholar 

  • Xu N, Liu Q, Ma L, Deng Y, Chang H, Ni G, Zhou Z (2020) A hybrid approach for dynamic simulation of safety risks in mega construction projects. Adv Civ Eng

  • Yang RJ, Zou PX, Wang J (2016) Modelling stakeholder-associated risk networks in green building projects. Int J Project Manage 34(1):66–81

    Article  Google Scholar 

  • Yang L, Lou J, Zhao X (2021) Risk response of complex projects: risk association network method. J Manag Eng 37(4):05021004

    Article  Google Scholar 

  • Yescombe ER (2011) Public-private partnerships: principles of policy and finance. Elsevier

    Google Scholar 

  • Youssef A, Osman H, Georgy M, Yehia N (2018) Semantic risk assessment for Ad Hoc and amended standard forms of construction contracts. J Leg Aff Disput Resolut Eng Constr 10(2):04518002

    Article  Google Scholar 

  • Zhao X, Hwang B-G, Gao Y (2016) A fuzzy synthetic evaluation approach for risk assessment: a case of Singapore’s green projects. J Clean Prod 115:203–213

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Civil Engineering, K. N. Toosi University of Technolog, Tehran, Iran

    Mahdi Bakhshayesh & Hamidreza Abbasianjahromi

Authors
  1. Mahdi Bakhshayesh
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Hamidreza Abbasianjahromi
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

All authors contributed to the study conception and design. Material preparation, data collection and analysis were performed by Mahdi Bakhshayesh and Hamidreza Abbasianjahromi. The first draft of the manuscript was written by Mahdi Bakhshayesh and all authors commented on previous versions of the manuscript. All authors read and approved the final manuscript.

Corresponding author

Correspondence to Hamidreza Abbasianjahromi.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Bakhshayesh, M., Abbasianjahromi, H. Integrating text mining and system dynamics to evaluate financial risks of construction contracts. Artif Intell Law (2023). https://doi.org/10.1007/s10506-023-09366-7

Download citation

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s10506-023-09366-7

Keywords

Search

Navigation