Risk Governance for EPC Contracts with Startup Owners: An Integrated MCDM–Behavioral Framework
Year: 2026
Type: article
Abstract: Large-scale international Engineering, Procurement, and Construction (EPC) projects undertaken for startup owners involve substantial transactional and financial risks that may not be adequately captured by conventional Failure Mode and Effects Analysis (FMEA), which assumes equal weighting of risk factors and rational decision-making. This study develops an integrated risk assessment framework combining the Modified Delphi Method (MDM), Step-wise Weight Assessment Ratio Analysis (SWARA), FMEA, Prospect Theory, and Decision-Making Trial and Evaluation Laboratory (DEMATEL) to identify, weight, behaviorally adjust, and analyze the causal relationships among EPC risks. A large international EPC turnkey project was examined using assessments from seven senior managers, resulting in 25 risk indicators across five dimensions. The results show that severity is the most influential risk factor, accounting for 43.5% of the total weight. Incorporating a prospect-theoretic transformation of the expert ratings alters conventional risk rankings, with owner insolvency, funding-chain disruptions, and liability-cap risks emerging among the nine most critical risks. DEMATEL further identifies Owner Relationship Risk and Contractual Risk as the primary causal dimensions, whereas Financial Risk represents the major outcome dimension. Sensitivity analyses of the criterion weights, prospect-theory parameters and reference point, together with expert-level bootstrapping, indicate that the high-priority risk set is robust, although the exact order within it is less certain. The proposed framework integrates behavioral preferences into EPC risk assessment; because it was validated retrospectively on a completed project, it is proposed as a basis for risk prioritization and bid-stage governance in future prospective applications.
Source: Buildings
Authors: Ching-Feng Lee, James J.H. Liou
Institution: National Taipei University of Technology
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $3,137
OpenAlex ID: W7222979661