The risks and uncertainties inherent to the construction industry are more than any other industry and this industry exhibits poor management of these risks. Hence, many projects fail to meet time schedules and budget targets. Transport sector is an important part of the construction industry and is vital to its growth. However this sector has been severely affected by delayed completion of the projects with exceeded cost. These issues are more pronounced in terrorism affected areas around the world, predominantly in Pakistan, Afghanistan and Iraq. Evaluation of Risk Factors Causing Cost Overrun in Road Projects in Terrorism Affected Areas: Pakistan - a Case Study. Pakistan being top ranked terrorism affected country among 85 terrorist affected countries around the world in 2012, has been taken as case study. In Pakistan, Federally Administrated Tribal Area (FATA) being the recipient of max casualties in 2012 is the focus of the study. After 9/11, FATA received maximum share of development projects especially road infrastructure however, these projects could not fulfill their desired purpose due to lack of evaluation of risks associated with the dynamics and culture of that area resulting in severe cost overrun of these projects. This study presents the mechanism to identify the key risk factors contributing to the failure of achieving budget targets of road projects in FATA and suggests measures to overcome them. The study is undertaken via a questionnaire based survey comprising of 18 cost overrun risk factors which were ranked using their mean weightage. Analysis of the results show that non-availability of suitable contractors, project location within FATA, idling cost of plant and equipment due to security threats, differing site conditions in a project and inaccurate survey and site investigation due to security threat were major factors responsible for cost overrun. Moreover, responsibility among the stakeholders for these risks was also established. The results of the study warrant adoption of proactive measures for effective management of these risks by owner, consultants and contractors to avoid budget escalation in road construction projects in terrorism affected area around the world.