TABLE OF CONTENTS
Title page – – – – – – – – – – – ii
Certification – – – – – – – – – – iii
Dedication – – – – – – – – – – – iv
Acknowledgment – – – – – – – – – – v
Table of Contents – – – – – – – – – vi
List of Tables – – – – – – – – – – viii
Abstract — – – – – – – – – – x
CHAPTER ONE
INTRODUCTION- – – – – – – – – 1
1.1 Aim and Objectives- – – – – – – – – 3
1.2 Aim – – – – – – – – – – – 3
1.3 Objectives – – – – – – – – – – 3
1.4 Statement of Problem – – – – – – – – 4
1.5 Study Methodology- – – – – – – – – 5
1.6 Research Questions- – – – – – – – – 5
1.7 Study Area – – – – – – – – – – 6
CHAPTER TWO
LITERATURE REVIEW- – – – – – – – 7
2.1 Theoretical Review- – – – – – – – – 7
2.2 Conceptual Framework- – – – – – – – 10
2.3 Risk Management Process in Construction- – – – – 11
2.3.2 Risk Identification and Management- – – – – – 12
2.3.3 Builder / Engineer Selection Process- – – – – – 13
2.3.4 Site Selection and Validation- – – – – – – 14
2.3.5 Needs Identification and Validation- – – – – – 15
2.3.6 Preliminary Schedule and Budget Development- – – – 17
2.3.7 Project Cost Performance- – – – – – – 19
2.3.8 Project Time Performance- – – – – – – 20
2.4 Sources of Risk in Construction- – – – – – 21
2.5 Mitigating Risk in Construction- – – – – – 25
2.5.1 Risk Transfer- – – – – – – – – 24
2.5.2 Risk Reduction- – – – – – – – – 25
2.5.3 Risk Avoidance- – – – – – – – – 26
2.5.4 Risk Retention- – – – – – — – – 26
2.6 Tools For Mitigating The Effects Of Risk- – – – – 28
2.6.1 Contingency Sum- – – – – – – – – 28
2.6.2 Insurance Policy / Cover- – – – – – – – 30
2.6.3 Contingency Plan- – – – – – – – – 31
CHAPTER THREE
Research Methodology- – – – – – – – – 32
3.1. Research Design- – – – – – – – – 32
3.2 Data Collection Instrument- – – – – – – – 33
3.3 Primary Source of Data Collection – – – – – – 34
3.4 Secondary Source of Data Collection- – – – – – 34
3.5. Research Instruments- – – – – – – – 34
3.6. Study Population – – – – – – – – – 35
3.7. Sampling Frame/Techniques – – – – – – – 35
3.8. Pilot Test- – – – – – – – – – 37
3.9. Data Processing and Analysis- – – – – – – 37
CHAPTER FOUR
4.1 Research Findings and Discussion- – – – – – 38
4.2 Basic Information- – – – – – – – – 39
4.3 Level of Importance Attached To Risk Identification- – – – 42
4.4 The Impact of the Builder and Engineer Selection Process- – – 46
4.5 Site selection and validation process– – – – – – 48
4.6 Needs Identification and Validation Process- – – – – 51
4.7 Preliminary Budget and Schedule Development- – – – 53
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
5.1 Conclusions- – – – – – – – – 56
5.2 Recommendation- – – – – – – – – 57
References- – – – – – – – – – 59
Appendix – – – – – – – – – – 66
LIST OF TABLE
Table 2.1:- Risk Sources included;- – – – – – – 22
Table 2:2- Index of Risk Associated with Construction Projects;- – 22
Table 2:3- Index of Risk Response {Allocation};- – – – – 24
Table 2.4:- Risk Transfer among Parties to Construction Project;- – 27
Table 4.1:- Experience of the Respondents – – – – – 39
Table 4.2: Education Level of the Respondents;- – – – – 40
Table 4.3:- Risk Identification at Project Planning Phase;- – – 42
Table 4:4- Level of Importance Attached to Risk Identification Practices;- 43
Table 4.5 :- Project Phase That The Respondents Participated- – – 44
Table 4.6:- Impact on the Project Lost for Identified Risks;- – – 45
Table 4.7:- Timing and Method of Builder and Architect’s Selection- 46
Table 4.8:- Evaluation of Project Performance- – – – – 47
Table 4.9:- Evaluation of the Builder- – – – – – – 47
Table 4.10:- Time of Site Selection- – – – – – – 48
Table 4.11:- Involvements In Site Selection- – – – – – 48
Table 4.12:- Site Evaluation; – – – – – – – 49
Table 4.13:- Site Evaluation- – – – – – – – 50
Table 4.14:- Time of Needs Identification- – – – – – 51
Table 4.15:- Reasons for the Project- – – – – – – 51
Table 4.16:- Evaluation of Criteria Used in Project Needs Validation- 52
Table 4.17:- Time of Budget and Schedule Development- – – 53
Table 4.18:- Evaluation of Preliminary Budget Against Bid Price- – 54
ABSTRACT
Risk mitigation is recognized as an important exercise in order to achieve better performance of construction projects. Success in construction project is indicated by its performance in the achievement of project time, cost, quality, safety and environmental sustainability objectives. Construction projects in and generally in the region and the world run a high risk of being well over budget and significantly late. While some degree of cost and time schedule risks is inevitable in construction projects, it is possible to improve risk mitigation strategies to minimize their negative impact. The objective of the study was to identify the level of importance attached to risk identification practices during planning in construction projects in Abuja metropolis. The risk mitigation practices at construction project planning phase include: risk identification and profiling, builder/engineer selection; site selection and validation, needs identification and validation and cost and schedule development. The study targeted builders, architects, engineers, project managers, quantity surveyors, contractors, and, regulatory authorities in operation in Abuja and key clients with major investments in the construction industry. The study used both qualitative and quantitative methods of data collection. Literature review, physical and email delivered questionnaires and structured interviews was used to collect data. Correlation analysis was used to analyze the relationships between the independent and dependent variables.The research project indicated that risk mitigation strategies at planning stage had an effect on project performance. However most respondents had not studied risk mitigation. While the study indicated that risk mitigation was widely practiced at 92%, the process was mainly informal. The process of risk mitigation was not adequate and no measures were put in place to mitigate the risks. Various project team members had different chances in managing the various risks with the client having the best chance of managing most risks at the planning stage by involving skilled professionals in decision making.The research project found out that the consulting builders and engineers were often selected before the design phase of a project. This meant that many projects did not benefit from professional input at planning stage. The most usedmethod of selection used for consultants was the quality and cost based selectionmethod. 45.2% of the projects surveyed had poor time performance while 35.7% of the projects had poor cost performance. The project site selection andneeds identification happened during planning stage in majority of the projectssurveyed and often without the involvement of construction professionals. TheProjects were conceived for various reasons customer request, business need and social need ranking high. This could be a result of external political strategies being key criteria in project needs validation. There were change orders in 80.5 % of the projects and their effect was fairly large.The preliminary budget development process in most projects was done without the involvement of professionals. There were some projects that were closed before construction works, as the initially anticipated budget was not feasible. In many projects, contractors and consultants were forced to work within unfavorable client financial schedules resulting in incomplete and poor design and delay in construction works. This research project recommends a formal and structured risk management practice during project planning and with the involvement of construction professionals and end users. The researcher recommends that risk management be included in the curriculum as an examinable subject for all students undertaking construction related studies.
This research further recommends that federal government of Nigeria should empower “CORBON” council of registered builder of Nigeria to monitor and control building project in the country as this will ensure usage of competent professionals in their respective area of specialization and reduce (if not eliminated), the use of quacks, hence the service of a professional builder on site will be mandated.
CHAPTER ONE
INTRODUCTION
Construction, like all industries today is looking to improve business efficiencies. However, it faces unique challenges due to the complexity of construction projects. These complexities create greater risks for efficiencies than those faced by other industries. We believe or it is believed that providing research into construction, risk mitigation is particularly critical in order to help the industry become more successful in overcoming its challenges. Construction is a key activity in any economy, it influences and it is influenced by Gross Domestic Product (GDP) of any nation. Compare to the other industries, the construction industry is at near the top in the annual rate of business failure and resulting liabilities (Enshassi et al., 2006) construction project involve numerous unpredictable and complex processes and as such are plagued with risk. Size can be one of the major causes of risk so can change in political or commercial planning. Other factors carrying risk with them include complexity of construction projects, locations. Speed of construction and familiarity with the types of work (Thompson and Perry, 1992). Risk in construction can be described as exposure of construction activities to economic loss due to unforeseen events or forseeing events for which uncertainty was not properly accommodated. Risk in construction has been the object of attention because of time and cost overrun associated with construction projects. (Akintoye and Macleod, 1997). Too often, these risks are not dealt with satisfactorily and the industry has suffered poor performance as a result (Tah and Carr, 2000).
From the review of literature, several attempts have been made to proffer solution to the problem of risk. There are proliferation of techniques and packages designed to provide risk analysis and management facilities. Although they have not offered a satisfactory solution to the risk problem as a whole. In so far as construction risk cannot be eliminated. There is therefore the need to explore the various strategies available to control and mitigate their adverse effects. As such, the aim of this paper or research work is to identify the key factors inherent in construction projects and evaluate measures to mitigate their effects. It also, investigates risk allocation and response techniques as perceived by the stake holders in the Nigerian Construction Industry. This study examines the opinions of the industry at large and of leaders in risk mitigation to provide insights on the impact of risk in the construction industry and the strategies used by the owners, building project contractors to mitigate risk they face in order to improve their bottom lines and increase project productivity.
I chose to focus this research on a building project construction project because of the number of risks and challenges faced on construction projects. The top line recommendations that emerge from the research findings offer practical solutions that I hope the construction industries will find helpful as they seek to avoid risk and improve their bottom line performance such as;
- To address early in the project to reap its full benefits.
- To communicate with other team members throughout the project.
- To implement a rigorous risk assessment and mitigation process.
- To embed risk management into the firms culture.
- To engage in activities that reduces the likelihood of litigation.
- To build a strong team and access the value of more former collaboration, such as integrated design.
Ultimately, this result demonstrates that good project management must include good risk management.
1.1 AIM AND OBJECTIVES
1.2 AIM
The aim of this subject is to identify the key risk status inherent in CO structure projects and evaluate measure to mitigate their effects.
1.3 OBJECTIVES
- To identify the level of importance attached to risk identification practices during planning stage in construction projects in Abuja.
- To establish the effect of the Architects and Builder’s selection process on the project performance.
- To determine the effect of the site selection and validation process on the project’s performance.
- To determine the effect of the needs identification and validation process on the project performance.
- To identify the effect of preliminary budget and schedule on project performance.
1.4 STATEMENT OF PROBLEM
The construction industry has high rate of work accidents and poor reputation for coping with problems and success in any construction project is indicated by its performance in the achievement of project time, cost, quality, safety and environmental sustainability objectives (Zhon, Zhang & Wang, 2007).
One of the reasons of the bad performance is that the construction industry is one of the riskiest of all business types (Clough, Sears & Sears, 2005). While some degree of poor cost and time schedule performance is inevitable in construction project, it is possible to improve risk mitigation strategies to maximize their negative impact in thus improve the project performance. Some of the key problems in any construction project includes, accidents such as fire outbreak, fall either by slipped or as a result of working at height which may result to injuries or even lost of lives. And if we know that risk are certain to materialize in every construction projects (even if we don’t know what they are), we can accept problem or uncertainties as part and parcel of any project and deal with them in a measured way instead of Overreacting and assuming the project is doomed to failure just because it has hit a bump in the wad.
1.5 STUDY METHODOLOGY
A descriptive research method was adopted as observation techniques (through opinion surely) was used as the primary data collection method (Mbachu, 2011). This involved questionnaire survey of stakeholders in the industry including contractors, quantity surveyors and project managers. A qualitative scoping study was first conducted amongst convenience samples of the stakeholders through purposive sampling. This helped to identify risk factors and mitigation measures. In the questionnaire survey, respondents were then asked to rate the relative levels of the impact of the identified risk factors as well as relative levels of effectiveness of the identified risk management measures.
1.6 RESEARCH QUESTIONS
- What is the level of importance attached to the process of risk identification practice during construction project planning?
- How does the Builder and Engineer selection process influence a construction project performance?
- What are the likely risks involved in any construction project and the possible solutions to solve the risk identified.
- What is the effect of the needs identification and validation process on the project performance?
- How does the preliminary budget and schedule affect the perception cost and schedule performance.
1.7 STUDY AREA
The study area of this research work is the construction industry in Abuja metropolis. The research only investigated risk management at the planning stage and not during the other construction phases. The research measured cost and schedule performance in construction projects. The respondents were the professionals in the construction industry working in Abuja, selected major developers and the industry regulators. The research targeted on joining and complete projects.
DEFINITION OF TERMS
- RISK: Is exposure to the consequences of uncertainty. In a project context, it is the chance of something happening that will have an impact upon objectives. It includes the possibility of loss or gain, or variation from a desired or planned outcome, as a consequence of the uncertainty associated with following a particular course of action. Risk thus has two elements: the likelihood or probability of something happening, and the consequences or impacts if it does.
- RISK MANAGEMENT; refers to the culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects.
- THE RISK MANAGEMENT PROCESS; involves the systematic application of management policies, processes and procedures to the tasks of establishing the context, identifying, analysing, assessing, treating, monitoring and communicating risk.
- RISK IDENTIFICATION; is the process of determining what, how and why things may happen.
- RISK ANALYSIS; is the systematic use of available information to determine how often specified events may occur and the magnitude of their consequences. It may use any of a wide variety of mathematical and other models and technique.
- RISK EVALUATION; determines whether the risk is tolerable or not and identifies the risks that should be accorded the highest priority in developing responses for risk treatment.
- RISK TREATMENT; establishes and implements management responses for dealing with risks, in ways appropriate to the significance of the risk and the importance of the project.
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