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;
1. To
address early in the project to reap its full benefits.
2. To
communicate with other team members throughout the project.
3. To
implement a rigorous risk assessment and mitigation process.
4. To
embed risk management into the firms culture.
5. To
engage in activities that reduces the likelihood of litigation.
6. 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
i.
To identify the level of importance
attached to risk identification practices during planning stage in construction
projects in Abuja.
ii.
To establish the effect of the
Architects and Builder’s selection process on the project performance.
iii.
To determine the effect of the site selection
and validation process on the project’s performance.
iv.
To determine the effect of the needs
identification and validation process on the project performance.
v.
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
1. What
is the level of importance attached to the process of risk identification
practice during construction project planning?
2. How
does the Builder and Engineer selection process influence a construction
project performance?
3. What
are the likely risks involved in any construction project and the possible
solutions to solve the risk identified.
4. What
is the effect of the needs identification and validation process on the project
performance?
5. 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
Ø
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.
Ø
RISK
MANAGEMENT; refers to
the culture, processes and structures that are directed towards the effective
management of potential opportunities and adverse effects.
Ø
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.
Ø
RISK
IDENTIFICATION; is the
process of determining what, how and why things may happen.
Ø
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.
Ø
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.
Ø
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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