A Project risk may, thus, not necessarily be undesirable, such as increased costs or decreased quality. A risk can also be progressive, for example, exhibiting new innovative product due to the use of new technology or inaugural a new market sector owing to some project modifications Ijaola, ; Eshan et al. Studies in Ghana have shown that, the construction industry is mostly challenged by financial risks which stems from overdue payments to contractors, consultants, suppliers, subcontractors Agyakwa-Baah; ; Frimpong et al. These studies also indicated that the industry is also exposed to political, natural, construction and design risks, but more are heightened at the construction stage.
Assibey-Mensah , however noted that in most cases, the risk response strategy is not effective in the construction industry in Ghana resulting from poor project implementation, poor co-ordination among team members, lack of commitment and low competence of contractors and consultants.
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- Risk assessment and management in construction projects full thesis htm?
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Specifically, some of the core responsibilities of the consultant, according to Dadzie et al. Statement of the Problem The construction industry is highly risks prone, with multifaceted and ever-changing project environments generating an atmosphere of high uncertainty and risk Eshan et al. The industry is susceptible to several technical, socio-political and business risks.
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As a result, construction firms bear numerous failures, such as failure of abiding by quality and operational requirements, cost overruns and uncertain delays in project completion Eshan et al. An effective system of risk assessment and management for construction industry, therefore, remains a perplexing task for the industry practitioners.
Moreover, there have been many types of research on risk management in financial, construction project work and application to manufacturing. The study aimed to assess the effect of risk in construction projects in Ghana: the consultant perspective.
The Objectives were to: 1. Literature Review 2.
Risks in Construction Projects Atta Agyeman and Adu Gyamfi a in their study found that the major causes of risk in construction are usage of substandard materials in construction industry, harmful work-related experience, and the dangers in construction. Ali and chike identify key construction risk in Italy and found that delays in payments, client variations, design variations, inaccurate cost estimates, and tight project schedules are key risk confronting construction project.
Akintoye and Macleod have distinct risk about construction as a variable in the course of a construction project whose variation leeds to uncertainty as to the final cost, duration and quality of the project. Atta Agyeman et al b posited that critical risk factors militating against included high-performance expectations, tight project schedule, poor program planning, excessive approval procedures, bureaucracy of government, variations by client, and design variation t construction project delivery.
Owing to construction projects difficulty and distinctiveness, but risk in construction is not different from other industries, but the risks is dynamic from construction project to project Panthi et al. Risk is an unavoidable phenomenon in an organisations as dynamic as construction, regardless of the size of the project. For example, Zou et al. Smith establishes that the construction industry is riskier venture due to distinguishing characteristics of construction such as financial concentration, multifaceted procedures, prolonged duration, offensive environment and dynamic arrangements of organizations.
Numerous other reasons impacting on the level of risk comprising state of market, level of competition, size of the project, political and economic disparities, and expertise of parties Flanagan and Norman, ; Akintoye and MacLeod, ; Smith, ; Smith et al.
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These risks are spread over the whole project life cycle and some of the risks may occur at more than one segment. Impacts of Risks on Construction Projects The presence of risks in construction projects requires that preventive measures must be put in place to militate against the possible negative impacts of the risks on the construction project Akintoye and Macleaod, Adams established that the impacts of risks or the threat of risks leads to the administration of certain preventive, control and responsive measures which are economic, socio-political or relational. The concern about economic risk factors is of supreme prominence given that the construction companies are saddle with many challenges that places it at risk of economic crisis.
There are issues of price controls, exchange rate volatility, and internal crisis, such as cost overrun, which make budgeting a difficult activity in the construction industry Berggren, The relevance of these factors lays in the fact that the industry deals with huge investments and a slight increase in cost percentages could amount to hefty amounts in actual currency value. Figueiredo and Kitson highlight that price fluctuations and high inflation have led to substantial uncertainty in the industry. Gunhan and Arditi, posited that financial risks are key to companies and the economy as a whole.
DALY-Based Health Risk Assessment of Construction Noise in Beijing, China
Freezes on capital, delays in payment, bankruptcy of stakeholders or financial failure all generate problematic conditions for organizations carrying out projects. As a common practice, contingency costs are added to budgeted costs to cover unexpected price increments, inflation, unfavourable exchange rates that might increase the cost of exports, accident claims and other unexpected expenses Hopkin, This requires accurate forecasting based on past experiences or econometric models.
Thus, the threat of risks leads to additional budgets, which may strain the client of financial resources. Therefore, the inference to be drawn is that most payments of project funded by government are halted when there is change of government in the country. Davis et al. This circumstances creates difficulties for the industry because monies due to contractors are inaccessible rendering organisations unable to take different job due to financial challenges.
Concerning the association between risk factor and project it is important that effective communication is employed for project success and must be initiated early in the project Chileshe and Yirenkyi-Fianko, The project objectives must be clear to all stakeholders and if necessary community sensitisation might be needed to gain community support for the project, especially for public works.
Thus, the threat of relationship risk might in the end lead to additional pre-project execution time to build a solid relationship and understanding among the major stakeholders of the project, as well as the beneficiary community Claycamp, In developing African countries, resource is major risk factor. Funds to construct factories and securing equipment are a main problem for many construction companies, especially local firms, but it is easy to get labour for construction projects Chileshe and Yirenkyi-Fianko, One main challenge revealed by specialists who work for local organizations was that local construction companies are slowly fading out because foreign firms carry out virtually all the projects, leaving very few projects for local organizations Oladinrin et al.
The threat of out-competition by foreign firms also becomes a major factor for local firms. The impact can only be assuaged if local firms become as resourced as foreign firms, and operate in a structure that out-competes or at least are at par with the structure of foreign competitors Buertey et al. Research Methodology 3. Study Design An important aspect of any research is the design. It is the logical sequence that connects the empirical data to the initial questions of the study and, ultimately, to its conclusions Sarantakos, Quantitative research technique was employed for this study, which represent observations under study numerically and explain the phenomenon that mirror those observations Babbie, This permitted the gathering of quantitative data and also allowed the use of quantitative approaches in the analysis of data.
The research designs adopted were the descriptive. Key reports that methods involved in a descriptive study design range from the survey which describes the status quo, the correlation study which investigates the relationship between variables, to developmental studies which seek to determine changes over time. Sarantakos confirms that descriptive research aims at describing social systems, relations or social events and providing background information about the issue in question and also to stimulate explanations.
However, a sample was taken due to the relatively short period for the completion of the study, as well as resource constraints and the fact that a representative sample could be generalised for the entire population Creswell, However the study population was which should have sample size of by krejcie table for determined sample size.
The study sampled to represent a population of Sampling Procedure The calculated sample of respondents was selected using the simple random method; specifically, the lottery method. The sampling frame consisted of a numbered list of all the members of the GCEA.
The computer software, Q-Basic was programmed to generate random numbers from 1 to and the corresponding names to the sampling frame were selected. Sources of Data All the data for the study was collected from the consultants and from books, articles etc. The general purviews of risks in the construction industry were covered by the study.
These were collected as primary data as they were directly elicited from the respondents and those collected through books, articles and literature searches were secondary data. Instruments for Data Collection The primary data were gathered from the consultants by questionnaire this was possible because these groups of people are knowledgeable and can read, comprehend and also response to the items on the questionnaire by themselves. Pre-test The study instruments were tested by a qualified consultant in the Ashanti Region as was done by Adu Gyamfi et al This was done intentionally as the initial testing of the questionnaire for their ability to produce the desired answers for the study.
The purpose of the pre-test was to enable the researchers to make necessary changes to items which may be inappropriate, determine the level of ambiguity of the questions for corrections and determine the percentage of responses. Ambiguous items were modified and inappropriate items, made appropriate. The pre-test therefore allowed the investigators to review the contents of the instruments to accomplish the reliability and validity criteria necessary in scientific research. Validity is the degree to which a test produces what it is supposed to produce. The researcher tested the face and content validity of the questionnaire.
Face validity refers to the likelihood of a question being misunderstood or misinterpreted. Content validity refers to whether an instrument adequately covers all the topics concerned. The validity of the instrument was established through expert opinions, literature searches, and pre-testing of questionnaires. Reliability is the degree at which instrument produces constant result after frequent testing. The questionnaire was administered to the same group of subjects twice in the pilot study with a two-week grace period between the first and the second test and the coefficient of reliability from the two tests correlated.
The reliability test produced Cronbach alpha of 0.
Risk Assessment And Management In Construction Projects Full Thesis Htm
The researcher employed descriptive statistics, chi-square, and t-statistics to analyse the data. Results and Discussion 4. Impact of Risks in the Construction Industry This section analyses the impacts of risks in the construction industry. The consultants were asked to indicate the most destructive risk regarding the categories of risks from their experience in the construction industry. The result is shown in figure 1. Figure 1. The other major risks, which are most destructive to the construction industry, as noted by the consultants, were socio-political risks and design risks.
These were indicated by Who posited that socio-political risk factor may occur in the form of change of government and change in government policies, which in her opinion are ever-present risk factors, especially for public works.
Therefore, the inference to be drawn is that most payments of project funded by government are halted when there is change of government in the country Davis et al. The study aimed to segregate the risks involved in public and private project, this was purposed to explain further the financial risks that are prone to projects that require public procurement and those that underwent other procurement procedures as shown in fig. The study revealed that for public projects, the mean score of delays in payments 4. This was followed by under-budgeting 4. These means corresponded with the Friedman mean ranks, where delay in payment had the highest mean rank 3.
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The mean ranks were tested for their statistical significance and the results indicated that the differences in the mean ranks of the stated financial risks were significant at an alpha of 0. Fig ure 2. Rating the impact of finanacial risks on public construction project The identified financial risks have been captured in literature as some of the influential financial risks in the construction industry. For example, Gunhan and Arditi and Ali and chike posited that financial risks are key to companies and the economy as a whole. Similar indications have been emphasised by Hopkins in an analysis of the fundamental elements of risk management.
The study also investigated the most critical financial risks to the private sector based on initial findings that financial risks were the most destructive to the construction industry. The results of the study from table 3 showed that major financial risk confronting private construction project is delay in payments which had the highest mean score MS of 3. Fig ure 3. Rating the impact of fanancial risks on pravite construction project From table 4 paired sample t-test was used to compare the mean scores of financial risks between public funded projects and private funded projects, according to the perspective of the consultants.
It was shown that the consultants scored the risks including delay in payments; freeze in capital, bankruptcy, under-budgeting, and corruption in the public sector higher than in the private sector. This was indicated by the positive mean differences in the pairs of variables, after deducting the mean scores for private sector risks from the mean score of public sector risks.
The difference in the mean score of risks of freeze capital in public and private sector was 0. Similarly, the mean score in delays in payments in the public and private construction sub-sectors was statistically significant at an alpha of 0. Table 4. The consequences of time schedule risks, design risks, socio-political risks, and safety risk on the construction projects were analysed as shown in table 5.
According to the consultants, in most cases, the most effect of time schedule risks amount to delays in projects This was indicated by Following this, Table 5.
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