1.1 Introduction
Risk management is the most effective project management practices in order to achieve the project delivery and sustainability. Project delivery has become a vital tool to nation’s economic measurement and evaluation. Project success is valued in terms of delivered time, executed cost, work quality and environmental sustainability. Some of the risks associated with construction are poor quality of work, premature failure of the facility, a lack of safety, poor or incorrect design, and financial risks (Mahesh et al., 2007). Risk management plays a significant role in the decision making process. The purpose of risk management is to ensure that all parties to a construction project understand the specific risks specific to the project and work out patterns on how these risks should be managed for effective project delivery (Mills, 2001).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of technical terms.
1.2 Background of Study
Risk management has become an integral process in managing construction projects. Construction project activities are to be well calculated in-order for the deliverable to be of great use and benefit to its stakeholders. To complete most construction projects on time, minimizing cost and wastages proper risk management techniques must be employed (Tchankova, 2002). According to Mills (2001), systematic risk management is expecting the unexpected or in other words it is a tool which helps control risks in construction projects and its objective is to introduce a simple, practical method of identifying, assessing, monitoring and managing risk in an informed and structured way. Normally, in risk management process, the first steps will involves risk identification process which includes the prioritization process in order to identify and rank the risk based on its impact and seriousness. Risk that will have a greater impact on a project normally will be handled first and low impact risk will be handled later.
Despite its numerous challenges, it is the Construction Industry that shapes the development parameters of any nation (Zeiss, 2007). So a firm grasp of the nature and effects of key issues affecting the Industry is always the beginning of developmental wisdom. The construction industry is bedeviled with global climate change, aging infrastructure, shrinking workforce, declining productivity and Information Island (Akintoye and Macleod, 1997; El-sayeh, 2008; Smith, 1999 Zeiss, 2007; Hillson, 2002; Wang et al., 2004). Gandu and Musa-Haddary (2007) in their work mentioned high risks and uncertainties as additions to these problems.
However, the capability of the bidding contractors varies. They may all be able to complete the work, but some can accept more of the risks than others. This depends on their skill, personnel, equipment, time, financial strength, organization, desire etc., as well as their risk acceptance profile. These qualities may be amongst the distinguishing factors between bidders to help decide who is awarded the work, but all parties need to understand the risks they are accommodating. The client’s best interests are not necessarily served by contractors competing on criteria such as acceptance of excessive risk (which may be detrimental to the project i.e. pricing low).
Construction project team consist of professional such as the architect, engineer, and the quantity surveyor that will help to assist and advice the client in order to meet all the project objectives in term of time, quality and cost. Awareness and knowledge on risk management is very crucial so that they will deal with the risk properly which will directly leads to project success. Due to this scenario, this research aims to identify the level of awareness of construction professional specifically Nigerian quantity surveyors towards risk management. Apart from that, it will also aim to identify how risk management being implemented in the Nigerian construction industry and also the potential barrier and challengers in the implementation of risk management specifically from the quantity surveyor's point of view.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to appraise the Obstacles Precluding the Effective Application of Traditional Risk Management Approaches in Project Delivery.
1.3 Statement of Problems
Investigation revealed that the construction industry is complex and subject to a higher level of risk than other industries, making effective risk management vital (Zeng, An & Smith, 2007). Currently, however, construction firms lack both the proper methodologies to determine and evaluate risk and reliable approaches to eliminate, reduce or mitigate risks. On top of this, there is a lack of government policies regarding risk in the construction industry (Zaneldin, 2006). The challenge is even greater with fast-tracked projects, where the schedule must be accelerated in order to cut costs, but there must be no compromise on quality.
The risk management process, which involves risk identification, analysis, response planning and control, can be applied to all kinds of projects regardless of their sizes or budgets (PMI, 2006). Project completion within the expected time span has always been the most challenging task for construction companies, with many failing to deliver on the agreed schedule, cost and quality (Rahman et al., 2002).
1.4 Aim and Objectives of Study
The aim of the study is to appraise the Obstacles Precluding the Effective Application of Traditional Risk Management Approaches in Project Delivery. In achieving this aim, the following specific objectives were laid out as follows:
- To investigate the Obstacles Precluding the Effective Application of Traditional Risk Management Approaches in Project Delivery.
- To identify the risks affecting projects delivery in Nigeria’s construction industry and categories them according to their levels.
- To investigate various formal risk management concepts and how they apply to construction project delivery in Nigeria.
- To analyze the significance of formal risk management technique fast-tracking in the future of Nigeria’s construction industry.
- To evaluate various risk mitigation frameworks and propose the most appropriate for controlling risks in the Nigeria’s fast-track projects.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Are there Obstacles Precluding the Effective Application of Traditional Risk Management Approaches in Project Delivery?
- What are the risks affecting projects delivery in Nigeria’s construction industry and categories them according to their levels?
- What are the various formal risk management concepts and how they apply to construction project delivery in Nigeria?
- What is the significance of formal risk management technique fast-tracking in the future of Nigeria’s construction industry?
- What are the various risk mitigation frameworks and propose the most appropriate for controlling risks in the Nigeria’s fast-track projects?
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