Risk management system to guide building construction projects’ in developing countries: a case study of Nigeria

Abstract

Project risk assessment is an effective tool for planning and controlling cost, time and achieving the technical performance of a building construction project. Construction projects often face a lot of uncertainties, which places building construction projects at the risk of cost, time overruns as well as poor quality delivery. Considering the limited resources of developing countries, there is need to complete building projects on-time, on-budget, and to meet optimal quality hence, risk management is an important part of the decision making process in construction industry as it determines the success or failure of construction projects. In line with this need, this research aims to establish a system to improve the time, cost and quality performance of building construction projects in developing countries, through a comprehensive risk management model that ensures the expectations of clients are met. To achieve the aim of this research, a mixed methodological approach was adopted. Through the review of literature, a conceptual risk management framework suitable to elaborate risk assessment of building construction projects especially for developing countries was developed. A questionnaire survey using a nonprobability sampling technique was conducted to elicit information from construction professionals in Nigeria to assess their perception of 79 risk factors identified from literature review based on the likelihood of occurrence and impact on projects using a five point scale. Responses from 343 construction professionals were drawn from 305 contractors and subcontractors and 38 clients (private and public) within the Nigerian construction sector. Response data was subjected to descriptive statistics to depict the frequency distribution and central tendency of responses. Subsequently, the risk acceptability matrix (RAM) was adopted to categorise and prioritise risk factors. 27 critical risks that affect building construction projects were identified. A Bayesian Belief Network (BBN) model was developed by structural learning and used to examine the cause and effect relationship amongst the 27 critical risk factors. The developed BBN model was subjected to validation using a multiple case study of two building construction projects in Nigeria. The result showed the interrelation between the 27 risk factors and how they contributed to cost and time overruns as well as quality problems. The critical risks directly affecting the cost of building construction project were: fluctuation of material prices; health and safety issues; bribery and corruption; material wastage; poor site management and supervision; and time overruns. The critical factors identified to directly affect quality were: supply of defective materials; working under harsh conditions; improper construction methods; lack of protective equipment; ineffective time allocation; poor communication between involved stakeholders; and unsuitable leadership style. Time overruns on building construction projects was directly caused by: quality problems; low productivity; improper construction methods; poor communication between involved parties; delayed payments in contracts; and poor site management and supervision. As a consolidation of the findings of this research, a BBN model for identifying risk factors that directly affect time, cost and quality on building construction projects has been developed which has the potential for assisting construction stake holders to manage risks on their projects. In view of the findings, a best practice system for risk management in building construction projects in Nigeria has been developed with an implementation guide to help building construction practitioners to successfully implement risk management on their building construction projects. Suitable risk responses, also in the form of recommendations have been identified. The strategies include actions to be taken to respond to risks based on their perceived significance or acceptability as well as some positive risk responses, such as exploiting, sharing, enhancing and accepting, and other negative risk responses, such as avoidance, mitigation transfer and acceptance