Assessment of potential risks and risk management practices in construction projects in Ethiopia- multiple case study
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Date
2020-05
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Addis Ababa University
Abstract
The construction industry is widening in its share in the service industry of the economy ,
construction is contributing around 3.5% to the growth of real GDP, and Ethiopian
government have been increasingly investing in public social services, grand national projects
and infrastructures that demand high capital and high project management skills and most of
theses projects are construction related projects. The construction projects are traditionally
prone to different types of risks that are leading to delays, cost overruns and compromised
quality, and this has become common observation in many projects. However little is known
and documented on the prominent risks, perception of impact and likelihood of theses risks and
what the project risk management practice looks like by the project actors. There fore this
research or assessment intended to identify key risks in the construction sector, perception
of theses risks and common practice of risk management systems by project actors. The
research methodology approach of this study was qualitative, multiple case study backed up
literature review. The assessment has looked in to six construction projects as case study; four
of the cases are building construction projects and two of them are road construction projects.
The case study projects are undergoing and are located in four different regions of Ethiopia.
The cases were thoroughly reviewed and analyzed based on the key informant in-depth
interview, physical observation and relevant literatures. Accordingly the assessment found
out that there are several prominent risks in the construction industry and the most common
risks in both road and building construction were many but the top five of each projects were
analyzed and found out to be ; cash flow, availability of row materials, absence of skilled man
power, project management and technical skills, corruption, design completeness, inflation,
right off, environmental and safety, limited contract administration skills from the client side,
outdated building design codes, payment modality, political stability, safety and security (site
location), and tender preparation. More over in order to understand the perception of risks
and their impacts and likelihoods by the project actors, the likelihood impact assessment
matrix was independently analyzed using 5 point Likert measurement. The result analysis
showed that in building constructions risk of cash flow shortage is most certain to likely
happen with high negative impact on the projects, and risk of price inflation was almost certain
and with moderate negative impact, followed by availability of raw materials with likely to
happen and to moderately affect the project objective negatively. In the road constriction cases
again cashflow was most certain to happen with high negative impact and availability of skilled
manpower and row materials are both likely to happen with moderate impact. It also found
out that the risk management process and common practice of risk management to be mainly
intuitive, based on individuals experience and subjective judgments. i.e. the risk management
practice lacks structural (organizational) or systemic approach and it is reactive in most
cases. (Keywords: risks, likelihood and impact of risks, Project management, project risk
management, construction projects, project actors )
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Keywords
management, construction projects, government have been increasingly, perception of impact and likelihood