Risks and Risk Management of Addis Ababa Light Rail Transit System Project
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Date
2015-07
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Addis Ababa University
Abstract
Risk management of construction projects is increasingly felt critical to the success of projects in
general and large projects in particular. Addis Ababa Light Rail Transit project is a large and
complex project involving the construction of civil works and assembly of considerable
electromechanical components. The project is undertaken through EPC Turnkey Contract. A
research proposal was prepared to identify the risks that may thwart the success of this flagship
Project of the city. Assessing the project risk management practice was also of prime concern.
In order to understand the theoretical background, the research embarked upon intensive
literature survey. Archival records including contract documents, reports, and correspondences
were investigated. Questionnaires were distributed to respondents from the Employer and the
Employer’s representative. To supplement the low population of respondents and to further
refine the responses, interviews were carried out with selected professionals involved in the
project.
The findings have shown that the project is exposed to the vagaries of various risks. These risks
have the tendency of severely affecting one or more of the project objectives and even the wider
public as well. Despite of this risk prevalence, the Employer has not instituted formal risk
management system. The method of risk management is not structured and process oriented. The
term risk itself is not also properly understood and the conventional practice of managing risks
has wider departures from the internationally accepted practice.
Furthermore, the research has given evidence that the way risk identification, analysis and
treatment methods are handled is unsatisfactory. From among the three steps of risk
management, risk analysis is the least practiced. Risk treatments are addressed through contract
provisions by way of insurance and bonds.
Although the contract document clearly allocates risks to both the Employer and the Contractor
in acceptable manner, most respondents replied that the contractor carries most of the risks.
This entails that most of the respondents have no detailed understanding of the contract clauses
that specifically dwell on risk allocation.
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Keywords
Risk management, risk identification, risk analysis, risk treatment, risk allocation