RISK TO PROJECT MANAGEMENT IN CONSTRUCTION … · mitigation and demonstration of the ability to...

1 Ravi-S. Dubey, PhD Student ; Thesis : Risks to Project Management in Construction Industries

RISK TO PROJECT MANAGEMENT IN CONSTRUCTION INDUSTRIES

TYPE, CAUSES, EFFECTS& MEASURES TO REDUCE / ELIMINATE RISK

BY

Ravi Shankar Dubey (ID: NVYU 131350)

Ph.D. in Project Management

NATIONAL VALLEY UNIVERSITY, New York, USA

Dissertation Supervisor: Dr. Nicholas Davis


Abstract

All human ventures bring in uncertainty and risk. It is agreed that risk is extreme in the business

sector than other sectors. Every entrepreneurial act and a business decisions are associated with

risk. The risk is an occurrence that has a degree of obscurity and can either be positive or

negative. A positive risk is a convenient opportunity, while a negative risk is a threat and hence

inconvenient. The more convenient and less convenient risks imply progressive and negative

outcomes respectively.

However, the Construction Industries (CI) faces random risks which may have adverse

consequences leading to increase cost, time overruns and low-quality work. The factors

leading to such an out-come include planning, design and construction intricacy as well as the

presence of countless interest groups and material resources.

Risk Management ( RM) has various complicated dimensions relating to the CI that go

beyond its direct physical detriment to the financial and cultural processes, and even the way

society functions.

The construction industry is highly risk prone, with complex and dynamic project environments

creating an atmosphere of high uncertainty and risk. The industry is vulnerable to various

technical, socio-political and business risks. Generally, all construction projects are hazardous

by nature due to their configuration, financial, organizational arrangements, and

technology and resource demands.

Hence, RM in construction projects is dynamic rather than stagnant and it is crucial for the

industry to minimize these risks and uncertainties to unearth the impact to determine which part

of the project is having more exposure to risk and less feasible.

RM in Constructions Industries has the task of identifying and measuring of Risks related to

Project Management which is one of the foremost concerns affecting the economies throughout

the world.


ACKNOWLEDGEMENT

I would like to take opportunity to acknowledge the unwavering support and guidance by my

dissertation supervisor and coordinator Dr. Nicholas Davis. His efforts and constant guidance

have been invaluable.

I would also like to thank Dr. Charles Christopher, Mr. Frank Martin & Mr. David

Anderson for guiding and motivating me to complete my dissertation in its final form. His

expert input and assistance helped me to reshape the form and format of this dissertation.

AIMS & OBJECTIVES :

The aim of this research was to evaluate the various types of Risks that occur in construction

projects and the reasons why Risks occur and the measures that can be implemented to reduce

or eliminate these Risks. The purpose of this research is to reveal why the construction projects,

generally most of the projects, fail or get delayed due to inadequate risk management and what

are the best practices for the recovery.

The objectives were to identify the various types of Risks and examine the reasons for causing

Risk in especially in construction project .The evaluation of the existing methods for Risk

mitigation and demonstration of the ability to prevent Risks up to maximum extents.

The reason responsible for causing Risks are tackled by utilizing the knowledge gained in the

various modules and applying them through a scientifically acceptable research methodology.

We came to know that 16% of Governmental Expenditures in Dubai are meant for

infrastructure growth and development ( Gulf News) . Hence, the construction Projects plays

very significant role in the development of economy and society as well. So, I planned to study

the major risks, its types, causes, effects and remedial actions which are required to achieve

success in Constructions projects.

This PhD is a result of my interaction with construction labourers in their labour

camps, on the streets and in the fields. I was involved with large projects in different fields for

last couple of years starting from my career in Voltas, India ( A Tata Group of Company ) in

the year 1997 to present the organization i.e. aswaaq , Dubai as of today .


I started preparing for PhD study while working, particularly at a time of recession in Dubai

during year 2008 when one had to “show extra performance” in order to keep ones job, was not

an easy task.

The research involved multi-research methods, starting with the narratives of the construction

labourers. The research methodology was further augmented through a case study approach

with the participant observation method.

The findings were coded according to grounded theory into national cultural dimensions. Re-

confirmation and cross-checking interviews were also conducted to confirm the correctness of

the coding.

While, the qualitative data collected were quantified to give Meaning to the data collection

through triangulation in data analysis


TABLE OF CONTENTS

1) Title Page …………………………………………………………………………… 1

2) Abstract ………………………………………………………………………………2

3) Acknowledgement ……………………………………………………………………3

4) Aims & Objectives ………………………………………………………… …. 3 & 4

5) Introduction ……………………………………………………………………….….6

6) Type of Risks in Project Management Constructions ……………………… …8-15

7) Source of Risk in Project Management of Constructions Industries ……….…15-18

8) Research Methodology …………………………………………………… … ...18

8.1) Scope of the Research ……………………………………………………19

8.2) Research Design …………………………………………………… …19

8.3) Pre study Phase …………………………………………………… …20

8.4) Main Study Phase……………………………………………….… ….20

8.5) Research Paradigm ………………………………………………… …....20

8.6) Quantitative paradigm …………………………………………… ……20

8.7) Qualitative Paradigm ……………………………………………… ….21

8.8) Mixed Method Paradigm …………………………………………… … 21

8.9) Data Collection …………………………………………………… . . …22

8.10) Literature Review……………………………………………… ….22-25

8.11) Inadequate Early planning …………………………………… …25

8.12 ) Lack of Risk Management system …………………………… … … .25

8.13) Risk of delaying Project ……………………………………… …….26

8.14) Lack of Resources & Labour Productivity …………………… .….27

8.15) Survey questionnaires …………………………………………… …..28

8.16) Interviews ……………………………………………………… …...28

8.17) Findings ……………………………………………………… … . …28

8.18) Advantage of survey questionnaires ………………………… ….29

8.19) Focus Group ………………………………………………… ….…….29

9) Risk Management Process …………………………………………… …… …..31

9.1) Risk Identifications ………………………………………….… … ….31

9.1.1) Tools & Techniques of Risk identifications…………… ……… …..32

9.2) Risk Assessment ……………………………………… ………… … …33

9.3) Risk Analysis ……………………………………………… ……..… ….35

9.3.1) Qualitative Risk Analysis………………………..……… ……… ….36

9.3.2) Quantitative Risk Analysis ……………………………. .……… . .…36


TABLE OF CONTENTS

9.4) Risk Mitigation ……………………………………………… ………….37

10) A case Based Study of Constructions site in Dubai …………… ……… ….39

11) Results ………………………………………………………… … … …… ..41

12) Discussion …………………………………………………………… …… …43

13) Recommendation …………………………………………………… …… ..44

14) References …………………………………………………………… … …..47

15) Appendix ( supportive documents used for research works) ……… …….49


1) Introduction

The reasons of my research were to illustrate why the construction projects fail due to

inadequate risk management and what are the best practices for the recovery. I would like to

define pre-signals for the failure of a project like insufficient risk management and the lack of

recovery planning.

I studied the reasons of Risks which were primarily due to an unviable project scope,

inadequate early planning and the absence of Risk Management System. It was also observed

that the contractors contributed Risk to projects due to lack of resources, non -clarity in design

and inefficiency in labour productivity , over ambitious estimate, incorrect task management,

delay in approval and interference in decision making process by the clients.

In fact, “Risk and Actions” are not the same for each project because every Project is unique

and constructions companies work in dynamic sector where many of the more interesting

projects are complex and have reputation to fail in time, cost , scope & quality of works.

The need to manage Risks into constructions industries is related to all professionals, groups &

stakeholders i.e. client, design team, project team, Finance team, Project Management

Team, contractors & sub-contractors.

Ignoring the study of Risk Management will cause to increase the costs of projects, reduce the

profit, and damage the reputation, cost overruns, scope creep, schedule delays and worst

disposal of the businesses or insolvency.

Therefore, the efficient risk analysis, thorough studies, evaluations, timely and correctly actions

at different stages of Projects Management are vital to the successful undertaking and

completion of any construction projects.

The track record of construction industry is very poor in terms of coping with risks, resulting in

the failure of many projects to meet time schedules, targets of budget and sometimes even the

scope of work. As a result, a lot of suffering is inflicted to the clients and contractors of such

projects and also to the general public.

Risk Concept: Risk is inherent and difficult to deal with, and this requires a proper management

framework both of theoretical and practical meanings. Risk management is a formal and orderly process of

systematically identifying, analyzing, and responding to risks throughout the life-cycle of a project to obtain

the optimum degree of risk elimination, mitigation and control.


In the construction industry, risk is often referred to as the presence of potential or actual threats

or opportunities that influence the objectives of a project during construction, commissioning,

or at time of use of Utilities. Risk is also defined as the exposure to the chance of occurrences of

events adversely or favorably affecting project objectives as a consequence of uncertainty.

2) TYPE OF RISKS IN PROJECT MANAGEMENT IN CONSTRUCTIONS

Specifically, the research has been divided into four areas of Risk Management i.e.

(1) Project Risk Management

(2) Risk management in construction project

(3) Troubled Risk management in construction

(4) How to turnaround a project in success

Generally, the Project Risk Management were deliberately studied into three groups:

−External Risk, Project Risk and Internal Risk.

The External Risks are those risks that are beyond the control of the “project management

team”. The External Risks comprise Political risk; Economic risk; Social risk; & Weather risk.

The followings factors causes the external risks .

1) Contractual relations

2) Landowners unwilling to sell

3) Priorities change on existing program

4) Funding changes for fiscal year

5) Stakeholders request late changes

6) New stakeholders

7) Additional needs requested by stakeholders

8) New information required for permits

9) Inconsistent costs, time, scope, and quality objectives

10)Permits and licences

while, the Project risks consist of Time risk; Cost risk; Work quality Risk; Construction risk;

Technological risk, Contractor Risk & Sub-contractor Risk .

https://www.designingbuildings.co.uk/wiki/Stakeholders



https://www.designingbuildings.co.uk/wiki/Quality


Generally, the Risks cannot be totally avoided, but the choice can be made so that risk is minimized.

We observed that Risk = Probability of an event × Consequence of loss due to that event Per event

Although, Internal risks were studied according to the party who might be the originator of

risk events such as stakeholders, designer, contractors, sub contractors , Project Manager ,

Architects, Consultants & Clients.

The Construction risks are categorized into eight categories:

a) Technical Risks

Technical risks include anything that restricts us from creating the product that customer wants.

This can include uncertainty of resources and availability of materials, inadequate site

investigation, or incomplete design. These risks can commonly occur when there are changes in

project scope and requirements, and if there are design errors or omissions. The details of

technical risks are as under :-

Design process

1. Owner involvement in design

2. Inadequate and incomplete design

3. Change in seismic criteria

https://www.designingbuildings.co.uk/wiki/Design_process


4. Errors in completion of structural / geotechnical / foundation

5. Wrong selection of materials

6. Take off data (traffic demand, water consumption demand, etc.)

7. Need for design exceptions

b) Logistical Risks

There are various logistical risks that need to be addressed before beginning a project. These

risks include the availability of transportation facilities and availability of resources i.e.

equipment and adequate skilled manpower such as spare parts, fuel, and labor. Without

addressing these logistical issues, we may risk huge project delays and losses.

https://www.designingbuildings.co.uk/wiki/Foundation

https://www.designingbuildings.co.uk/wiki/Materials

https://www.designingbuildings.co.uk/wiki/Take_off

https://www.designingbuildings.co.uk/wiki/Water_consumption


c) Environmental risks

Environmental risks include natural disasters, weather, and seasonal implications. These risks

are commonly overlooked when people are unfamiliar with local conditions i.e. peak ambient

temperature in Dubai during summer seasons when labour are mandatorily given rest during 1

PM to 4PM .

So, if we are going to be working on a project in a new city, we need to become familiar with

that region’s weather patterns. If we prepare for possible weather risks, we are much more

likely to avoid potential delays and losses.

d) Management related risks

The most common management related risk is uncertainty of human resources . We must have

sufficiently skilled , experienced and qualified staff whose roles and responsibilities are

adequately defined , otherwise ; failing to do so, may lead to disastrous losses.


The following factors constituted management related Risks : -

Inexperienced staff assigned

Losing critical staff at crucial points of the project

Insufficient time to plan

Unanticipated project manager workload

Not enough time to plan

Priorities change on existing program

Inconsistent cost, time, scope, and quality objectives

Project purpose definition, needs, objectives, costs, deliverables are poorly defined or mis-

understood

No control over staff priorities

Too many projects

Consultant or contractor makes inordinate delays

Estimating and/or scheduling errors

Communication breakdown with project team

Lack of coordination / communication

Inexperienced workforce / inadequate staff / resource availability

E) Financial risks

Inflation, local taxes, fluctuation in foreign exchange and non availability of cash flow are a few

of the possible financial risks which we may face during a construction project. We used to

https://www.designingbuildings.co.uk/wiki/Assign

https://www.designingbuildings.co.uk/wiki/Project_manager

https://www.designingbuildings.co.uk/wiki/Quality

https://www.designingbuildings.co.uk/wiki/Consultant

https://www.designingbuildings.co.uk/wiki/Contractor

https://www.designingbuildings.co.uk/wiki/Estimating

https://www.designingbuildings.co.uk/wiki/Project_team


observe that our finances are going to look quite different , if we work in a tax-free city versus

a high-tax city.

F) Socio-political Cum Legal Risks

Customs and import restrictions, difficulties in disposing of equipment, safely using of tools

&equipment are a few of the socio-political risks which we may face during a construction

project. We used come across different regulations and codes in different countries which we

must abide by in order to successfully execute the project.

It is the risk of non-compliance with legal or regulatory requirements. Much of the law is

general and will apply to all organizations e.g. employment law, health and safety,

environmental legislation, etc. Others may be industry specific e.g. covering specific transport

services such as railways or airlines.

Some of the legal risks that a construction projects can face are related to lease of property,

ownership of asset, properly handling of tools & equipment and breach of financial

documents. At one of the construction sites, we observed that a crane was incorrectly used for

lifting the labours as reflected in the below picture.


g) Force majeure risks :-These risks are regarding the events that are outside the control of

any party and cannot be reasonably prevented by the concerned party. These risks generally

arise due to causes extraneous to the project. Natural force majeure events comprise of all

events that can be attributed to natural conditions or acts of god such as earthquakes, floods,

cyclones and typhoons. These risks should be shared equally among the parties.

h) Operating risks : - Some of the risks that may face in a construction project apply during

operations and maintenance (O&M) type services. More specifically, operational risk can be

defined as the risk of loss resulting from inadequate or failed internal processes, people and

systems, or from external events.


As for example, few Utilities like HVAC system cannot be effectively operated or maintained

to produce the expected cooling capacity, output or efficiency due to inadequate designing or

maintenance works or incorrectly selection of Equipment. Such faulty selection of equipment

also enhances the operational cost.

3) Sources of Risks in Project Management of Construction Industries

1 Incomplete Design

2 Inadequate site investigation

3 Improper project planning and budgeting

4 Inadequate specification

5 Excessive approval procedures in administrative government departments

6 The contractor does not pay worker wages in due time

7 Tight Project Schedule

8 Inappropriate time allocation

9 Insufficient time to prepare bid

10 Unsuitable construction program planning


11 The worker does not abide by regular work-hours

12 Plans of design are incompatible with execution.

13 Many modifications on designs are made during execution.

14 The designer does not follow up designs and Changes made on them.

15 Inability to execute the project within specified timetable.

16 Necessary technical skills are not available

17 Low productive efficiency of the worker.

18 Some materials do not arrive at the assigned site.

19 Absence of trained & skilled manpower.

20 Difficulties in Selection of right quality of material and equipments

21 Equipment failure at construction site

22 Shortage of labors

23 Shortage of equipment

24 Quality variations by the labours

25 New technologies implemented without imparting appropriate training to staff

26 Changes in material types and specifications during construction

27 Undocumented change orders

28 Labour disputes

29 Designs are changed by the engineers during the progress of project.

30 Actual quantities differ from the contract quantities

31 Defective design (incorrect)

32 Not coordinated design (structural, mechanical, electrical, etc.)

33 Inaccurate quantities

34 Lack of consistency between bill of quantities, drawings and specifications

35 Incorporating Rush design

36 Awarding the design to unqualified designers

37 Breach of contract by project partner

38 Improper verification of contract documents

39 Lack of enforcement of legal judgment

40 Uncertainty and unfairness of court justice

41 Competition from other similar projects

42 Increase of Labour costs

43 Increase of Material price

44 Unfairness in tendering


45 Unrealistic price variation in material

46 Inadequate forecast about market demand

47 Change of top management

48 No past experience in similar projects

49 Internal management problems

50 Improper project feasibility study

51 Poor relation and disputes with partner

52 Project delay by the management problems

53 Loss due to fluctuation of interest rate

54 Change in bank formalities and lenders

55 Loss due to rises in fuel prices

56 Late payment by clients

57 Cash flow problem

58 Price fluctuation

59 Tax rate increase

60 Foreign currency exchange rate fluctuation

61 Inflation

62 Funding / Payment shortage

63 Cancellation in giving loan

64 The owner lags behind in paying the contractor.

65 Construction prices are low.

66 Competition in pricing projects.

67 Large number of Construction companies

68 Specialists in project financial analysis are notemployed

69 Inexperience when pricing tenders

70 Changes in laws and regulations

71 Changes in laws and regulations

72 Requirement for permit and late approvals

73 Loss incurred due to Corruption and Bribery

74 Natural Disaster (Floods, earth quakes,etc.)

75 Difficulty to access the Site

76 Adverse weather conditions

77 Pollution and Safety rules

78 Problems from near project


79 Local People non support for project

80 Accidents on workers

81 Unexpectedly falls of the floors

82 Electrical fires occurred

83 Vehicle , equipment & tools crashes on workers .

84 Being struck on the equipment

85 Poor quality of materials procured which causes damage in structure

86 Damage to equipment

87 Labour injuries

88 Wastage of materials by workers

89 Equipment and material got fired or damaged during construction

90 Theft of materials at site

91 Communication breakdown with project team

92) Unreasonable project Scope

93) Inadequate early planning

94) Lack of risk management System

95) Lack of resources & Labor productivity

96) Over-ambitious estimates and incorrect task assessment

97) Lack of task clarity

98) Design delays & Approval of Drawings

99) Owner interference & decision-making process

100) Contractor’s greed to make more money by using poor quality materials.

RESEARCH METHODOLOGY

4.1 Introduction

Research Methodology discusses the research design, selection of participants, data collection

techniques and data analysis methods, and outlines the steps that were taken to ensure the

validity and reliability of the results . The chapter also discusses the challenges that emerged

during the data collection and analysis processes and how they were overcome and the ethical

considerations that had to be addressed before the study took place.

https://www.designingbuildings.co.uk/wiki/Project_team


4.2 Scope of the Research

As empirical data on “risk identification and management” in construction projects indicates

that how they are perceived, measured and controlled.

The methodology adopted in this project are given below:

a) Study of literature related to Risk Analysis and Risk Management capabilities

b) Preparation of Questionnaire.

c) Site visit to major construction project sites.

d) Questionnaire survey and personnel interviews with in-charges and managers and

collection of data from site.

e) Analyzing the Questionnaire

f) Qualitative analysis of data obtained from site and to identify the root cause.

g) Remedial measures to be suggested and the present data to be recorded for future

reference.

h) Conclusions, recommendations and suggestions for future projects.

4.3 Research Design

The research design is the methodological framework that is used to address the research

questions. It’s meant for explanatory, descriptive, experimental, exploratory or

interpretive.

According to Bryman (2012), the selection of a research design depends on the essence of the

research problem. Similarly, the type of questions being asked will influence the choice of

research strategy. Since the research questions formulated for the project were mainly “what”

questions, it was decided to adopt a survey strategy (Crotty, 1998).

The survey technique entails the use of

instruments such as questionnaires or

interviews, which can either be administered

face-to-face, or by mail or telephone

(Creswell, 2009). In our project, we decided to

study and to explore or conduct face to face

interviews at different ongoing construction by

visiting their different sites to collect first hand

information in Dubai . The pictures of few

visited ongoing constructions sites are reflected herewith as reference.


4.4 Pre-study phase

The aims of the pre-study phase were to define the theoretical framework and formulate

coherent research questions. It consisted of two main steps: the literature review and the

preparation of the survey questionnaire.

4.5 Main study phase

The main study phase was the conducting of the survey. The questionnaires were distributed to

four organizations that routinely undertake projects in Dubai . The purpose of the questionnaire

was to capture the perceptions of a range of participants regarding risk management. These

participants were involved in various project phases, and had different roles and varying

degrees of knowledge about the risk management process.

4.6 Research Paradigms

The research paradigm determines the methods that will be used to frame the research; that is,

to collect and analyze the data. Research paradigms can be quantitative, qualitative or mixed-

method in approach.

4.7 Quantitative paradigm

The quantitative approach focuses on evaluating and measuring numerical data (Cohen et al.,

2011). This is especially useful for comparing present and previous research findings.

Quantitative research methods are employed for the empirical and systematic investigation of

quantitative phenomena or properties (Bryman, 2012). They rely on empirical data and

conclusions are based on statistical analysis. Structured questionnaires, like the one used in this


study, are a highly effective data collection tool in quantitative research, as they allow the

researcher to target specific research questions.

4.8 Qualitative paradigm

The qualitative approach involves the evaluation and analysis of non-numerical data. It involves

the collection, analysis and interpretation of the subjects’ perspectives or opinions about the

phenomenon under study (Denzin& Lincoln, 2005); in other words, the researcher investigates

the definitions, meanings and characteristics of an activity or an object as observed by the

subject.

The qualitative paradigm employs various methods for collecting and analyzing data such as

focus groups, observation, ethnography, in-depth interviews and open-ended questionnaires

(Denzin& Lincoln, 2005).

The below referred pictured indicates that this construction site is meant for constructions of

Malls and belong to Mohammed Bin Rashid establishment for young Business leaders that is

currently known as aswaaq.

4.9 Mixed-method paradigm

Most researchers find it difficult to choose between quantitative and qualitative research designs

as both have limitations. As a result, researchers often adopt the mixed-method approach and

combine the two paradigms (Crotty, 1998). In this case, quantitative data may be gathered to

reinforce qualitative information gathered from the study participants.


The survey and focus group methods were most suitable to achieve the objectives of this study

as they were able both to give insight into practices and perceptions within specific construction

companies and to show how concepts are being applied across the industry as a whole.

The focus group study allowed investigation of how professionals in the construction industry

perceive risk management in constructions projects and gave a greater insight into the complex

nature of projects, while the survey questionnaire allowed the collection of hard data.

4.10 Data Collection

4.10.1 Literature review

Risk management in construction projects is a fairly broad subject, so the literature review was

the first step to establish the key concepts. The search information was entered in such a way

that it allowed for recommendations to be made about similar articles, after the most relevant

had been identified.

The aim was to highlight some of the methodologies that have been used to study construction

projects in the Dubai and to compare their methods and findings with those of the present study

in order to assess the reliability of the findings gathered here.

Risks are of various types and researchers have their own parameters to rate and identify them.

Risks have numerous reasons which vary from project to project and the reasons are different

and unique for every project. Efforts to reduce the Risks by mitigation or elimination are

measures which may be applicable in some cases and will depend on the projects being

considered for those measures.

In reality, changes are inherent to nearly all project of substantial size due to the fact that

projects rarely commence after all the designs are completed and approved. It is important that

all the key stakeholders for the project agree as to how the changes to the project would be

handled and by whom.

This is in the interest of the project as beneficial to the owner and the contractor. The

continuous striving for improvement makes it necessary to incorporate changes even though

they may disrupt the works to a certain extent. However the overall result is likely to be better

than the initial after incorporating the changes and the satisfaction of achieving a better final

product makes the changes more acceptable rather than no changes at all.


The stage at which changes are proposed to be implemented is important as any major changes

proposed when the project is in an advanced stage of progress will complicate the works,

impact the schedule and likely to cause delays to the completion.

The changes will increase the cost of the project as abortive works, modification and changes

will come with a cost. “Changed work complicates a project, invites delays and increases the

project cost- all things that make owners unhappy.”( Molner , 2007).

A detailed literature review for the objectives is done to evaluate the types, reasons of Risks

and the methods for the mitigation and prevention of Risks.

The literature review provided a theoretical basis for the thesis and for the development of the

research questions. The next step was to select participant companies in accordance with the

research objectives; in other words, they had to have undertaken construction projects and be

able to answer our questions.

Lastly in the pre-study phase, the survey questionnaire was prepared. The questionnaire was

structured around themes that had been identified as significant in the literature review.

We also came to know vide several Literature Reviews that there are Top 10 ranked risks in

different fields as delineated below

a).Cost related risks:

Tight project schedule

Design variations

Variations by the client

Unsuitable construction program planning

Occurrence of dispute

Price inflation of construction materials

Excessive approval procedures in administrative government departments

Incomplete approval and other documents

Incomplete or inaccurate cost estimate

Inadequate program scheduling

b)Time related risks:


Design variations




Incomplete approval and other documents



Bureaucracy of government

High performance or quality expectations

Variations of construction program s

c)Quality related risks:




Incomplete or inaccurate cost estimate

Low management competency of subcontractors


Variations of construction programs

Unavailability of sufficient amount of skilled labour

Design variations

Lack of coordination between project participants

d)Environment related risks:



Unavailability of sufficient professionals and managers



Inadequate or insufficient site information (soil test and survey report)




Serious noise pollution caused by construction

e)Safety related risks:





General safety accident occurrence



Design variations

Lack of coordination between project participants


Unavailability of sufficient amount of skilled labour

Unavailability of sufficient professionals and managers

5.10.1.a ) Inadequate early planning.

The primary task before the commencement of any project is as the saying goes

“ Plan the work, Work the plan”. It is of utmost importance for any project to commence with

the full planning to ensure the successful execution of works.

According to Thomas et al (2007), “Planning is an essential function of project management.”

But, it is seen that the medium and small sized contracting companies do not take it as a priority

and end up doing a job where there is little planning. If the planning is done from the tender

stage or bidding stage then it will help in reducing the costs, allow realistic schedules and labor

productivity. Limited guidance for contractors is available regarding effective planning as

planning is considered as a macro level function for the owners.

A detailed micro level planning process vide Gantt chart for the contractors is described

herewith vide annexure -1 .It is important to commence the planning by assessing the contract

risks and developa initial summary plan. The next step would be to develop plans for site

layouts and identify the sequence of works to further develop detailed operational programs.

The design and construction strategies need to be reconciled and if required , the initial plan

should be revised and communicated to all and finally enforce the final program.

4.10.1.b) Lack of risk management systems.

The issue of risk management is a complex one as risk management has various

Levels and it is important to understand and attend to all these levels to allow for an effective

risk management system.

According to Weighell (1999), risk management consists of four levels-(a) business strategy,

(b) venture, (c) project and (d) function level.


The business strategy generally deals with the competition, investment, relationship,

performance and constraints on future strategic steps.

The venture level is responsible for the revenues and operating cost.

The project level deals with risk associated with delays to design, engineering and

construction.

The functional level caters to the supply chain management, plant operations, quality , safety

and asset issues where wearing safety shoes and safety helmet are mandatory for every-one who

works at construction sites as we observed during our research at different project sites.

An important risk taken by contractors is the non availability of accurate sub strata Information

which may be related to provisions, live cables, water pipelines and other services.

Any of the above, if discovered when the project commences will delay the works as the

services will have to be relocated which we noticed at one of the project sites in Dubai i.e.

aswaaq Al Bada . If the services are live then it would be a further time consuming process.

“Remedying site conditions that are materially different from those specified in contract

documents is a common source of delay for contractors.”


4.10.1.c ) Risk of delaying projects

The study conducted to identify factors that would allow the contractors to handle the delays

due to differing site conditions indicated that 70 percent of the delays occurred due to the

absence of timely and sufficient communication. The absence of trust between the owner and

the contractor caused 20 percent of the delays and the balance delays were due to various

causes. The impact of the delays due to differing site conditions was found to have reduced

following the unstinted follow up by the contractor. The study arrived at a conclusion that a

communication at important levels and with an urgency was required to deal with such delay

causing factors.

Communication is key to maintaining organization in any construction project. If the project

manager isn’t on the same page as the field workers, chaos can be ensured. The e-mail, tablet

mobile and phone allows us to communicate with concerned staff so that everyone stays on the

same wavelength of the facts.

4.10.1.d) Lack of resources & Labor productivity.

The manpower is the most important factor in the successful completion of any

project. An adequate number of persons must be assigned to the engineering and construction

site. In case of projects , where there is a lack of manpower then it also affects the productivity

of the existing workforce as they would be required to undergo long working hours which

would reduce the productivity.


“poor construction productivity is commonly caused by a lack of resources at the crew level.

Providing proper resources is an important planning issue, requires significant effort, and is

necessary to properly manage a construction project.” ( Pappas et al 2003 ).

Effective management can reduce the delays and save on costs by up to 20% as per the data

available for the United States. Also, research shows that some projects by deploying

“innovative management methods” get better output. These methods merit attention as they

dispel the common perception of achieving better outputs. The innovative management

methods.

and procedure need to be evaluated and documented for the process of improved productivity

through qualitative and quantitative assessments.

4.10.1. e) Survey questionnaire

In addition to collection of secondary data by the literature review, primary data was collected

through a mixed method approach combining the quantitative survey and the qualitative focus

group discussion.

The survey was conducted first, and the findings of the analysis were used to guide the

establishment of the framework for the focus group discussions. Therefore, the study used an

embedded mixed-method design, where the quantitative pre-test data and results are performed

before the qualitative process and interpretation of post data and results (Creswell, 2009).

The questionnaire is a powerful data collection tool that can be used to ask the same questions

to a larger number of people (Atkin, 2006). As it was the primary data gathering instrument in

the study, careful attention was paid to its development and implementation.

4.10.2 ) Interviews: Five interviews were undertaken with personnel from five different

construction companies in Dubai . The interviews were conducted in a semi-structured manner

with a number of questions prepared in advance. The interviewees were free to speak about

risks and opportunities in their projects and the interviews were conducted in a positive

atmosphere.

4.10.2.1 ) Findings: The findings from the interviews give a picture of what site managers in a

few small sized construction projects think about risk management. They have shared both how

they work with uncertainties, risks and opportunities and also indicated what they regard as the

most common risks from their perspective. They gave their view on what is defined as risk and


uncertainty which we illustrated in the “ Discussion & Recommendation topic” of this

thesis.

The below picture is one of the ongoing construction sites at aswaaq Al-Warqa -2 which is

supposed to be inaugurated in the first quarter of 2018. We met with several staff starting from

project managers , supervisors and labourers who were working at ongoing constructions site

to understand the kind of Risks which they were facing and their remedial measures which they

used to embraced.

4.10.2.2) Advantages and disadvantages of survey questionnaires

The questionnaire is a flexible data gathering tool because it can be administered in a wide

variety of ways, such as mobile , e-mail, or face to face interviews (Bryman, 2012).

There is also the danger that some respondents’ answers may be incomplete or even false.

Adding open-ended questions to the questionnaire allows the researcher to gather at least some

in-depth, subjective data, from which new concepts may emerge. Accordingly, an open-ended

question was included in this study’s questionnaire. The question were generally asked to

respondents to provide general comments on risk management in the construction projects.

4.10.2.3) Focus groups

Focus group is a qualitative research method where selected participants are asked about their

perceptions, beliefs, attitudes and opinion towards a concept (Creswell, 2009). In this case, the

focus group aimed at revealing opinions of experienced project managers towards risk

mitigation .Focus groups complement the survey by being able to reveal a wealth of detailed

information and deep insight of the findings revealed from the survey.


Therefore, after identifying the nature of risks and their probability and impact from the survey

based from the study objectives, the focus group was useful in identifying a practicable

framework for risk mitigation as being provided under topic of discussions of this thesis..

Focus groups usually require small groups of participants, about 6 to 12 people in a group. In

my research , the study included 8 people from both the male and female genders for the focus

group discussion.

The intention of forming the group with this number of participants is that it has to large enough

to generate a rich discussion but not so large that some participants do not participate (Creswell,

2009). Therefore, the in depth views of each key informant were captured with the right

number of participants in the group. Some of the participants in the quantitative survey also

participated in the focus group during visit to current running project sites in Dubai where we

observed lobourers were on works by incorporating full safety norms as reflected in the below

picture.

Since the aim of the research was to solve the practical problem of how construction companies

in the Dubai can apply risk management concepts to avoid the losses that are associated with

uncertainties, it was necessary to find participants who would be able to give the researcher an

insight into current practice in construction industry. Accordingly, participants were sought

from key groups, including clients, contractors, designers, construction managers , clients

representative and private consultants whose group photographs were taken as referred below.


5) Risk Management Process

The main source of collecting input data for this Research were carried out vide Data

Gathering from the “Literatures Reviews” consisting books, journal, articles and Internet.

Risk Management Process in case of construction industry involves the following stages :

1. Primary stage

Risk Identification

2. Secondary stage

2A) Risk Assessment

2B) Risk Analysis


3. Tertiary stage

Risk Mitigation

5.1.1) RISK IDENTIFICATION PROCESS: Risks exist from the very outset of a project.

We need to identify what they are, ascertain when they might arise, what effect they may

produce and what measures need to be taken to prevent their occurrence or mitigate their

potential impact.

The identification of risks may be considered as the most important stage in Risk Management,

if only in terms of bringing considerable benefit to all parties in the greater understanding of the

project, irrespective of whether further action is taken or not. When identifying risks, it is

important to appreciate not merely the risk itself but the source, the event that may lead to the

risk materializing and the effect of the risk if it does materialize.

5.1.2) Tools & Technique of Risk Identifications

i) Questionnaire or Checklist

j) Interviews

k) Expert System

l) Delphi techniques

m) Feedback from Similar Projects

n) Brainstorming & workshops

o) Previous Experience

a) Questionnaires or Checklists:-Questionnaires are usually drawn up from a combination of

previous experience and specific project criteria. There are two forms of questionnaire, one is a

very general form with non-specific prompts questions and the other can be detailed as is

required by the particular project. Questionnaires also facilitate consistently presented answers

from different team members which allow less time consuming and more meaningful

comparisons.

b) Interviews:-This is technique that has been used historically by personnel departments and

other consultants to extract information. It has also been used by risk managers to identify

possible risk in a development. The interviews may take place on a one to one basis or on a

many to one basis. The many to one basis should consist of projects members from different


disciplines so that the subjects raised can be viewed from different perspectives. The problem

with this method is that it is time consuming not only to carry out the interviewing but also

record the risks from where it arrived .

c)Expert system:- A lot of research is being done on artificial intelligence and expert systems.

Specifically, one of the most sophisticated models that can be developed for risk management is

by making use of knowledge-based systems or human-computer cooperative systems. This

system is designed to assist the project managers in achieving more effective control over risks

by providing them with appropriate knowledge, gathered from many project managers and

compiled into a knowledge-base. While doing this, the logical thinking and the intuitive

thinking of the managers is accounted for in the system

d)The Delphi technique:- The Delphe technique attempts to produce objective results from

subjective discussions. It is a systematic, interactive forecasting method which relies on a panel

of independent experts. This method may be applicable to the identification of risks but it is

more suited to attaching likelihood of occurrence and potential impacts of previously identified

risk events. This method basically involves the following sequence of events:

e) Feedback from Similar Projects :-A questionnaire is forwarded to all the appropriate

members of the project team by the appointed risk manager. The members of project teams

gives their objective views in response to the questionnaire and returns them to the risk

manager.

f) Brain storming &Workshops :-The risk manager then collects these results and

redistributes them to have brainstorming & workshop . Each project participant now receives

a different set of views and is requested to reconsider their original answers and resubmit

them to the risk manager.

g) Previous experiences :-These revised results are again collected by the risk manager and

redistributed again in the same manner as above. This iterative process is continued until the

risk manager is satisfied that a consensus of opinion has been reached based on each

individual’s previous experiences.

5.2) . RISK ASSESMENT: Risk assessment is the process of estimating and communicating

workplace safety risk, and deciding whether this risk is acceptable. Conducting a risk


assessment involves making a value judgment based on the information and any available

evidence within the workplace and industry. This may include numbers of current and past

incidents, severity of injuries from the identified hazard, lost work time from injuries and

number of people involved in incidents. Specific information such as environmental

measurements of hazards, e.g. noise levels, dust levels, and comparisons made between the

workplace measurement and the legally required measurement can also assist in the risk

assessment process.


Akintola S Akintoye and Malcolm J MacLeod (1997) studied the construction industries ‘s

perception of risk associated with its activities and the extent to which the industries uses risk

analysis and management techniques with the help of questionnaire of general contractors and

project managers . “The authors concluded that the risk management is essential to constructions activities

and enhancing profitability. Construction risk is generally perceived as events that influence project objectives

of cost, time and quality. Risk analysis and management in construction depend mainly on intuition,

judgment and experience”. Formal risk analysis and management techniques are rarely used due to a lack of

knowledge and to doubts on the suitability of these techniques for construction industry activities.

Li Bing and Robert L. K. Tiong (1999) : Based on their study categorized the risk

factors and their mitigating measures , the most effective risk mitigating measures

were categorized into eight groups . Those are partner selection, agreement ,

employment , control, subcontracting , engineering contract, good relationship, and

renegotiation .

Shou Qing et.al (2004) identified twenty eight critical risks associated with international

construction project in developing countries and categorized them in three hierarchy levels (

Country, market and Project) of which 22 were evaluated as critical or very much critical based

on 7 degree rating system . The top 11 critical risks are : Approval and Permit, Change in Law,

Justice Reinforcement, Local Partner’s Credit worthiness, Political Instability, Cost Overrun, Corruption,

Inflation and Interest Rates, Government Policies, Government Influence on Disputes and Termination of

JV.

The risks at country level are more critical than that at Market level and the latter are more critical than that in

project levels . It is suggested that when mitigating a specific risk, the measures with higher effectiveness

should be given a higher priority.

2B) RISK ANALYSIS

The process of project risk analysis demands appropriate and efficient techniques. A technique

is a specific procedure designed to perform an activity or to solve a problem under a prescribed

notation and guidelines (Brinkkemper, 1996).

Project risk analysis techniques can be classified into two main categories, namely qualitative

and quantitative techniques (PMI, 2009), with associated sub-categories of semi-quantitative

and simulation techniques. The group of qualitative risk analysis techniques does not operate on

numerical data rather than presenting results in the form of descriptions, recommendations and

ordinal scores (Hubbard and Evans, 2010), where risk assessment is connected with qualitative


description and determination of qualitative scales for the probability and impact of the

consequences of risk.

Qualitative techniques can be lists of risks, risk rankings, or risk maps. These techniques

prioritize risks for subsequent further analysis or action by assessing and combing their

probability of occurrence and impact. The risk is evaluated in more conceptual terms, such as

high, medium or low, depending on the collected opinions and risk tolerance boundaries in the

organization.

All risks identified will be assessed to identify the range of possible project outcomes.

Qualification will be used to determine which risks are the top risks to pursue and respond

to and which risks can be ignored.

5.3.1) Qualitative Risk Analysis

The probability and impact of occurrence for each identified risk will be assessed by the

project manager, with input from the project team using the following approach:

Probability

High – Greater than <70%> probability of occurrence

Medium – Between <30%> and <70%> probability of occurrence

Low – Below <30%> probability of occurrence

Impact

High – Risk that has the potential to greatly impact project cost, project

schedule or performance

Medium – Risk that has the potential to slightly impact project cost,

project schedule or performance

Low – Risk that has relatively little impact on cost, schedule or

performance

Risks that fall within the RED and YELLOW zones will have risk response planning which

may include both a risk mitigation and a risk contingency plan.

5.3.2) Quantitative Risk Analysis

Analysis of risk events that have been prioritized using the qualitative risk analysis process

and their affect on project activities will be estimated, a numerical rating applied to each risk

based on this analysis, and then documented in this section of the risk management plan.

Imp

act

H

M

L

L M H

Probability


5.4) RISK MITIGATION :- The uncertainty of a risk event as well as the probability of

occurrence or potential impact should decrease by selecting the appropriate risk mitigation

strategy. Four mitigation strategy categories commonly used are:

a) Risk avoidance or Termination . Risk avoidance may include a

review of the overall project objectives leading to a reappraisal of the

project as a whole. Risk avoidance is often perceived as the ultimate

mitigation strategy in that it implies that the project may be aborted. It

means making a decision not to enter in to new way of working

because of inherent risk this would introduce. This method of

mitigation involves the removal of the cause of the risk and therefore

the risk itself.

b) Risk reduction or Treatment :This method adopts an approach

whereby potential exposure to risks and their impact is alleviated.

Often this is achieved by the managing or designing out of potential

risk. Methods of risks reduction may require some initial investment

that should then reduce the likelihood of the risk occurring. Risk

reduction occurs where the level of risk is unacceptable and

alternative action is available. Typical action to reduce risk could be:


1. Detailed site investigation will improve the information upon which the estimate has been

prepared.

2.Alternative procurement route- by utilizing an alternative contract strategy risks will be

allocated between project participants in a different way.

3.Changes in design to accommodate the findings of the risk identification process. Designing

& installing HVAC duct system was observed to be carried out to reduce the ineffective cooling

inside the buildings as referred in the below picture.

c) Risk retention or tolerate :This strategyindicate that the project has decided not to change

the project plan and to deal with a risk. Passive tolerance requires no action leaving the project

team to deal with the risks as they occur and high impact risks should undergo rigorous

examination so that that an alternative response can be found.

d) Risk transfer Risk transfer is the technique that plays a far greater role in development

projects and involves the complete or partial transfer of risks among the various parties

involved in the implementation of the project. Risk can be transfer by two ways. First is through

insurance and second is through contract. The distribution of risk between the client and

contractor tends to overshadow effective management strategies and investigations show that

contactors and owners give minimal consideration to risks outside the realm of their own

concerns.


Risk Management in Construction Industry is categorized in four segments as referred under .

7)“A case based study” of different live projects having experienced of different types of Risk

were conducted to have a deeper insight into the Risk .

We studied developing of “car parking area” at one of the site in Dubai, where Contractor i.e.

Nabulus initially quote AED 442775/ for accomplishing the construction & designing works

for developing car parking area.

After six months, the contractor i.e. Nabulus informed that they are unable to get design

approval from RTA , Dubai since there is need to hire Consultant who will have to design storm

water drainage system for car parking area whose drainage outlet to be connected with Dubai

Municipality’s drainage Manhole .

Finally, a Consultant i.e. RTC was hired who developed initial & final concept design and took

several approval from different governmental authorities in Dubai ( Annexture-2 attached).

When RTC reached to Dubai Municipality Office (DM) for having final approval , he came to

know that some of our plot area which were initially allocated is getting overlapped with the

neighbour’s plot area of newly upcoming Petrol Pump.

Ultimately, Consultant made revised claim to client for redesigning the whole plot and Client

finally agreed to pay additional Charges to consultant to get final approval from DM & RTA

to restart the works.


When consultant received Design approval from RTA as per updated lay-out , the earlier hired

contractors i.e. Nabulus enhanced their pricing from AED 442,775/ to AED 888,630/

(Annexure 3 & 4 attached)

Considering the current scenario , the client was having no choice except to invite new bids to

accomplish the parking development works in order to keep the project cost same.

Client finally hired Atelier a new contractors against AED 440,000/ ( Annexure-5) to

accomplish the car parking works as reflected in the picture below . Thus, we observe that any

kind of delays in projects may subsequently enhances it cost as well.


On starting the parking development works, Atelier were supposed to remove few trees &

CCTV pole ( picture below) which were not covered in their initial quote . Finally, Atelier

agreed to remove the tree and CCTV ‘s pole without charging any additional amounts to clients

in view of maintaining good professional relations with the clients . So, proper communication

team works and good working relationship with contractors or stakeholders reduces the risk of

incurring higher cost or delaying the projects.

8) RESULTS

Risk is perceived as a negative term, even though in theory It can have two dimensions.

Professionals in the construction industries are using techniques described in the literature

concerning RM, but are not aware of it. Risks are being managed every day in the industry, but

not in such a structured way as the literature describes.

Effective risk management requires commitment as well as the risk conscious behaviour of each

individual. The motivation as well as the interplay of the parties involved in the project in the

end determines the quality of the work and thus the success of the project.

Risk management successfully installed in the project offers the chance to gain a clear

understanding of the goals, duties and contents of the service and the feasibility of the project. It

provides an information basis for the quantitative data, sorted according to size, for the purpose

of supporting decisions, such as e.g. the choice between costs and implementing goods or the

comparison between several possible options.

Risk management can therefore only be implemented and enforced effectively if

communication channels in the enterprise are created, which guarantee the direction of the

information to the places concerned in each case. Through the risk management used, the


overall risk of the project is broken down into individual risks. For these, corresponding

measures can be taken. Nonetheless, in each project residual risks remain. It remains a strategic

decision whether these risks are to be considered or overlooked.

Risk management assists Project Managers in setting priorities, allocating resources and

implementing actions and processes that reduce the risk of the project not achieving its

objectives. Risk management facilitates better business and project outcomes by providing

insight, knowledge and confidence for better decision-making.

In particular, it supports better decisions about planning and design processes to prevent or

avoid risks and to capture and exploit opportunities. It provides better contingency planning for

dealing with risks and their impacts, it encourages better allocation of resources to risks and

alignment of project budgets to risks, and it facilitates decisions about the best allocation of risk

amongst the partiesinvolved in a project activity. Together, these lead to increased certainty and

a reduction inoverall risk exposure.

What happens if risk management is ignored?

Increased costs

Loss or reduction of profit

Damage to the brand / reputation

In the worst disposal of the business or insolvency.

Therefore, efficient risk analysis is vital to the successful undertaking and completionof any

construction project

This study will provide evidence to show that sufficient use of risk management, in a

construction project will help to ensure that it will succeed.

The management of construction projects requires knowledge of modern management as well

as understanding of the design and the construction process. Construction projects have a

specific set of objectives and constraints such as a required time frame for completion.

On average around 26 percent of construction projects default at one point or another. There are

various possible reasons for such default. The five most common reasons for contractors default

and failure are:

poor project management;

poor leadership;

poor performance;

poor accounting; and


poor planning.

9).Discussion

The Change is inherent in construction work. The majority of the projects fail to meet

deadlines, cost and quality targets. This is not too surprising considering that there are not

known perfect engineers, anymore than there are perfect designs or that the forces of nature

behave in a perfectly predictable way. Change cannot be eliminated, but by applying the

principles of risk management, engineers are able to improve the effective management of this

change.

Construction companies that manage risk effectively and efficiently enjoy financial savings, and

greater productivity, improved success rates of new projects and better decision making. Risk

management in the construction project management context is a comprehensive and systematic

way of identifying, analyzing and responding to risks to achieve the project objectives

In construction projects, each of the three primary targets of Cost, Time and Performance are

likely to be subject to risk and uncertainty. Many people, in order to make change in the project

with minimum cost, get the project into trouble. The lack of risk management, even an

insufficient risk analysis, can put construction projects in jeopardy.

We observed that the risk Management is the core of project management. Every project is

unlike the earlier one, the problems are distinctive and their solutions are also different. Risk

management will not remove all risks from the projects. Its main objective is to ensure that risks

are managed most effectively.

The formal risk analysis and management techniques are rarely used by construction industry

due to lack of knowledge and expertise. The industry is also unknown about the suitability of

these techniques to construction industry. The control and risk transfer is most useful method in

construction industry. Joint venture widely used as a tool for risk transfer

More than 800 construction workers die and another 137,000 are seriously injured on the job

each year in the United States, according to the Department of Labor (Posted on November 17,

2011 by Jared Wade ) . It’s a tragic number and the worst part is that so many deaths and

injuries are preventable.

Aside from simply being deadly, however, the industry is imperiled by as many risks as any

other industry.

http://www.riskmanagementmonitor.com/the-top-10-construction-risks/

http://www.riskmanagementmonitor.com/the-top-10-construction-risks/

http://www.riskmanagementmonitor.com/author/jared-wade/


Aon recently documented as much in its report on the state of risk management in construction.

The broker surveyed industry professionals and received at least one encouraging result: overall

preparedness for the threats identified as the top 10 risks has risen from 60% in 2009 to 67% in

2011 which are as listed below

1. Economic slowdown

2. Regulatory/legislative changes

3. Increasing competition

4. Damage to reputation/brand

5. Business interruption

6. Failure to innovate/meet customer needs

7. Failure to attract top talent

8. Commodity price risk

9. Technology failure/system failure

10. Cash flow/liquidity risk

Based on our case study of several projects in constructions Industries, we observed that every

Project are having five chief objectives related to Time, Cost, Quality, Environment & Safety

what we observed during a visit to an on-going constructions sites at Dubai as referred in the

picture below .

10).Recommendation

Many people have a theory that there are no obstacles in a project, only opportunities. Perhaps

the most valuable merit in a troubled project is the chance to learn from it. Unfortunately,

people who have been involved in a disaster prefer to forget it the sooner. This is a terrible

http://www.aon.com/attachments/risk-services/2011-Aon-Construction-Industry-Report.pdf


waste of experience, because the lessons we take , can help us to improve our knowledge and

can easily help us to avoid the next disaster.

Any organization who has been involved in a disaster management should take a list of lessons

learned in the end including the following the causes.

a) What was done well?

b) What was done badly?

c) What could have been done to prevent the disaster?

d) What could have been done to improve the results?

e) How can it be avoided next time?

It is very important to jog our memory that if we want to learn from a disaster, we must avoid

having blame culture inside the organization; otherwise; the identification of root causes for

the problem will not be attainable. The defensive behavior will not help to discover the truth for

the problem.

We understand that there four main guidelines in order to recover a project. These are;

a) Do nothing,

b) Start the project from the beginning,

c) Declare crush,

d) Assess and carry on.

e) Do not lie about

It is important to mention that all these four strategies are not supported by all projects. In some

cases, we must use other methods to approach the phases of the project. We should keep in

mind that just because the project is in trouble does not mean that everything in it goes wrong.

a) Do nothing : Although it is difficult to work, it seems to have been tested in many

projects. It generally happens when people believe that the trouble is not happening or

because they are too bemused to think of anything.

“As in the last week , there were 17 Indian who lost their life when one of 30 years old

building got collapsed in Ghatkoper, Mumbai where one of the flat owner was

removing column of the building at the ground floor without taking governmental

approval and flat’s owners of the upper floor also did nothing” .

If the project disaster is due to an external event, such as weather conditions, then the most

probable is that we cannot do anything. But, the above case ; the flat owner carrying out

renovation works in the building should take approval from Mumbai Municipality before

starting of the renovation works or other flat owner should inform to governmental authority to


check work permit of the ground floor’s flat owner but on one did anything and few human

life’s got lost.

b) Start the project from the beginning : This means to throw away everything

implemented to date, keeping, of course the lessons learned. It is costly, extravagant and

requires elastic timetable. It is used mainly, on projects which are not on the critical path

for overall delivery.

c) Declare crush : Accepting the disaster in a project is not as dreadful as it sounds. By

accepting the situation, you give the chance to communicate effectively with other people

in the project team and find solutions. The main disadvantage is that it is very easy to

start blaming everyone here. But all disasters are not someone’s fault, and even it is true,

as we have already mentioned, it is not an effective strategy to blame someone, or even

more to punish them. If we do it, then we should lessen the opportunities to build the

organization onto lessons learned.

d) Assess and carry on :- Assess and carry on means that we can identify any event that is

out of control since we cannot carry on in the same way. This is the best approach, and it

is the most used.

Also, it gives the capability to combine the advantages of declaring the crush strategy

with starting the project from the beginning. Getting exact in the right place , the most

important thing for a project is to enter it from the beginning in the right way with a clear

knowledge of its requirements.

The implementation decisions should be taken by people with previous experience and

congruent knowledge. Following this guideline will reduce the number of project

disasters. Generally, Project disaster is a mixture of command and thinking, where we

don’t have clearly and effectively defined the goals and we have put wrong people to

handle it.

e) An ongoing risk monitoring : In order to eliminate the possibility for a troubled project,

It is advice able to develop an ongoing risk management process embedded into an

effective project planning.

Effective project planning, besides of the “normal” activities (stakeholders involvement,

identification of project objectives and goals, and so on) consists more than one activity

i.e. the design for the performance measurements of objectives, the development of

strategies and the remediation approach, in order to implement, monitor, optimize and

shut down remedies.


The main difference from the traditional project planning is that this design is practiced

throughout the project, and not just in the beginning phases. The new project planning is

iterative process during all the project lifecycle, till the closeout phase.

One of the elements of the new project planning design is the ongoing risk monitoring of

the project. Simply, each step of the project implementation should be documented.

It requires a risk management assessment applied with a contingency plan in order to

accelerate post disaster management. Such plans should be also reviewed and tested

frequently

f) Do Not Lie About : It is a good method, because if we reveals the truth to clients or

stakeholders of the projects before the problem has been fixed, it provides all possible

support from all the corners to mutually address the issues.

Hence , Risk Management is brought on a higher level of importance for the Project and

is being recognized as a common tool for both the Project Team and the Project

Organization. In this way, Risk Management becomes an element of organization

philosophy and strategy.

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[17] Daniel Baloi, “Risk Analysis Techniques in Construction Engineering Projects”, Journal of

Risk analysis and crisis response, 2012,Vol.2, Issue 2, pp.1-9

[18] DaudNasir, Brenda McCabe and Loesie Hartono, “Evaluating Risk in Construction-

Construction Schedule Risk Model”, ASCE Journal of Construction Engineering and

Management, Volume 129, Issue 5, October 2003 , pp. 518-527

[19] Elkingtin P. and Sallman C., 2002. Managing project risks: a case study form the utilities

sector. International Journal of Project Management.Vol. 20, No. 1, pp. 49-57 (v) Lyons T. and


Skitmore M., 2004. Project risk management in the Queensland engineering construction

industry: a survey. International Journal of Project Management. Vol. 22, pp. 51- 61

[20] Flanagan, R. & Norman, G. (1993). Risk management and construction. Oxford,

[21] England: Blackwell Scientific. Flanagan, R. & Norman, G (1995). Risk management and

construction (3rd ed.). Oxford:

[22] Blackwell Scientific. Flynn, N. (1997). Public sector management, Prentice-Hall, London.

12)Appendix (supporting Pieces /documents used for assessing Risks )

RISK ASSESSMENT FORM

Project

Name

Prepared

By

Date

Pro

blem

Area

or

Activ

ity

Risk

s

Iden

tifie

d-Y

es

/NO

Descrip

t

ion

Pro

ba

bil

ity o

f

Risk

-

Yes /N

O

Imp

act

Inten

sit

y -H

igh

/LO

W

Ex

isting

Mea

sure

s OK

/No

t OK

Mitig

ati

on

Stra

tegy

- OK

/Not

OK

Ad

ditio

na

l

Mea

sure

s OK

/

NO

T

OK

Con

ting

ency

Pla

n-

OK

/

Not O

K

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