Assessment of the Likelihood of Risk Occurrence on Tendering and Procurement of Construction Projects
DOI:
https://doi.org/10.15641/jcbm.2.1.95Abstract
The construction industry is plagued by risks above other industries due to its unique features which include the complexity of building activities, extended period of construction, complicated processes, financial intensity and dynamic organisational structure. These risks are not adequately dealt with and result in increased cost, time and reduced quality. While many types of research have been conducted on construction risks, only a few types of research have investigated the impact of risk (at tendering and procurement stage) on construction projects before they commence. Meanwhile, risk issues are better solved at bidding and procurement phase than construction phase as the case has been. Therefore, this paper examines the likelihood, degree of impact and probability of risk occurrence on tendering and procurement of construction projects. It also investigates the significant sources of tendering and procurement risks, the level of awareness and adoption of risk management techniques in construction tendering and procurement. The questionnaire for the study was administered on building contractors and consultants. A total of 44 questionnaires were retrieved and used for the analysis of the study. The statistical tools used for analysis are frequencies, percentages, mean scores and t test. The findings of the study revealed 17 significant sources of risk among the 35 that were investigated. Risks with high likelihood of occurrence, the degree of impact and high probability of occurrence were also indicated in the study. Based on the findings, it was concluded that respondents are aware and adopt risk management techniques on construction projects, but their adoption is at response level rather than identification level. Therefore, the recommendation of the study is that awareness should be created on the need for risk identification before construction projects commence. This should be implemented at professional and organizational level. Construction stakeholders should guard against risks with a high degree of impact and probability of occurrence during tendering and procurement of construction projects. Therefore, this study contributes to the body of knowledge by investigating the significant sources of risks to tendering and procurement, likelihood of risk occurrence, impact of risks and probability of risk occurrence in tendering and procurement.
Keywords: Construction projects, Cost overrun, Impact of risk, Probability of risk, Procurement, Sources of risk, Tendering and procurement.
Downloads
References
Abdou, O.A. (1996). Managing Construction Risks. Journal of Architectural Engineering, 2(1) 3-10
Abdul-Razak, S. (2013). The impact of project risk factors on the selection of public works procurement methods in Ghana: a focus on national competitive tender. An M.Sc thesis of the department of Building Technology and Procurement Management, College of Architecture and Planning, Kwame Nkrumah University of Science And Technology, Kumasi
Adnan, H. (2008). An assessment of risk management in joint venture projects (JV) in Malaysia. Asian Social Science, 4(6) 99-106
Agerberg, J. (2012). Risk management in tendering process An M.Sc thesis of the Department of technology management and economics, Chalmers University of Technology, Sweden
Agwu, M. O. (2012). The effects of risk assessment on organizational performance in selected construction companies in Nigeria. British Journal of Economics, Management and Trade, 2 (3) 212-224
Ahmed, S.M, Azhor, S and Ahmad, I. (2001). Evaluation of Florida general contractor’s risk management practices. Florida International University
Albogamy, A. and Dawood, N. (2015). Development of a client-based risk management methodology for the early design stage of construction processes: Applied to the KSA. Engineering, Construction and Architectural Management, 22 (5), 493-515
AL-Shibly, H. H., Lonzi, B. M and Hiassat, M. A. (2013). The impact of risk management on construction project success from the employees’ perspective. Interdisciplinary Journal of Contemporary Research in Business, 5(4) 12-42
Banaitiene, N and Banaitis, A. (2012). Risk management in construction projects. Intech open science.
Buertney, J. I, Abeere-Inga, E. and Kumi, T.A. (2013). The financial impact of risk factors affecting project cost contingencies: Evidential reasoning method. Journal of Engineering, Project and Production Management, 3 (2) 65-73
Calzadilla, E., Awinda, K. and Parkin, A. (2012). An examination of the risk management process in Venezuelan construction projects IN: Smith, S-D(Ed) Proceeding 28th Annual ARCOM Conference, 3-5 September 2012, Edinburg, UK, 1209-1218.
Chapman R. J. (2001). The Controlling Influences on Effective Risk Identification and Assessment for Construction Design Management, International Journal of Project Management, 19, 147-160
Chen, Y. C., Zhang, S. Liu, L. S. and Hu, J. (2015). Risk perception and propensity in bid/no-bid decision-making of construction projects, Engineering, Construction and Architectural Management, 22 (1) 2-20,
CIPFA Counter Fraud Centre (2015). Managing the risk of procurement fraud. Retrieved at https://www.local.gov.uk/sites/default/files/.../managing-risk-procurement- on 12 January 2017
Dosumu O. S. and Onukwube, H. N. (2014). Impact of health and safety practices on the productivity of skilled construction site workers in Lagos state: workers perspective, Proceeding of CIB Conference held on 28-30 January 2014 at Orchid Hotel, Lagos, Nigeria.
Dosumu, O. S, Idoro, G. I. and Onukwube, H. N. (2017). Cause of errors in construction contract documents in Southwestern, Nigeria. Journal of Construction Business and Management 2(1) 50 - 62
Dosumu, O. S. and Onukwube, H. N. (2013). Analysis of project success criteria in the Nigerian construction industry. International Journal of Sustainable Construction Engineering & Technology, 4, 1, 31-47
El-Sayegh, S. M. and Mansour, M. H. (2015). Risk assessment and allocation in highway construction projects in the UAE. Journal of Management and Engineering, 31 (6) 1-11
FAA System Safety Handbook (2000). Operational Risk Management. Safety Handbook
Flanagan, R. and Norman, G. 1993. Risk Management and Construction. Oxford: Blackwell.
Iqbal, S., Choudhry, R, M., Holschemacher, K., Ali, A. and Tamošaitienė, J. (2015). Risk management in construction projects, Technological and Economic Development of Economy, 21 (1) 65-78
Kansal R.K. and Sharwa M. (2012). Risk assessment methods and application in construction projects. International Journal of Modern Engineering Research, 2 (3) 1081-1085
Mahendra, P. A., Pitroda, J. R and Bhavsar, J. J. (2013). A study of risk management techniques for construction projects in developing countries. International Journal of Innovative Technology and Engineering 3 (50) 139-142
Mantzaris, E. (2014). Public procurement, tendering and corruption: realities, challenges and tangible solutions, African Journal of Public Affairs, 7 (2) 67-79
Mills, A. (2001). A systematic approach to risk management for construction. Structural Survey, 19 (5) 245-252.
Naphade, P. V. and Bhangale, P. P (2013). Study on risk management risk treatment strategies and insurance in construction industries. International journal of Innovative Technology and Exploring Engineering, 3(4) 68-74
National Institute of Standards and Technology (NIST). (2012). Risk likelihood, risk impact and risk level definition. Retrieved from www.hipaacow.org/wp-content/uploads on 12th January 2017
Oyewobi, L. O, Ibrahim, A. D and Ganiyu, B. O. (2012). Evaluating the impact of risk on contractor’s tender figure in public building in the northern Nigeria. Journal of Engineering, Project and Production Management, 2(1) 2-13
Radujkovic, M. and Car-Pusic, D. (2011). The attributes of risk sources and drivers in construction project
Rezakhani, P. (2012). Classifying key risk factors in construction projects. Universität technical, 1-11
Ritchie, J (2007). Treatment options for risks in construction, Civil and mining projects. Australian Construction, 18(10): 1-4
Shrestha, (2011). Risk framework for public private partnerships in highway construction. Masters of science thesis submitted to the Department of Civil and Environmental Engineering, University of Wisconsin-Madison
Slattery, K. and Bodapaty, N. (2001). Risk management of construction. ASC Proceedings of 37th Annual Conference University of Denver, Colorado, April 4-7, 95-100
Smith, N. J. (2003). Construction Management Series: Appraisal, Risk and Uncertainty. London: Thomas Telford Publishing.
Sun, C., Man, Q. and Wang, Y. (2015). Study on BIM-based construction project cost and schedule risk early wrning. Journal of intelligent and fuzzy system, 29, 469-471
Taghipour, M., Seraj, F., Hassani, M. A. and Kheirabadi, S. F. (2015). Risk analysis in the management of urban construction projects from the perspective of the employer and contractor. International Journal of Organizational Leadership, 4, 356-373
Takim, R. (2010). Analysis of effectiveness measures of construction project success in Malaysia. Asian Social Science, 4, 7 74-91
Tam, C. M., Zeng, S. X. and Deng, Z. M. (2004). Identifying Elements of Poor Construction Safety Management in China. Safety Science, 42, 569-586.
Tipili, L. G. and Ilyasu, M. S. (2014). Evaluating the impact of risk factors on construction projects cost in Nigeria. The International Journal of Engineering and Science, 10-15
Zou, P. X. W., Zhang, G. and Wang, J. Y. (2007). Understanding the key risks in construction project in China. International Journal of Project Management, 25, 6 601-614
Downloads
Published
Issue
Section
License
Copyright (c) 2018 OLUWASEUN DOSUMU
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
The JCBM is an open access journal, and the authors (copyright owners) should be properly acknowledged when works are cited. Authors retain publishing rights without any restrictions.
