A Study of Risk Management Approaches in Construction Projects in Bihar

Abstract

The goal of the study is aimed to obtain an overall comprehension of risk, its influence on the construction sector, and the procedures that are needed to manage it. This study aims to identify the risk variables that have an overall negative impact on construction project performance, analyze them using the right tools and techniques, and provide a framework for risk management. Along with discussing the instruments and techniques used to handle risk in construction projects, the impact of risk on project assessment is also looked into. The main approach of the study is based in large part on the survey questionnaire that will be distributed by mail or in person to the various construction project managers and construction contractors of varying sizes. The survey\'s questionnaire was developed after looking over pertinent construction management literature. Leveraging the SPSS software, the replies were analysed using bar charts.

Introduction

I. INTRODUCTION

The systematic process of detecting, evaluating, and minimizing hazards related to a construction endeavour is referred as risk management. It entails taking proactive steps to spot potential hazards, assess their potential effects, and make plans to reduce or eliminate them. A coordinated and economical method of employing the materials and resources in order to reduce potential hazards as well as monitoring and regulating unfavourable occurrences that might happen may be included in this. Construction projects can be incredibly difficult and uncertain. Uncertainty and risk could potentially have negative effects on construction projects. In order to effectively manage uncertainty and unforeseen events and to successfully complete projects, risk analysis and management remain a key component of project management for construction projects. Due to time and cost overruns in related construction endeavours, risk in the construction sector has come under scrutiny. Risk exists in every one of our activities; the degree of risk simply differs.

This study focuses on risk assessment and risk management of different risk factors in construction projects and will cover the related previous literature on risk management, development of questionnaire for personal interviews and form being circulated on emails and suggestions related to risk management practices in construction projects. As new risks may arise and the project context may change over time, risk assessment in construction projects is a continuous procedure, making regular review and updates of the risk assessment essential to ensure the accuracy and relevance of risk information. This ongoing assessment aids in the implementation of risk management strategies and the maintenance of effective control over risks as the project progresses.

II. CONCEPT OF RISK ASSESSMENT AND RISK MANAGEMENT

The idea of risk assessment in construction projects is methodically locating, investigating, and assessing any hazards that could have an impact on the project's goals. It is a proactive procedure that seeks to comprehend the type and scope of risks in order to facilitate efficient risk management.

This proactive approach improves the endeavour's capacity to recognise and deal with risks promptly, reducing the possibility of adverse impacts, and expanding the project's whole success rate. By carrying out an in-depth risk assessment, construction projects may acquire an in-depth knowledge of possible hazards, emphasize their focus and assets, and arrive at sound choices with regard to approaches to managing risks. As new risks may arise and the project context may change over time, risk assessment in construction projects is a continuous procedure, making regular review and updates of the risk assessment essential to ensure the accuracy and relevance of risk information. This ongoing assessment aids in the implementation of risk management strategies and the maintenance of effective control over risks as the project progresses.

A. Project Risk

Project risk, in the case of construction projects, pertains to possible ambiguities or incidents that could have a negative impact on the accomplishment of the goals of the project. These dangers may come from a number of different places and may have an effect on a number of different elements of the construction project, such as timeline, price, workmanship, safety, and stakeholder satisfaction. Risks in construction projects can result through a variety of things, including bad design, poor construction techniques, poor site conditions, environmental considerations, compliance with regulations, workforce troubles, lack of materials, engineering difficulties, adverse economic situations, and unanticipated occurrences. If the proper choice is not made at the beginning, the sequences will be more expensive the riskier the activity is. There will be some risks which are controllable and few which are uncontrollable, these have to be categorised and studied before the start of the project. There are few uncontrollable risks like natural disasters which are unavoidable and effect great population.

B. Risk Affecting Factors

The quantity and type of risks in construction projects might vary depending on a number of factors. It's essential to comprehend these elements if you want to manage risks effectively. The following are certain significant factors that can affect project risks in the construction sector:

1. Project Intricacy: A construction project's complexity, comprising its scale, magnitude, degree of design complexity, and technology needs, can have a big impact on the risks associated. Since they frequently have more interconnections, unpredictability, and possible failure spots, complex projects generally have higher risk characteristics.
2. Project Timeline: A construction project's length might affect how exposed workers are to risks. The market surroundings, legislative changes, material price variations, and unexpected occurrences that may happen over a protracted period of time are usually more susceptible to longer-duration projects.
3. Contract Arrangements: The structure and commitments set forth in a construction project's contracts can influence accountability and distribution of risk.
4. History: The technique has not been perfected over time, making fresh ventures riskier. When a comparable project has been completed successfully many times previously, the chances of completing the present project successfully are similarly increased.
5. Stakeholder Dynamics: Risks may be affected by the dynamics of the parties who participate in the construction project. Risks may be reduced by collaboration, open communication, and consensus among stakeholders..
6. Employee Experience and Knowledge: When the staffs working on project have no prior experience and expertise in construction project field, there is high probabilities of error and wrongdoing in the process. It finally results with high cost, more time required with compromised quality.
7. Efficient Management System: The management team working on a project must work as a whole with good intercommunication system will lead to an efficient work environment results in successful completion of project. I there is any miscommunication, it leads to problematic scheduling and resource allocation which ultimately leads to delays and effects the cost and productivity.
8. Issues of Environmental Safety and Health: It is essential that construction projects adhere to all applicable health, safety, and environmental requirements. Neglecting to handle these factors may result in monetary, fiscal, and social repercussions. The risks of injury to workers, damage to the environment, and the improper disposal of dangerous substances must be mitigated.

C. Determination Of Risk

The literature on risk assessment often divides into two categories: qualitative analysis and quantitative analysis. Data-driven (quantitative) methods may be used to find risk variables, and qualitative approaches like interviews, mind maps, and checklists can also be useful. Quantitative analysis is used to evaluate and assess construction project risks using more advanced methodologies and procedures. Decision tree analysis, cost risk analysis, and Monte Carlo simulation are just a few of the quantitative approaches used in quantitative risk analysis to try to assess the frequency and severity of hazards. Modelling the construction project's exposure is made possible via the use of quantitative risk analysis, which also provides numeric values for the likelihood of occurrence and potential effect of the identified risk variables. In qualitative risk analysis, risks are evaluated and prioritized using expert opinion and qualitative standards rather than quantitative measures. Without putting a monetary value on the risks, this study aids in comprehending their nature and possible effect.

Risks can be evaluated more subjectively via qualitative analysis, with an emphasis on the importance and consequences of each factor. Stakeholders in a project might arrange hazards in order of importance and provide resources accordingly

D. Source Of Risk

Alterations or mistakes in the design

Inaccurate estimation

Unclear or unattainable project objectives

Budget based on incomplete data

Contractual problems

Unskilled workforce

Legislature problem

Social and Political circumstances

Natural calamity

III. ADOPTED METHODOLOGY

In this paper, the general prospective which has been considered is the aspect of risk management and finding the different     risk factors with respect to the types of construction risk.

A. Methodology

The methodology which is being adopted in this project is described below:

Brain Storming: Primary studies to get the general idea of possibility of risk and uncertainty

Survey Design: Design a survey for Personal Interview to get data for qualitative study

Conduct Survey: visits sites of different construction projects and take personal interview of related individual.

Study the Survey: List the different risk factors on the basis of personal interviews and study of previous related works.

Prepare questionnaire: For different risk factor with their scale Likert and Impact Likert and circulate it amongst the stakeholder via mail.

Data Interpretation: Study and analyse the response of the questionnaire which were circulated

Results and Discussion

Conclusion

B. Material

The data which are being used in this research are of two types:

1. Qualitative data

Questions which are identified to understand the approach as a basic are:

a. Knowledge of Risk

b. Process of Risk Identification

c. How important is the risk management

d. What is risk assessment?

e. Who are the people responsible for an effective risk management procedure?

f. Is there any course on risk management which you have studied?

g. What is your attitude with regards to risk?

h. You response to risk in a project? etc.

2. Quantitative Data

On the basis of study of previous works regarding risk management and conducting personal interviews at sites, there were numerous factors of risk were identified. Then to study their scale of occurrence and impact of various risk factors on construction project a questionnaire were prepared.

a. Risk Rating: A Likert scale of 1-5 was used in questionnaire. This scale is a kind of psychometric response scale in research survey. The respondents were required to select the option of different risk factors on the basis of their relative effectiveness of each of the scale occurrence of risk factor and their impact on the construction project.

Table No. I

Likert Scale And Their Significance

IV. ANALYSIS AND DISCUSSION

Various risk factors which were obtained from the questionnaire survey, personal Interviews and study of previous related works, the construction project risk is categories in seven broad categories:

1. Technical risk
2. Managerial risks
3. Legal risks
4. Financial risks
5. Logistical risks
6. Socio-Political risks
7. Environmental risks

Various risk factors with their scale and impact are tabulated with its corresponding bar chart, minimum, maximum, mean standard deviation and variance as obtained from SPSS statistical tools.

A. Analytical Study And Result Of Survey

TABLE NO. II

AGE OF THE RESPONDENTS

The table gives us the information about the age group of all the respondents, 14% of the respondents are 25-30years, 46% are of age 30-35years, 29% are of age 35-40years and 11% are of age more than 40years. Therefore majority of  them are from 30-35years of age.

TABLE NO. III

EXPERIENCE PF THE RESPONDENTS

From the above table, we can observe that 7% of respondents have experience less than 1year, 32% have experience of 1 to 5 years, 43% have experience 5to10 years, 14% have experience 10-15years and 4% have experience more than 15 years. Therefore respondents with 5to10years of experience have majority with 43% in a construction project.

B. Comprehensive Analysis And Result Of Survey

In total, forty five construction professionals received the questionnaire, out of which 42 responded back of which twenty-eight provided a useful response. Thus, 93% of respondents responded, which is regarded as a satisfactory response in this kind of poll. The project manager, deputy project manager, quality control engineer, store and inventory manager, site engineer, or contractor completed every questionnaire survey. Since it was challenging to schedule a direct one-on-one meeting with the project management, even email replies were welcomed. Problems with subcontractors, shortage of time, skilled labour and an increase in inflation were the main issues that construction professional were worried about.

Lack of training and technical kills in available local labours is the risk factor which has maximum scale of occurrence other than this  the construction company takes into consideration the lowest-cost resource, reduced work quality when there are time restrictions are the few risk factors which have maximum scale of occurrence.

Interference of local population and leadership while rehabilitation and resettlement before execution of work is the risk factor which has maximum impact on project, other than this lack of training and technical kills in available local labours , lack of regular testing materials at site and batching plant re the risk factors which has maximum impact over project.

On the basis of different risk factors, technical risk has the more number of factors which influences the project most whereas Socio-Political risks and Environmental risks has the least number of factors which influences the project.

Overall ranking of different risks factors and their scale and impact which are identified are listed in Table IV and Table V.                                                                                        Table IV

Descriptive Statictics Of Scale Of Risk Factors

• Result: The frequency of various risk variables in risk management for construction projects might change based on the particular project, its location, and a number of other factors. As the survey's findings are discussed, I can provide you a broad conclusion based on a questionnaire survey of several risk variables and their frequency of occurrence as seen in the construction sector. Risk factors like  Lack of training and technical skills in available local labours, the construction company takes into consideration the lowest-cost resource and reduced work quality when there are time restriction, have maximum scale of occurrence which can be identifies as frequent factors. Most of the factors which are identified comes under the somewhat frequent category of scale of occurrence. The factors which have been identified as occasional are few like environmental risk, socio-political risks with risk factors like environmental factors (flood, earthquake etc.), Change of government during construction project and assessing the site is difficult.

TABLE V:

Descriptive Statistics Of Impact Of Risk Factors

• Result: It's necessary to keep in mind that the effects of risk factors might change based on the particulars of every construction project. Through proactive planning, the deployment of control processes, and regular evaluation throughout the project lifespan, effective risk management entails identifying, evaluating, and minimising these risks. The factors which have been identified as most important with regards to their impact as High are Interference of local population and leadership while rehabilitation and resettlement before execution of work, Lack of training of local labors, Lack of regular testing of materials at site and batching plant, Unavailability of material on time are few of them. Most of the risk factors have impact of medium severity. Rush bidding of construction project, progress on the job cannot be paid in cash are the few factors which have least impact which fall in low impact category.

C. Categorisation of Risk Factor

Table no. VI

Categorisation Of Risk Factors With Respect To Their Type Of Risk And Abbreviation Used

Conclusion

This analysis should help management locate the construction project-related activities that generate a risk and, as a result, give management a basis for making rational decisions about reducing risk to a predetermined level. These results are crucial for putting additional, efficient measures in place to guarantee that future development will go in the right direction. The project should be evaluated using risk management as a major technique. To manage risk effectively, construction contractors must make it a key component of their project management. Throughout the course of a project, risk factors should also be periodically examined and modified since both new risks and changes to current risks may occur. Construction projects may manage risks efficiently, make informed decisions, and maintain a balance between risk and reward by establishing a risk-aware culture and encouraging open dialogue amongst project collaborators.

References

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Copyright

Copyright © 2023 Ashwini Kumar, Hemant Sood. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.