Research Proposal on

RISK MANAGEMENT AND ITS APPLICABILITY IN CONSTRUCTION PROJECTS.

1.1 BACKGROUND

The construction sector in India has for some time suffered from poor performance and
a lack of control in various steps of the process. Due to the sector’s problems with
numerous faults and the increased costs for buildings and other infrastructure facilities
the research was carried out and it has been found, amongst other things, problems
with cost and faults related to the construction. Risks and other uncertainties can cause
losses that lead to increased costs, time delays and lack of quality during the
progression of the projects and at their end. It was also found that quality management
systems according to the ISO standard 9000 have not been enough to decrease the
problems in the sector .
Risks and uncertainties appear in various shapes. In projects the objectives are most
often related to time, cost, quality and function and client satisfaction. In organisations,
depending on the risk management focus, different relations between the objectives and
the definition of risk exist. The risk definition is therefore highly dependent on the choice
of applied management focus in the organisation. In the construction industry the
management focus on site is closest related to what Hillson describe as project risk
management and safety risk management. At other levels, apart from the project site,
the focus is somewhat different.
Risk management is generally a part of other management systems such as quality,
environmental or work environmental management systems. Some core values are
common in many quality and environmental management systems viz. the commitment
of all employees, customer focus, management commitment, focus on process,
continuous improvement and fact-based decisions. These core values are closely
connected and could easily be found in the theoretical framework of risk management.
The current focus on risk management should be regarded as a complement and a
development of the already implemented quality management systems used by
companies. Either way, risk management is a crucial part of the total project
management system regardless of the focus on quality, environment or work
environment.

1.2 NEED FOR RISK MANAGEMENT

In construction projects, project stakeholders face the risk of cost overruns, schedule
delays, and even waste, fraud, or abuse. Environmental, quality, and safety factors also
represent sources of risks. And further in some projects, managers run the risk of
generating political controversy at the federal, state, or local level. An absence of
concern on risk assessment and management could lead to several serious problem,
resulting in unachievable goals and unmet expectations.
Although it is common in our country and even in other places for problems such as
delays to occur in project completion, it is necessary for managers and project teams to

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ensure such common problem can be eliminated in future by applying the theoretical
concepts of project management such as managing risks into practice despite of
numerous limitation and pressures. Delays, incompletion, cost overrun, unsafe site
condition and poor quality in construction projects resulting from lack of awareness on
risk aspects are intolerable excuses.
Thus, managing risks effectively requires implementing a structured, well thought-out
risk management plan. Although managers cannot eliminate risk entirely, they can
minimize it by monitoring project's risks, developing strategies to mitigate them, and
establishing fallback positions and contingencies. Managing risks also can lead to more
creative and efficient management techniques, such as innovative financing, new
methods of accountability and control, and increased options for contractual
arrangements.

1.3 OBJECTIVE AND RESEARCH MOTIVES

In this research the aim is to uncover how risk management is carried out in
construction projects. The contribution of the study is to reach an understanding of the
risk process.
If a greater understanding about the issues in construction projects is achieved, it will be
easier to focus on the right efforts of the companies to increase value in the construction
process. The research questions for this study are:
 What are the methods and tools for risk management in construction projects?
 How are these methods and tools used?
 What kind of risk management is applied in the construction companies’
management systems?
 What are the obstacles and drivers for risk management in construction projects?
These research questions are formulated with the ambition to enlighten the work with
risks in construction projects.

1.4 IMPORTANCE OF THE STUDY.

Construction industry will be risky for a large number of reasons. Differences categories
of project risk and level of risk found on construction projects. Project risk if not well
managed has significant effect on completion cost and time of construction project. Risk
can be minimize, avoid or transfer when their factors are identified. Knowing the risk
factor in a construction project would help avoiding the same in future.
There are several valuable benefits expected by implementing this study. One of it is to
increase awareness among the project players to deliver a project responsibly by also
focusing into aspects such as risk management in handling projects. This can be
achieved by applying theoretical concepts discussed in many literatures into practice in
real projects. It can ensure good practice of project management in an effort to avoid
common problems in construction project such as delays, cost overruns and poor
quality of products.

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1.4 METHODOLOGY

Literature study and analytical research are my major learning methods, which play an
important role in this report. Analytical research involves analyzing existing facts and
information. Today’s world is based on information technology and huge amounts of
information are available on all kinds of subjects.

The method used to prioritize the risk factors is an application of the Analytic Hierarchy
Process (AHP). We adopted AHP as analytic decision-making method to understand, in
order to prevent, risk of falls, which is complex, multifactorial and multidimensional
problems . The main idea is that it is more reliable to assess relative importance of risk
factors, comparing pairs of them using a natural language scale, than judging their
absolute importance.

In addition, to speak of, the report is more persuasive and practical based on the study
of real case and visit of site manager. As a student lacking experience working on
construction site, the visit definitely has a critical effect on the conclusion of this report.
I also use Internet-searching engine, which is a fast approach to get wanted answers of
this time. It offers me much writing inspiration and scientific proof from other related
articles.

1.6 LIMITATIONS OF THE STUDY

This research focuses on managing construction project risks; case study: for
contractors in India. Therefore, the area of research is limited to only India in which the
respondents are randomly being selected from this boundary. The risks they faced
varied with the size of project and the size of their organization. Thus, to ensure the
reliability of the data gathered, it is essential to limit the lists of respondents according to
the size of the organization and the size of the project. Qualitative risk assessment is
subjective and lacks consistency. It does not consider risks and uncertainties regarding
the supplier’s performances.
According to the statement of related problems in this report, I try my best to narrow
down the scope of my study and make my report more pertinent.
The original Risk Management: Risk is classified into five facets:
 Technical(performance related)
 Programmatic(performance related)
 Supportability(environment related)
 Cost
 Schedule

Considering that, cost and schedule risks frequently serve as indicators of project
status. They are treated somewhat differently from the others. However, cost and
schedule can become a major source of project risk. Based on the above, I decide to
start from schedule, and narrow down the scope to the risk management in construction
period phase which makes my report more specific. Go through the case of study,
different realistic constructions have been presented and analyzed.

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Contracts in this study are treated only as a one risk management mean, but not
analysed any further.

1.7 Scheme of Study

Chapter I is introduction to the background of the research area and sets discuss the
problem formulation. The aim, objectives and research questions are stated and
delimitations can be found. The purpose of this chapter is to help the reader understand
why this report needed to be written.
Chapter II is the theoretical overview and the state the literatures which this thesis
focuses. This chapter gives the theoretical foundation for the thesis and the aim of this
chapter is to ensure the reader that this thesis is at the cutting edge of the research in
the chosen area.
Chapter III is the case of study about the Ganga Rail Cum Road Bridge Project in
Patna, Bihar. This section tells the background of this project and describes different
type of risks occurred in this construction projects.
Chapter IV is the analysis and discussion, this section’s objective is to combine results
of both the case of study and analytical research in order to identify the main findings
and their relevance and implications to current risk management practices.
Chapter V contains the findings and conclusions of the study. This part points out the
main research contributions and thinking about the specific direction what we can still
doing further study in future.

BIBLIOGRAPHY

 Managing risk in construction projects  By Nigel J. Smith, Tony Merna, Paul
Jobling
 Construction Project Management  By Kumar Neeraj Jha
 Risk management and construction  By Roger Flanagan, George Norman
 Engineering construction risks: a guide to project risk analysis and ...  By
Science and Engineering Research Council (Great Britain)
 http://civilengineerblog.com/risks-construction-projects/

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