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Journal of Contemporary Research in the Built Environment ISSN: 2636-4468
Volume 8, Number 1, March 2024 © Department of Building, University of Uyo
ASSESSMENT OF SYSTEMATIC RISK
MANAGEMENT PRACTICES ON BUILDING
CONSTRUCTION PROJECTS IN NIGERIA
Saidu Minin Mohammed
1
and Isah Muhammad2
1&2Department of Quantity Surveying, Ahmadu Bello University, Zaria, Kaduna
State, Nigeria
ABSTRACT
Purpose: The purpose of this study is to examine the prevailing risk management practices in
building construction project delivery within the Nigerian construction industry, considering its
significance in economic value creation, employment generation, and GDP contribution.
Design/methodology/approach: Quantitative data were obtained through questionnaire
survey. Purposive sampling was adopted and data was collected using close ended questionnaire
that were self-administered. 117 questionnaires were distributed and 61 were received, filled
and used for the analysis. Descriptive statistics was used to analyse the data collected using
statistical package for social science (SPSS V29). Respondents were chosen from one
construction firm each classified under the highest building construction class.
Findings: The study revealed that risk management in construction projects is not
systematically, deliberately, proactively, or continuously implemented. Instead, risks are
addressed in an ad hoc manner, deviating from internationally recognised risk management
standards/best practices. This highlights weaknesses within project management practices in
Nigeria.
Research limitations/Implications: Limitations of this research include the focus on a specific
segment of the construction industry in Nigeria and the reliance on data from Building
construction firms, which may not fully represent the entire industry. However, the implications
of these findings underscore the need for enhanced risk management practices in construction
project delivery to ensure value for money.
Practical implications: The study suggests that project managers within construction firms in
Nigeria would benefit from comprehensive training and knowledge in internationally
recognised systematic risk management practices. Implementing such practices could lead to
better project outcomes and increased efficiency in resource utilisation.
Originality/value: This study contributes to the existing literature by shedding light on the
current state of risk management practices in the Nigerian construction industry. By highlighting
the deficiencies and advocating for improved risk management methodologies, the research
emphasises the importance of aligning project management practices with international
standards to enhance project success and economic development.
Keywords: Building Construction Projects; Construction Industry; Constructor; Risk
Management; Risk Management Practices; Systematic Risk Management.
1
Email: smminin@yahoo.com
16 Saidu Minin Mohammed and Isah Muhammad
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
1. INTRODUCTION
The successful execution/construction of building projects is one of the
objectives/goals of the construction industry. The construction industry (CI) is one of the
fore-most important industries of any nation. It contributes significantly to the growth of
any nation’s economy by creating value, labour, and contributing to the gross domestic
product (GDP) (Owoo & Lambon-Quayefio, 2018; Urbanski et al., 2019), in particular, and
plays a pivotal role in driving the global economy (Shishehgarkhaneh et al., 2024 citing
Ahmad et al., 2020), in general. Construction refers to the creation, repair, maintenance,
alteration, and demolition of buildings, highways, streets, bridges, roads, sewers, railways,
telecommunication systems (Owoo & Lambon-Quayefio, 2018), and many more. CI is
susceptible to risks due to the involvement of complex and uncertain activities that may
affect construction project scope, budget, and timely achievement (Hassan et al., 2023,
quoting Pinto et al., 2011). Despite the inclusion of health and safety and environmental
sustainability as factors for determining success (Zhao, 2024) and other scholars and
clients, the iron triangle of quality, cost and time (Oyekunle, 2024 citing Unegbu et al.,
2022) are the long-ago established parameters, and still very valid, for measuring project
success at construction stage. The 100% achievement/attainment of these parameters is
only possible with the complete absence or elimination of all risks.
However, due to the challenging, dynamic and complex nature of the industry, no
construction project is free of risks. In other words, risks are inherent in every construction
projects. Risk is multi-faceted, and in the context of the construction industry, it could be
the likelihood of the occurrence of a definite event/factor or combination of events/factors
which occur during the whole process of construction to the detriment of the project (Ajayi
et al., 2022 citing Mhetre et al., 2016). Research has indicated that both practitioners and
scholars in the industry are unanimous in their agreement that construction projects are
exposed to more risks compared to other industries as a result of the complex nature of the
industry (Mills, 2001; Serpell et al., 2015; Shojaei & Haeri, 2019; Taofeeq et al., 2019).
However, not all risks are detrimental to project success. According to Project Management
Institute (PMI) (2017), risk is any uncertain event or condition that, should it occur, has
either a positive or negative impact on one or more project objectives/parameters. Risk
Management (RM), on the other hand, according to the British Standards BS31100 cited in
Shibani et al. (2022) is the mechanism by which resolutions are taken to consider a
recognised or measured risk and to undertake steps to minimise the effects or the occurrence
probability. RM in the context of construction management is a comprehensive and
systematic way of identifying, analysing and responding to risks to achieve the project
objectives (Banaitiene & Banaitis 2012). However, most of the times, these risks are not
dealt with appropriately, nor systematically, resulting in the industry suffering poor
performance (Belel & Mahmood, 2012). Also the RM system and practices of most
organisations, according to Choudhry and Iqbal (2013), are reactive, semi-permanent,
informal, and unstructured with little or no committed resources to deal with risks. Crispim
et al. (2019) and Justus et al. (2024) added that the inability to cope with risk is the main
cause for exceeding budget, exceeding deadlines and failing in other project objectives and
intended outcomes. CI in developing countries approach RM in construction by using sets
of practices that are normally insufficient, often producing poor results, and limiting project
success (Adekele et al., 2019; Serpell et al., 2015). Instead of systematically tracking the
risks, constructions firms allow all sorts of risks only to refer everyone of it to either
insurance, subcontractors, and/or client or other parties (Banaitience and Banaitis, 2012
citing Wang and Chou, 2003), (a minor solution which is actually a subset of Systematic
RM), thereby increasing the overall project cost, in most instances. Systematic Risk
Management (SRM) is a management tool, which requires practical experience and training
in the use of the technique (Mills, 2001). SRM involves quantitatively and comprehensively
tracking, continuously and in an orderly manner, all risks (the known ones and the ones that
are unknown and even the unexpected), assessing their likely effects (positive or negative),
and whether they be treated as insurable or uninsurable risks, in order to effectively and
Assessment of Systematic Risk Management Practices on Building Construction… 17
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
efficiently manage them. SRM is also a proactive process, in the sense that it allows any
detection of risks before they occur. Fostering a proactive RM culture is crucial to project
success and stakeholders’ satisfaction (Shishehgarkhaneh et al., 2024).
In compliance with best practice, Boateng et al. (2020) assessed SRM practices on
building construction projects in Ghana. The study found that RM is not dealt with in a
systematic, deliberate and continuous manner, but in an ad-hoc manner. This is despite the
suggested guide by APM (2019) cited in Oyekunle (2024) that RM be a methodical
approach; without which is the eminent resultant difficulty of maximising (positive)
project’s outcomes. Bahamid et al. (2022) studied the RM practices and knowledge in
Yemen construction industry, but also concluded that risk was not managed systematically.
The research went further to conclude that to guarantee that construction projects obtain
maximum value for money, project managers of big construction businesses in Yemen need
a strong understanding and training in globally accepted SRM procedures.
Comparatively, in Nigeria, most of the previous studies on RM have dwelt on the
capacity of project participants in managing project risks. While Bukar and Ibrahim (2021)
revealed that the major problem of the construction industry in risk is the lack of a
regulatory framework to be imbibed and implemented by the companies and firms in the
industry, Ezeabasili et al. (2021) identified risks and their criticality in the Nigerian
construction industry. However, the study focused on RM practices at the various stages of
the project lifecycle and not the capacity of participants to manage risk. Several studies in
this area have emphasised on risk identification, risk analysis, adoption RM practice and
its impacts, rightly so in trying to x-ray all the processes in details, but RM must always be
looked at and taken holistically. Belel and Mahmood (2012) assessed RM practices but
their focus was on Risk Identification, Benefits of RM practices and factors affecting RM
practices. They found that insufficient skilled staff was identified as the most important
source of risk in construction, while, lack of RM knowledge was ranked the most severe
factor that militates against the practice of risk management.
Risk (internal and external) and risk management have significant impact on project
performance (Bukar & Ibrahim, 2021). From the foregoing attempts, only a few studies
may have been carried out on SRM Nigeria despite its numerous advantages, and therefore,
a gap that this study seeks to fill. This study investigate the current practices of RM in
Building Construction Projects through stepwise processes of RM, with a view to assessing
whether or not they are done systematically. Advantages of SRM include, but not limited
to: questioning the assumptions that affect success of construction projects the most;
concentrating attention on actions that best controls risks; and assessing the cost-benefit of
such actions (Mills, 2001).
2. LITERATURE REVIEW
2.1. Risk Management Processes in Construction Industry
El-Karim (2017) defined RM as the systematic process of identifying, analysing and
responding to project risk, and it includes maximizing and minimizing the probability and
consequences of positive and negative attributes respectively. There are four stages in the
methods to managing risk in construction industry a) risk identification; b) risk analysis
and evaluation; c) risk response; and d) risk monitoring. By making use of the RM process,
one can achieve a major improvement in the performance of the construction project
management. The goal of RM process is not to completely remove all project risks. This is
impossible according to Burchett (1999) in Mills (2001). Its aim is to produce an organised
framework that will make management, to manage project risks, most importantly the
crucial ones, in a more efficient and effective way (Bahamid & Doh, 2017).
RM is broader than insurance or insurance management, and for it to be effective it has
to be done all through the construction life cycle of a project. Al-Bahar and Crandall (1990)
18 Saidu Minin Mohammed and Isah Muhammad
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
assert long ago that even where risks are assessed, contracting firms do not frequently
assess/evaluate the consequences (potential impact) associated with individual risks. This
is managing risk in an effective way. Once a risk has been addressed and assigned a certain
status, it is imperative to revisit it periodically to reassess its impact and adjust measures as
necessary (Ruha, 2024). The ineffective implementations of risk management are often
caused by, according to Liu et al. (2007): a lack of formalised RM procedures (also in
Choudhry & Iqbal, 2013), including risk identification, analysis and control; a lack of
continuity of RM in the different stages in the project life cycle, including conceive, design,
plan, allocate, execute, deliver, review and support; poor integration between RM and other
key processes, including design, estimating, planning, production, logistics, cost analysis,
manufacturing, quality assurance, reliability, schedule analysis, support (e.g.
maintainability), and test and evaluation; and a lack of interaction among different parties,
including clients, contractors, insurers, and suppliers.
2.1.1. Risk Identification
PMI (2017) states that the whole process of RM must be planned, thus beginning with
Plan Project Risk Management, before the identification of risks, their sources and
classifications. Risk Identification attempts to classify responsibilities (Banaitiene &
Banaitis, 2012). It determines the potential risks inherent in any project including sources,
possible consequences and identify entities affected by risks (Hansen-Addy and Fekpe,
2015; Szymanksi, 2017). It also documents their characteristics which aid in risk analysis
and fashioning out appropriate risk responses (PMI, 2017).
2.1.2. Risk Analysis
According to Wang (2004), Risk Analysis is the intermediate process between risk
identification and management. This process rates identified sources of risks and
uncertainties about the goals of a project, and usually accompanied by the estimation of the
probability of occurrence and the severity of risk impacts (Szymanksi, 2017). Identified
risks are analysed qualitatively and/or quantitatively. According to Hansen-Addy and
Fekpe (2015), Qualitative Risk Analysis assesses the probability of occurrence of risks and
the level of severity of impacts accompanied with these risks in a project. Banaitiene and
Banaitis (2012) pointed out that Qualitative Risk Analysis permits key risk factors to be
identified. It does not necessarily follow that all identified risks that are analysed
qualitatively are further analysed quantitatively. As explained by PMI (2017), it is not even
required for all projects. Literature largely agrees on what constitutes Quantitative Risk
Analysis. Quantitative Risk Management, according to Banaitiene et al. (2011) involves
the use of more sophisticated techniques and methods to investigate and analyse risk, by
estimating the probability of occurrence of identified risk factors and the potential impact
on projects.
2.1.3. Risk Response
Risk Response, according to Hansen-Addy and Fekpe (2015) is the process where
strategies are formulated to deal with risks that have been identified and assessed, as and
when they occur. PMI (2017) pointed out that these formulated strategies are selected from
developed options, and actions to address overall project risk exposure, as well as treating
individual project risks agreed on. This agreement is based on PMI’s philosophy that all
Project Team Members and key stakeholders must buy into the plan. It is at this stage that
the bought-in plan of responding to identified and analysed risks, as and when they occur,
would be implemented.
2.1.4. Risk Monitoring
Hansen-Addy and Fekpe (2015) identified risk monitoring as the final process in SRM.
This phase, they continued, monitors and responds to current and emerging risks. Residual
risks, that is, risks that still remain after implementing risk responses, and secondary risks,
which are risks that arise directly out of the implementation of risk responses, are monitored
(PMI, 2017). Risk Response is keeping track of risks identified, monitoring residual risks,
Assessment of Systematic Risk Management Practices on Building Construction… 19
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
and identification of new risks and evaluation of the effectiveness of the whole RM process.
This view is also largely supported by PMI (2017). Judiciously managing risk does not
imply avoiding it but to identify it correctly and determine all associated opportunities and
hazards (Szymanksi, 2017).
2.2. Current Risk Management Practices in Construction Industry
There exists extensive literature in the field of risk studies in the construction industry.
In the study of Zou et al. (2007), key risks in construction projects in Australia were
identified and their likelihood of occurrence assessed. Risks were prioritized according to
the significance of their influences on typical project objectives in terms of cost, time,
quality, safety and environmental sustainability, and then scrutinised from a joint
perspective of project stakeholders and life cycle. In Sri Lanka, Perera et al. (2014) adopted
Delphi technique to identify critical risks on a life cycle basis and defined how such risks
were shared and handled by parties involved in the projects. The findings showed that the
construction and design phases are prone to many major risks. Moreover, “delays in
payment by the client” was the most critical risk factor in the construction stage. Serpell et
al. (2015) revealed the need for development of an instrument based on an organisational
maturity model for evaluating the risk-management capability of construction
organisations. This instrument has been applied to both, clients and contractors and is part
of a general knowledge-based system that would allow a client or contractor first, to
develop or improve its project RM capabilities based on international and local best
practices; and second, to continuously improve the performance of this function along the
realisation of new projects. Pawar and Pagey (2017) identified risks, investigate severity,
examined RM actions in India. The study concludes that RM is essential to construction
activities in minimizing losses and enhancing profitability. Serpell et al. (2015) tried
fostering the effective usage of RM in construction. Their findings showed that risk
management is either not used or done ineffectively in domestic construction projects. One
of the primary reasons for this appears to be the lack of RM capabilities and knowledge.
El-Karim (2017) also assessed the effect of factors affecting cost and time contingencies.
Estimating cost and scheduling contingencies are major factors in achieving a successful
and realistic budget and schedule for construction projects.
Previous research results in Nigeria have established that organisations that employ
construction services on a periodic basis do not analytically practice RM, which has led to
adverse effects for the performance of projects, for instance, the abandonment of projects
(Aibinu & Jagboro, 2002) cited in Ugwu et al. (2019). Also, Nigeria’s inability to manage
risk properly has led to increase in projects failure (Nnadi et al., 2018) cited in Ugwu et al.
(2019).
2.3. Systematic Risk Management Practices in Construction Industry
The construction industry being the most fragmented industry has several risks from
several known, unknown and unexpected sources. According to Godfrey (1990) in Mills
(2001), Systematic risk management (SRM) help to: identify, assess, and rank risks, making
the risks explicit; focus on the major risks of project; make informed decision on the
provision for adversity, such as mitigation measures; minimise potential damage should the
worst happen; control the uncertain aspects of construction projects; and identify the
opportunities to enhance project performance. SRM is a management tool, which requires
practical experience and training in the use of the technique (Mills, 2001). SRM allows for
early dictation of risks. SRM should be part of management functions, as it requires top
management support.
Boateng et al. (2020) assessed SRM practices on building construction projects in
Ghana, which they found was not done in a systematic and continuous manner. Project
managers of large construction firms in Ghana require sound knowledge and training in
internationally recognised SRM practices in order to ensure achievement of value for
money in construction projects, they concluded. Similarly, in Yemen, as cited earlier,
research revealed that, risk management is not executed systematically, intentionally, or
20 Saidu Minin Mohammed and Isah Muhammad
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
continuously, and most firms’ RM procedures are reactive, semi-permanent, informal, and
unstructured, with few or no dedicated resources to address risks. This strategy is
inconsistent with generally accepted risk management principles (Bahamid et al., 2022).
SRM practices are essential in order to handle and manage risks so that the success of
projects can be ensured (Abdul-Rahman et al., 2015 citing Hossen et al., 2015). Although
all uncertainties cannot be removed, SRM improves the chances of the project being
completed on time, within budget, to the required quality, and with proper provision for
safety and environmental issues (Mills, 2001). To guarantee that construction projects
obtain maximum value for money, project managers of construction businesses need a
strong understanding of and training in globally accepted SRM procedures.
2.3.1. Models and Frameworks
The use of models and frameworks have been proposed by several researchers. A
formal RM process, according to Zhao (2024), has been recognised as an effective way to
handle risks in organisations. ISO31000:2018 provides a generic RM framework and
process (Zhao, 2024). Also according to Zhao (2024), PMI (2017) develops a framework
and process for RM at project level. Some, out of the numerous, models developed include:
Cynefin-Risk (CR) model (Frank & Mohamed, 2024); Construction Risk Management
System (CRMS) (Al-Bahar & Crandall, 2024); Innovative Framework and Alien Eyes’
Risk Model (Nawaz et al., 2019). Models that bring together all the processes (as listed
previously) and the attributes of SRM can be developed to bring together all that are needed
for SRM for construction project. The development and/or usage of most of the models and
frameworks mentioned above, and more (not stated here), have not been sighted in
literature. Most of them have either stopped at the level of proposals or actually developed
but missing in literature.
2.3.2. Artificial Intelligence (AI)
Just as has been found to fit into the several facets of many industries in general and
the construction industry in particular, the AI is being proposed and works are in advanced
stages for the use of AI in construction risk management. Shishehgarkhaneh et al. (2024)
and Zhao (2024) have highlighted the introduction of AI in RM. Though, as adequate
captured, the sources of construction project risks are both internal and external. While, the
internal sources within the control of the organisation and so very possible for AI, the
external sources may not. This is due to the complexity of the industry, which is filled with
so much uncertainties.
3. METHODOLOGY
Quantitative research approach was adopted in this study. Quantitative research is the
collection and analysis of numerical data to describe, explain, predict or control phenomena
of interest. This research reviewed relevant literature. Well-structured closed ended, self-
administered questionnaires were also used to collect data from construction practitioners.
The questionnaire consisted of two Parts (Parts A & B). Part A consisted of the respondent’s
general information such as their profession, years of experience and level/position in
organization. Part B consisted of a table of probability of occurrence based on Likert scale
of 1-5, where: 1 = Never; 2 = Least often; 3 = Less often; 4 = Often; 5 = Very often.
In this study, data was collected from registered Building construction firms in Nigeria.
In order to effectively answer the research questions, there was the need to engage
construction managers in building construction companies with adequate practicing
experience in risk management, and who are also recognised built environment
professionals. Purposive sampling technique was adopted. Purposive sampling technique
being a non-randomised technique that does not need underlying theories or set of sample
size, thus the study set out to find respondents who could and were willing to provide
information by virtue of their experience and knowledge. The actual sample size was
established from the field study (Bernard, 2002). Construction companies in Abuja and
Assessment of Systematic Risk Management Practices on Building Construction… 21
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
Lagos were found to be 70 and 450 respectively (Business-List, 2023). According to
Yamane (1967), the sample size of a given population can be calculated using Equation 1.
𝑛 = 𝑁 1 + 𝑁 ∗ 𝑒2
⁄ … 𝐸𝑞𝑢𝑎𝑡𝑖𝑜𝑛 1
Where,
𝑛 = Required Sample Size
𝑁 = Total Number of the Population
𝑒 = Level of precision or sampling error (10%)
Total Sample Population = 520
Salkind (1997) recommends a 40% to account for non-response/uncooperative
subjects. Therefore, Sample Size (n) was found to be approximately 117, which were self-
administered and distributed to construction firms within Abuja and Lagos. 52% were
returned duly filled, and were analysed using descriptive statistics (mean score and standard
deviation) and ranked according to mean score which considered factor with ≥3.50
statistically significant.
4. PRESENTATIONAND DISCUSSION OF RESULTS
4.1. Respondents Profile
A summary of respondents’ profile show Project Managers (27.9%) and Quantity
Surveyors (24.6%) recorded the highest response. Majority of the respondents (82%) had
working experience of between 5 and 20 years and they are in-between supervisory and
top-level management cadre. This is an indication that the firms had experienced and
knowledgeable respondents and also show their ability to grasp management issues.
Table 1: Demographic Information
Professional Qualification
Frequency
Percentage (%)
Architect
11
18.0
Quantity Surveyor
15
24.6
Engineer
12
19.7
Project Manager
17
27.9
Builder
6
9.8
Total
61
100.0
Years of Working Experience
Below 5 years
5
8.2
5 - 10 years
14
23.0
10 - 15 years
15
24.6
15 - 20 years
21
34.4
Above 20 years
6
9.8
Total
61
100.0
Level/Position in Organisation
Top Level Management
15
24.6
Medium Level Management
27
44.3
Supervisor Role
16
26.2
Technical Staff
3
4.9
Total
61
100.0
4.2. Systematic Risk Management Practices in Building Construction Projects
In order to ascertain the current practices of systematic risk management in the
construction industry, respondents were asked to indicate the level of frequency for
undertaking risk management activities under Risk Identification, Risk Analysis, Risk
Response and Risk Monitoring. Clustering mean scores were computed which also aided
to obtain ranking of variables to determines statistical significance. The following
22 Saidu Minin Mohammed and Isah Muhammad
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
measurement scale regarding mean scores were used: where 1=Never (1.00 to 1.80);
2=Least often (1.81 to 2.60); 3=Less often (2.61 to 3.49); 4=Often (3.50 to 4.20); and
5=Very often (4.21 to 5.00). Means and indices ≥3.50 were considered statistically
significant. Having determined the mean score of each variable, the frequency indices for
the risk management processes were computed, ranked and compared to a significant
threshold of ≥3.50 (Ameyaw & Chan, 2015; Renault et al., 2018).
Table 2: Risk Identification (RI) Process
Variables
Code
Mean
Std.
Deviation
Ranking
Developing risk breakdown structure to define
risk categories
RI1
2.66
1.09370
5
Estimating resources and costs needed for risk
management activities include them in project
budget
RI2
3.11
1.24773
2
Defining and including risk management
activities in the schedule
RI3
2.84
1.03570
3
Holding planning meeting to develop risk
management processes and procedure
RI4
2.51
1.08969
7
Consciously developing process for identifying
risk
RI5
2.54
1.07353
6
Involving all key stakeholders in risk
identification
RI6
2.74
1.26361
4
Identifying risk as and when they occur
RI7
3.98
1.08769
1
4.2.1. Process One - Identification of Risk Factors
Under risk identification variables (Table 2), ‘Identify risk as and when they occur’
emerged the only significant factor with a mean score of 3.98 and a corresponding standard
deviation of 1.087 under this subcategory. Closely following is ‘Estimate of resources and
costs needed for risk management activities include them in project budget’, though not
statistically significant having obtained a mean score of 3.11. This implies that risk
identification is not carried out in line with proper risk management processes or systems.
This particular process is the least engaged risk management process, even though it is
expected to be the most critical (Mills, 2001). Even though a major tool for risk
identification is brainstorming sessions which involve all stakeholders (PMI, 2017), this
came out insignificant as a further proof of risk factors not being systematically identified.
Table 3: Risk Analysis (RA) Process
Variable
Code
Mean
Std.
Deviation
Ranking
Developing risk matrix that defines probability
and impact of risk
RA1
2.44
0.86650
5
Create priorities of risk
RA2
2.57
1.07174
2
Establish overall risk of project
RA3
2.51
1.20586
3
Assess of probability of achieving specific
project objective
RA4
2.38
1.05141
6
Develop qualitative risk analysis methods and
tools
RA5
2.49
1.16366
4
Analyse risk as and when they occur
RA6
3.79
1.06638
1
4.2.2. Process Two - Analysis to Identified Risk
A total of 72% of respondents revealed that risks were analysed (very) often as and
when they occur and hence, with a mean score 3.79, considered significant under the study
(Table 3). However, the entire process of Risk Analysis was found to be not significant.
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Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
This further reinforces the position that risk management in construction is carried out in
an unplanned manner (Mhetre et al., 2016). Whiles Hansen-Addy and Fekpe (2015) pointed
out joint evaluation by key project participants as the most frequently used risk analysis
practice, findings in this study indicate otherwise. From the above table, all the other steps
under risk analysis proved insignificant, indicating that this process in risk management,
though carried out in some instances, but were not done systematically.
Table 4: Risk Response (RR) Process
Variables
Code
Mean
Std.
Deviation
Ranking
Assign one or more persons for each agreed to
risk response
RR1
2.43
1.14687
6
Use tools like decision tree analysis to choose
the most appropriate response
RR2
2.48
1.08944
5
Develop planned responses
RR3
2.85
1.06201
4
Allocate contingency reserve for time
RR4
3.56
1.21848
3
Allocate contingency reserve for cost
RR5
3.62
1.14257
2
Response to risk as and when they arise
RR6
3.87
1.10265
1
4.2.3. Process Three – Responses to Analysed Risk
The results revealed that planned responses are not developed to manage risk factors;
neither is anyone or persons assigned to develop risk responses (Table 4). Very much like
risk identification and analysis, there are no tools that are used to choose appropriate risk
responses. However, respondents were of the view that contingency time and cost reserves
are allocated as risk response measures as they both attained mean scores (3.56 and 3.62
respectively) above the significant threshold of 3.50. With most projects travelling well
beyond initially intended completion periods, according to Asiedu and Alfen (2016),
contract durations are promptly extended to cater for any delays. Consistent with the
developing trend from the findings, risk factors are mostly responded to as and when they
occur, without prior identification and analysis (Boateng et al., 2020).
Table 5: Risk Monitoring (RM) Process
Variables
Code
Mean
Std.
Deviation
Ranking
Discussion of risk in team meeting
RM1
3.02
1.05660
3
Actively and routinely track risk and reassess
RM2
2.39
1.08442
4
Project team hold periodic meeting specifically
for risk discussions
RM3
2.34
1.20948
5
Examine the effectiveness of risk response
RM4
3.08
1.08467
2
Monitor risk, not specific all, but as part of
general management of the project
RM5
3.75
1.01087
1
4.2.4. Process Four – Monitoring of Risk Responses
From (Table 5) above, RM5 is the only activity that is significant. This means that risk
is not specifically monitored, but as part of general project meetings, having obtained a
mean score of 3.75 and the standard deviation of 1.011. This does not deviate so much from
the findings of Hansen-Addy and Fekpe (2015) who indicated periodic status reporting,
which is part of general project meetings, as the most frequently used risk monitoring tool.
This points to the fact that risk is not systematically and consciously monitored. Since risk
management is not consciously carried out, risks are not routinely tracked and reassessed,
the effectiveness of responses is not evaluated, and no dedicated meetings are held to
address risk. This buttresses the findings of Yirenkyi-Boadi and Chileshe (2015) who
concluded that though construction professionals in Ghana are aware of risk management
practices, they do not implement them.
24 Saidu Minin Mohammed and Isah Muhammad
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
4.3. 4.3. Consistency Reliability Test
To ensure reliability of the questionnaire, it was checked for internal consistency
reliability through Cronbach’s alpha.
Table 6: Cronbach’s Alpha Reliability Coefficient for Likert-type
No.
Coefficient of Cronbach’s Alpha
Reliability Level
1
More than 0.90
Excellent
2
0.80-0.89
Good
3
0.70-0.79
Acceptable
4
0.60-0.69
Questionable
5
0.50-0.59
Poor
6
Less than 0.49
Unacceptable
Source: Gliem and Gliem (2003)
As a rule of thumb, to satisfy reliability requirements, values should be greater than
0.70 (Ringle, 2020). Cronbach’s alpha value for this study ranged between 0.70-0.79
(0.704). Thus, the questionnaire satisfied both reliability requirements.
Table 7: Cronbach’s Alpha Reliability Test
Scale Reliability Statistics
Cronbach's α
Scale
0.704
4.4. 4.4. Factor Analysis
Factor Analysis (FA), which is part of the General Linear Model (GLM) family of
procedures that has same assumptions as multiple regressions, and is primarily used to
identify not-directly-observed factors based on a larger set of observable or measurable
indicators (variables). To understand the nature of a particular variable, factor loadings are
computed. Factor loading is the correlation between the original variables in the specific
factor. To test for statistical validity, Kasier – Meyer – Olkin (KMO) was computed (Table
8). KMO measures whether or not the distribution of value is adequate for conducting FA.
KMO with value >0.50 is acceptable. However, a measure of KMO >0.90 is marvellous,
>0.80 meritorious, >0.70 middling, >0.60 mediocre, >0.50 miserable and <0.50
unacceptable (George & Mallery, 2003). The use of FA in construction risk management
has gained acceptance as many studies have adopted its use (Renault, 2018; Zafar, 2019).
In the RM phases of identifying, responding to, and monitoring risks, all factor loadings
were above 0.50, and the Kaiser-Meyer-Olkin (KMO) measure exceeded 0.6, indicating
the suitability of the data and sample size for Factor Analysis. Similarly, in the risk analysis
process, the KMO was 0.72, and all factor loadings were above 0.50, indicating
appropriateness for Factor Analysis.
Certainly, in both the risk identification, response, and monitoring stages, as well as
the risk analysis process, the high factor loadings exceeding 0.50 indicate strong
relationships between the observed variables and the underlying factors being measured.
Additionally, the satisfactory KMO values suggest that the data collected is appropriate for
Factor Analysis, affirming the robustness of the analytical approach employed in assessing
and managing risks. This level of validation enhances confidence in the results obtained
and strengthens the overall RM framework, enabling more informed decision-making.
Assessment of Systematic Risk Management Practices on Building Construction… 25
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
Table 8: Factor Analysis
Variable
Indicator
Factor
Loading
KMO
Develop risk breakdown structure to define risk categories
RI1
0.816
0.69
Estimate resources and costs needed for risk management
activities include them in project budget
RI2
0.920
Define and include risk management activities in the
schedule
RI3
0.576
Holding of planning meetings to develop risk management
RI4
0.612
Consciously develop process for identifying risk
RI5
0.748
Involve all key stakeholders in risk identification
RI6
0.521
Identify risk as and when they occur
RI7
0.640
Develop risk matrix that defines probability and impact of
risk
RA1
0.811
0.72
Create priorities of risk
RA2
0.701
Establish overall risks of project
RA3
0.866
Assessment of probability of achieving specific project
objective
RA4
0.460
Develop qualitative risk analysis methods and tools
RA5
0.682
Analyse risk as and when they occur
RA6
0.776
Assign one or more persons for each agreed to risk
response
RR1
0.382
0.68
Use tools like decision tree analysis to choose the most
appropriate response
RR2
1.022
Develop planned responses
RR3
0.708
Allocate contingency reserve for time
RR4
0.705
Allocate contingency reserve for cost
RR5
0.715
Response to risk as and when they arise
RR6
0.594
Discussion of risk in team meeting
RM1
0.572
0.60
Actively and routinely track risk and reassess
RM2
0.819
Project team hold periodic meeting specifically for risk
discussions
RM3
0.372
Examine the effectiveness of risk response
RM4
0.820
Monitor risk, not specific all, but as part of general
management of the project
RM5
0.419
5. CONCLUSION AND RECOMMENDATIONS
This study aimed to assess the SRM practices on building projects in Nigeria. The
techniques of project RM in the Nigerian construction industry were discussed. There is
little recording of the RM process, which is viewed as an informal and insignificant effort
by all stakeholders. This research discovered that risk management is not conducted in a
systematic manner due to a lack of risk identification, analysis, response, and monitoring
tools.
This study therefore recommends holistic risk management as against ad-hoc
approaches. Also, construction professionals and all those involved in risk management
should receive the necessary trainings, and firms should develop ways of harnessing,
storing and sharing practical experiences, expertise and knowledge. Top management and
organisational culture should support efforts towards systematic risk management, with its
full inclusion in the organisations governance structures. Full accountability of all risk
management efforts must be asked for and documented, and continuous improvement of
systematic risk management be made part of the contracting organisations. Also
consideration of managing risk through the use of models and frameworks, with the
26 Saidu Minin Mohammed and Isah Muhammad
Journal of Contemporary Research in the Built Environment, Vol. 8, No. 1, March 2024
assistance of Artificial intelligence should begin to be in the forefront of management
meetings and thinking.
In recent times, advocacy is in favour of managing risk at the enterprise level. However,
very little is known about enterprise risk management in the Nigerian construction industry.
Further research should focus on unearthing the challenges working against the
implementation of Enterprise Risk Management in developing countries such as Nigeria.
6. LIMITATION OF THESTUDY
This study is limited to the risk management of contracting organisations, from where
all data were collected. Further studies could assess other stakeholders in the industry.
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