THE EFFECT OF RISK MANAGEMENT PRACTICES ON PROJECT

SUCCESS IN CASE OF MOJO CITY SELECTED GOVERNMENT

PROJECTS

HARAMBEE UNIVERSITY
SCHOOL OF GRADUATE STUDIES

BURUSE ROBA BEDADA

A RESEARCH PROPOSAL SUBMITTED TO HARAMBEE

UNIVERSITY, DEPARTMENT OF BUSINESS ADMINISTRATION IN
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
AWARD OF MASTER DEGREE IN PROJECT MANAGEMENT
/MPM
ADVISOR: BIRUK MILION
FEBRUARY 2023

ADAMA, ETHIOPIA

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DECLARATION
I, the researcher, do here by declare that this research proposal is my original work and that
it has not been submitted partially, or in full, by any other person for an Award of a
Master Degree in any other college or institution or University.

Declared by

Buruse Roba Bedada Signature_________ Date_______

Confirmed by Advisor

Biruk Million Signature____________ Date_________

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CERTIFICATION
This is to certify that the Thesis Proposal prepared by Buruse Roba entitled with “the
effect of risk management practices on project success: The Case Of Modjo Town
Administration Selected Government Projects” which is submitted for partial fulfillment of
the requirements for Degree of Masters of Project Management /MPM/ complies with
regulation of the University and meet the accepted standard with respect to originality and
quality. Therefore, this proposal has been submitted with my confirmation as advisor to the
candidate.

Advisor:

Biruk Million

Signature______________

Date ______________

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Table of Contents
Content Page

Declaration………………………………………………………………………………………………I

Certification…………………………………………………………………………………II

Abstract…………………………………………………………………………………………………IV

1. Introduction……………………………………………………………………………………………

1.1. Background of the study………………………………………………………………….…..…………..

1.2. Statement of the problem………………………………………………………………………………………3

1.3. Research Questions and/or Hypothesis……………………………………………………………….…3

1.4. Objectives of the study………………………………………………………………………………………………………

1.4.1. General objective……………………………………………………………………….………..……………….….…....

1.4.2.Specific objectives

1.5. Significance of the study……………………………………………….………………………………

1.6. Scope of the study……………………………………………………………………………..……………….

1.7. Structure of the Study/Organization of the study…………………………………………………………..……………….5

Chapter two……………………………………………………………………………….……….…………...…6

2. LITERATURE REVIEW………………………………….………………………………….………………………..……..………….....…..…6

2.1. Introduction……………………………..……………………..…………..…….……………………..……..…6

2.2. Theoretical Review………………………………………………………………………………………..….6

2.3.Emperical Review: problems and drawbacks……………………………………………………………..….14

2.4.Conceptual framework………………………………………………………………………………………..20

CHAPTER THREE………………………………………………………………………………....….............…23

3.1.Research Methodology……………………………………………………………………….........................................….

3.1.1. Description of the study area………………………………………………………………………..….…23

3.1.2.population of the study…………………………………………………………………………………....23

3.1.3. Sample and Sample Size ……………………………………………………..……………………………23

3.1.4. Research Design……………………………………………….….…………………………...….……….

3.1.5. Data gathering instruments………………………………………..………………….………………..….25

2.1.6.validity and reliability of data……………………………………………………………………………...25

3.1.7.Methods of Data Anlysis

3.1.8 Ethical consideration…………………………………………………………………………………….……26

Reference

Work Plan

Budget Break Down………………………………………..………………………………………………….….…30

Appendix ……………………………………………………...……………………………………………………31

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ABSTRACT

The main objective of the study will be to assess the Effect of Risk management practices
on project successes in Mojo City Administration. Currently risk management shall be an
organized and regulated practice in developed countries. In contrast, in developing
countries there shall be problems on understanding and implementing risk management.
Lack of risk management in construction projects will be one of the major setbacks for
construction projects performance in our country. The proposal will be deals to investigate
risk management practices, challenges and ways to improve risk management on public
building and road construction projects in Mojo. The main methodology will be starts with
a comprehensive literature review, followed by structured questionnaire, case study and
interview with construction professional in Mojo ongoing and time delay projects. After the
questionnaires will be complete, the answers will analyze using statistical processing
software, SPSS and Microsoft Excel. Major Findings will be summarized that risk
management practices shall low and lack knowledge on the subject. In addition respondents
shall not be used PMI risk management process, to be identified, analyze response and
monitor risks. Furthermore, the risk management techniques will be by respondents, past
experience and documentation review will be used to risk identification techniques. Major
Finding will be summarized, conclusion remark will be done and recommendation will be
forwarded for respective organizational management bodies.

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 CHAPTER ONE

1.INTRODUCTION

This chapter deals with Background of the study, Statement of the Problem,
Objective of study, significance of the study, determination of the study an
organization of the study.

1.1 Background of the study

Now a day with the increase Construction projects, due to complexity, and future oriented features are
constantly exposed to risks. Theoretically, risk is defined as a positive or negative deviation of a
variable from its expected value (Keri & Mustafa raj, 2013). However, in everyday life it is considered
only as a loss. In order to have a smooth and successful implementation of a project, a manager must
have a deep knowledge on risks. Risk management constitutes the strategy to avoid losses and use
available chances. It requires assessment of the possible situations and scenarios occurring in the
future. The main goal is to minimize or totally avoid the possibilities of any failure in achieving project
goals (Keri & Mustafa raj, 2013). To make risk management an effective and efficient function, it is
necessary to have a proper and systematic methodology and more importantly, knowledge and
experience of various types of risk management technique (Alefrdo et al., 2015).

Currently, risk management is an organized and regulated practice in developed countries. In countries
such as United States of America, United Kingdom and Canada, risk management has become a
universal management process involving quality of thought, quality of process and quality of action in
contrast, in developing countries there are still problems on understanding and implementing risk
management (Keri & Mustafa raj, 2013).

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According to the Project Management Institute, risk management is one of the ten knowledge areas
propagated by the Project Management Institute (PMBOK, 2017), Risk management in the
construction project management context is a the processes of conducting risk management planning,
identification, analysis, response planning, response implementation, and monitoring. The objectives
of risk management are to increase the probability and/or impact of positive risks and decrease the
probability and/or impact of negative risks, in order to optimize the chances of project success. 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.

Risk management is a very important management process which helps to achieve project objectives.
It helps gain greater awareness and understanding of the types and nature of risks inherent in the
project, and the likelihood of their occurrence. It also helps to assess the potential impact of risks on
the viability of a project and determine how best to eliminate or control risks. The construction
industry operates in a very uncertain environment where conditions can change due to the complexity
of project (Krishna et al., 2014). The aim of each organization is to be successful and RM can facilitate
it. However, it should be underlined that risk management is not a tool which ensures success but
rather a tool which helps to increase the probability of achieving success (Krishna et al., 2014).

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 1.2. Statement of the Problem

Success in construction project is indicated by its performance in the achievement of project

Time cost, quality, safety and environmental sustainability objectives.

Lack of risk management in construction projects is one of the major setbacks for construction projects
performance in Ethiopia (Mitike, 2017). The construction industry generally has poor cost and
schedule performance and has a reputation for time and cost overruns. While some degree of poor cost
and time schedule performance is inevitable in construction projects, it is possible to improve risk
management to minimize their negative impact and thus improve the project performance

1.3.Research Questions

In order to achieve the objectives, the following research proposal questions will formulate to support
the investigation:

 What are the practices of risk management in Mojo public building construction projects?
 What are the challenges that hinder risk management implementation in Mojo public building
and road construction projects?
 How can risk management practice be improved in public building and road construction
project?

1.4.Objective of the Study

1.4.1.General Objective

The general objective of this study will be to investigate the risk management practices and
challenges to improve risk management and performance on public building and Road construction
projects in Mojo

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1.4.2.Specific Objectives

The specific objective of study are the following;

 To investigate the current practice of risk management in Mojo construction project.

 To identify the challenges facing risk management implementation in Mojo public construction
projects.

 To recommend points of improvement for the risk management practices in Mojo public
construction projects.

1.5. Significance of the Study

The Risk Management Practices report will be of some value to concerned body such as,

managers and other professionals find the best way of planning and executing projects through
appropriate risk management tools and also the significant will be in helping alleviate some of the

problems and challenges facing the construction industry by enlightening the parties involved in the
construction industry about risk management in order to achieve their objectives effectively

and efficiently.

1.6.Scope of the Study

The scope of this study will be focuses on public building and road construction projects in Mojo
only and heavy civil engineering works will not considered. The study will be only investigates

risk management practice, challenges and ways to improve risk management practice. The

respondents shall be professionals in the construction projects working in Mojo randomly selected
clients, consultants and contractors involved in on- going and time delay projects.

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 1.7.Structure of the Study/Organization of the study

This proposal will be organized as follows; the first chapter is the introductory chapter which
provides basic information on the research including back ground and statement of the research
problem, research objectives, significance of the research and limitations of the research. The second
chapter serves as literature review section of the proposal. The chapter provides an overview of
construction project risk, construction risk management practice and challenges to implement risk
management. The third chapter presents the methodology will be used for conducting this research.
It presents an overview of the research’s approach and instrument, research sample and methods of
analysis of the research data. The fourth chapter will be about data presentation, analysis of data and
Interpretation and The last chapter will deals with major findings, conclusions, remark and
recommendations.

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CHAPTER TWO

2. LITERATURE REVIEW

2.1.Introduction

This chapter reviews the relevant literature on project management with an emphasis on building
construction projects as the context of this thesis. The concept of risk in general and in the context
of construction can be clarified and its management practice, and risk management processes and
tools will be discussed. This chapter then will be underlines risk management practices in building
and Road construction projects as an important issue in order to improve project performance and
identify the risk factors influencing the project goals. Related studies undertaken by other
researchers are reviewed and their findings are discussed.

2.2. Theoretical Review:

An overview to the definition and concept of risk management &project success

This chapter divided into three parts. The first part is a description of project management with an
emphasis on construction projects. The second part introduces concept of risk management and
provides definitions of terms used in this process. Finally, the theoretical concept of risk
management practice, problems and challenges to implement risk management are presented.

 Project

Project Management Institute PMI, (2013), defines a project as “a temporary endeavor undertaken
to create a unique product, service, or result”. It is temporary because it has a defined start and
finish date; it is unique, meaning that it is not a routine operation, and the product/service would be
different from other similar products/services. Examples of projects can be considered as
developing a new product, designing a new machine, building a new shopping mall. Financial
resources, human and materials are organized in a project for delivery of a specific work
considering a variety of constraints such as time and cost (Manna, 2013).

Therefore, different aspects of the project should be managed properly in order to deliver the
objectives of the project on time and within budget, and hence it is important to set clear objectives
for the project. Project management as defined by PMI, (2013), is the
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Application of knowledge, skills, tools, and techniques to project activities to meet the project
requirements.

According to PMBOK, (2017) one of the largest contributors to project complexity is the project
start and finish date which makes the success of projects being undertaken in any organization to be
dependent on risk management strategies throughout the project lifespan. This implies that all types
of organization regardless of their sizes are bound to engage in project work. Though these projects
under takings differ, their success depends on effective management in order to meet their
objectives within the constraints of scope, time; cost, and quality (PMBOK, 2017). However;
different projects are facing challenges of risks and uncertainty that affect the project success.

Apart from the time, cost and scope of the project which need to be clearly defined, the quality
(specifications) of the various parties‟ requirements and risks involved in the project should also be
determined distinctly. Each of these criteria should be managed in addition to the communication
between them. A project usually exists in an organizational context (comprising other projects); is
influenced by this context (environment) and may also influence it in turn.

Project management scholar’s like Bodicha, (2015), argue that the main purpose of project
management is to foresee or predict as many of the dangers and problems as possible and to plan,
organization and control activities so that the project is completed as successfully as possible in
spite of all the difficulties and risks. This means that every project is prone to risks and it is the
work of the project manager to understand this. There are various types of projects and according to
the characteristics of each type, it

may be managed differently. One of these types is construction project which is explained below.

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  Construction project

Construction project is a type of project dealing with the process of creating physical infrastructure
such as residential building, industrial and commercial buildings, highways, and utilities.

The construction project is a becoming increasingly complexity as it involves risks and uncertainty
and requires different type of professional skills to develop a well thought out plan at various phases
of the project's life-cycle. Bowditch, (2015), says the success of a construction project from
execution to finish needs effective planning. Phases (stages) in construction project are more or less
like all the other types of projects and different authors/institutes have suggested their own division
of phases leading to the similar project life cycles.

Generally, every construction project starts with the feasibility phase in order to check whether it is
possible to operate this project or not and result in a go/no-go decision at the end of the phase.
However, this phase can be iterative if a project requires modification before a go decision can be
made. In case of possibility of the project, there will be a planning phase followed by designing the
project according to its specification and finally, the will be the actual construction phase and
building of the project. Other phases such as tendering, preconstruction and handover may also be
added to these phases but the concept stays the same.

There are various parties involved in any construction project; usually the main parties are client
(employer), contractor and consultant. However, each of these main categories may consist of
different specialist such as superintendent, project manager, subcontractor, quantity surveyor and
technical manager. Any of these parties may get involved in the construction project (in different
phases of the project) depending on the type of the project, type of the procurement system and type
of the contract chosen for the project.

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A construction project, like any other project, also faces different risks throughout the life of the
project. risk can constrain the achievement of key project objectives, time, cost and quality.
Inability to achieve the project objectives has great consequence on all project stakeholders
involved in the construction. For the client it could mean extra cost and less return on investment,
for the consultants it could result in loss of confidence placed in them by the clients, for the
contractor it could mean loss of profit and bad reputation etc.

The construction industry is a very important part of any country. It highly contributes to the
growth and development of the economy in developing countries like Ethiopia (Addis, 2014).
According to this study, the construction industry plays a major role in developing countries since
it constitutes a significant portion of gross national product and employment; at least three-
quarters of the world’s construction workers are in the less developed countries. The study also
state that construction workers in the less developed countries are more exposed to accidents and
endure much poorer terms and conditions of work than workers in the developed countries.

Construction is a major component of investment; hence expansion in construction activity is

closely related to economic growth. Numerous studies have shown that construction output grows
particularly fast, often exceeding the rate of growth of the economy as a whole, as countries put
their basic infrastructure in place during the early stages of development. This implies that
construction plays a major role in improving the economic growth of a country.

Despite improvements in the project risk management practices across the developed countries
construction industry, in the developing countries construction projects are still suffering from ill-
defined scope, design and mismanagement and as a result, the projects are accompanied by clear
time, cost and quality gaps .

Risk is unavoidable in almost all construction projects. Because of exposure to the outdoors,
construction is affected by both daily and seasonal weather variations. It is also

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often influenced significantly by the availability of local construction financing, labor, materials and
equipment etc. These and all the above mentioned factors make construction a very risky undertaking.
Construction is especially important in developing countries since it can greatly contribute to the
economic growth but as mentioned above the industry is faced with a lot of problems. Hence, to make
the construction effective and efficient there should be some way to manage and control the risks and
minimize the problems.

 Risk

Before discussing about risk management it would be better to understand what the terminology „risk‟
means. Risk is associated with every aspect of our daily life, i.e. risk is involved in every step we take.

Different literatures, professionals and standards define risk in their own way. But most of them
confirm that the view towards risk is most of the time negative. Risk is defined as an uncertainty of
outcome, whether positive opportunity or negative threat, of actions and events. The risk has to be
assessed in respect of the combination of the likelihood of something happening, and the impact which
arises if it does actually happen (Divvy Gupta, 2016).

Regardless of the continuing debate among risk management practitioners about the definition of risk;
there exist several attempts from different professional bodies and standard institutions to propose a
definition of risk that capture broad acceptance. However there is no one official definition for risk.
But it was discovered most standards use the word risk in its negative sense to mean, chance of bad
consequences, or exposure to mischance and some standards like the UK define risk as an uncertain
event or set of circumstances which, should it occur, will have an effect on achievement of objectives.
Since the effect is not specified it could mean either negative or positive and taking this into
consideration risk has been defined by (PMBOK, 2017), as an uncertain event or condition that, if it
occurs, has a positive or negative effect on one or more of the project’s objectives.

Risk has long been recognized in the construction industry. Contractors are required to accept a certain
level of risk due to unforeseen costs that they incur during construction. Risk is also an issue for
clients. This risk can be minimized by including contingency sum in the contract document.

One of the major problems in evaluating the risk of a project is the identification of the full range of
risks to which the project could be subjected to. The identification process is especially difficult

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because what is considered risk is influenced by the person’s perception. Therefore in order to reduce
the effect of these individual perceptions, multiple experts on risk management should be involved in
the contract design stage. A better result of managing risk can be obtained if a risk management is
involved starting from the contractual stage and work throughout the life of the project .

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Risk should be fully understood by all the contracting parties; otherwise it might cause many problems to
all involved. The effect of poor understanding is that the contractual parties might adapt risks they don’t
understand and be subject to different problems and bankruptcy.

 Risk in construction projects

Manna, (2013), have defined risk in relation to construction as a variable in the process of a construction
project whose variation results in uncertainty as to the final cost, duration and quality of the project.

Various institutes and authors have classified construction risks into different types and hierarchies. A
broad classification has been proposed by Manna, (2013) as Pure/static risks which are relating only to
potential losses with no potential gain and dynamic/speculative risks with possibility of potential gains as
well as losses. Dissimilar to consideration of losses and gains associated with the risk for its
classification Manna, (2013), have considered internality and externality of the risk to the project. They
have classified risk into two types of internal and external; internal risks are the ones generating inside
the project and more probable to be controlled whereas external risks are originated outside of the project
and therefore mostly not controllable.

Risks can be further subcategorized into smaller groups according to their type and impact. Examples are
risk classifications of Wigand, (2006) into four categories: economic and financial risks, external and site
condition risks, technical and contractual risks, and managerial risks; and the PMBOK, (2017)‟s one into
another four categories: Technical risks, organizational risks, project risks and external risks (TOPE)
risks.

The risk could also be grouped based on sources concerned with stakeholders. For example, the time
associated risks, environmentally associated risks, cost associated risks and safety associated risks. The
sub-categories of human risks associated with construction projects include technical, political, social,
economic, legal, financial, health, managerial and cultural risks. Bhavsar, (2014), grouped risk into ten
categories, namely:

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 Design: Defective design, inaccurate quantities, not coordinated design,
rush design, awarding the design to unqualified designers, lack of
consistency between bill of quantities, drawings and specifications.

 Physical: Occurrence of accidents, because of poor safety procedures,

supplies of defective materials, security of material and equipment, public
security, varied labor and equipment productivity.

 Logistics: Improper site investigation, inaccurate project program,

unavailable labor, materials and equipment, high competition in bids,
undefined scope of working, poor communications between the home and
field offices (contractor side)

 Legal: Ambiguity of work legislations, difficulty to get permits delayed

disputes resolutions, legal disputes during the construction phase among
the parties to the contract, no specialized arbitrators to Environmental:
Adverse weather conditions, difficulty to access the site (very far),
environmental factors (floods, earthquakes, etc.)

 Construction: Gaps between the implementation and the specifications

due to a misunderstanding of drawings and specifications, actual quantities
differ from the contract quantities, design changes, lower work quality in
the presence of time constraints, rush bidding, undocumented change
orders.

help settle fast.

 Management: Poor communication between involved parties, ambiguous

planning due to project complexity, changes in management ways
information unavailability (include uncertainty), resource management.

 Cultural: Religion, cultural custom

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  Financial: Delayed payments on contract, unmanaged cash flow, inflation,
financial failure of the contractor, exchange rate fluctuation, monopolizing
of materials due to closure and other unexpected political conditions.

 Political: New governmental acts or legislations, inflation, unstable

security circumstances (invasions).

 Risks in construction Project life cycle

Risks shall be associated with every project and shall be identified in order to avoid negative impacts on
the overall performance.

 Critical Risk Factors in construction projects

The critical risk factors will be identified by many researches do in different type of projects like
residential, industrial, commercial, infrastructure etc. factors like, Country risk (inflation, country
economic condition), environmental and geological risk (Weather and climatic conditions), statutory
compliance risk (statutory clearance before planning a project), design risk (scope and design changes),
project execution risk (new technology implementation, poor Safety procedures, construction delays,
inadequate managerial skills, improper coordination between teams), resource risk(Lack of availability
of resources) are the critical risk factors in various international projects (Renuka, 2014).

2.3. Empirical Review: problems& drawbacks

Project risk management is studied widely in the areas of projects and there is very limited research find
in the area of non-governmental organization working for not profit.

 Project Management in International Development Projects

International development organizations and non-government organization have been using projects to
implement their objective. Projects have always been part of the International Development landscape
whether as stand-alone or part of a program (European Commission, 2007;). The idea is to deliver
goods or services that are intended for public use in every single ‘poor’ country around the World and in
almost every sector of activity: infrastructure, utilities, agriculture, transportation, water, electricity,
energy, sewage, etc (Diallo & Thuillier, 2004).

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International Development Projects cover almost all possible sectors of PM application, they inevitably
share some characteristics with conventional projects in that they deliver goods and services; are
limited, temporary, unique, multidisciplinary; they develop through a life cycle; they face time, cost and
quality constraints; and require some specific tools and techniques for their implementation (Ika &
Hodgson, 2014).

 Risk management processes

A number of variations of the PRM process have been proposed. Boehm (1991) suggested a process
consisting of two main phases: Risk assessment, which includes identification, analysis and
prioritization, and Risk control, which includes risk management planning, risk resolution and risk
monitoring planning, tracking and corrective action(Boehm, 1991).

Fairley (1994) states that there are about seven steps: (1) Identify risk factors; (2) Assess risk
probabilities and effects; (3) Develop strategies to mitigate identified risks; (4) Monitor risk factors; (5)
Invoke a contingency plan; (6) Manage the crisis; (7) Recover from the crisis(Fairley, 1994). The
Software Engineering Institute (SEI 2010), a leading

source of methodologies for managing software development projects, looks at project risk management
as consisting of five distinct phases (identification; analysis; response planning; tracking and control)
linked by an ongoing risk communications effort.

Risk management researchers have focused on the examination of process models that provide
prescriptions for risk management, typically including variations on the four processes of risk
identification, assessment, response planning, and monitoring(Taylor, Artman, & Woelfer, 2012).
Schwalbe (2016) mentioned on Pimchangthong and Boonjing (2017) expressed six processes that were
involved risk management as follows: planning risk management, risk identification, qualitative risk
analysis, quantitative risk analysis, risk response planning, and risk monitoring &
control(Pimchangthong & Boonjing, 2017).

According to PMI 2013, Project risk management includes the processes of conducting risk management
planning, identification, analysis, response planning, and controlling risk on a project (Didraga, 2012).

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  Plan Risk Management

According to PMI (2013), Plan Risk Management is the process of defining how to conduct risk
management activities for a project. The process involves a systematic approach to planning the risk
management activity based on the premise that careful planning enhances the possibility of project
success (Richardson, 2014). The key benefit of this process is it ensures that the degree, type, and
visibility of risk management are commensurate with both the risks and the importance of the project to
the organization. The risk management plan is vital to communicate with and obtain agreement and
support from all stakeholders to ensure the risk management process is supported and performed
effectively over the project life cycle (Project Management Institute (PMI), 2013).

 Risk Identification

The first step in the process of risk assessment is risk identification. According to Kwak and Stoddard
(2004) mentioned on Teller & Kock (2013), the identification of risks is the most critical activity in risk
management (Teller & Kock, 2013).

 Risk Analysis

Once the risks will be identify, they have then to be analyze. Risk analysis is based on the identification
of all feasible options and data relating to the various risks and to the analysis of the various outcomes
of any decision(Roberts et al., 2003) (Roberts and Wallace, 2004). Kroner (2009), defines risk analysis
as a systematic process to estimate the level of risk for identified and approved risks( Kroner). It involves
the determination of qualitative and quantitative rating values for the identified threat or opportunity.
These two steps are designed to provide a measure of quantification to the identified risk
events(Richardson, 2014).

A more stable measure of risk prioritization can be arrived at by fusing elements of strategies from
several matrix-based schemes. The combination of these schemes leads to a cubic-structure, rather than
a matrix, as risks are evaluated along three dimensions: impact, probability, and discrimination
(Corvine).

Lansdowne (1999) as mentioned by Corvine 2006 explained that the first dimension, impact, uses a five-
point scale for evaluating risk impact (Corvine):

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 (1) Critical risk – five points – would cause program failure.

(2) Serious risk – four points – would cause major cost or schedule increases and secondary
requirements may not be achieved.

(3) Moderate risk – three points – would cause moderate cost/schedule increases; important
requirements would still be met.

(4) Minor risk – two points – would cause only small cost/schedule increases.

(5) Negligible risk – one point – would have no substantive effect on cost or schedule. The second
dimension, probability, is based on Kendrick’s (2003) as mentioned on Corvine 2006 rubric of:

 High probability – five points – likely occurrence with a 50 percent or greater chance.

 Medium probability – three points – unlikely with a 10 percent to 49 percent chance of

occurrence.

 Low probability – one point – very unlikely with a 10 percent or less chance of occurrence.

The third dimension, entitled discrimination and based on criteria from Kendrick (2003), is unique
within simple decision-based models. It provides an additional perspective that is designed to gauge the
impact of the risk to the overall framework of the project, rather than looking at each risk as an
independent variable within the project. The levels of discrimination are(Kendrick, 2003):

 High effect – one point – project objectives are at risk, this risk will result in a mandatory
change to scope, schedule, or resources.

 Medium effect – three points – project objectives will be achieved, but significant re planning
will be required.

 Low effect – five points – no major plan changes will result; the risk is an inconvenience or can
be handled with minor overtime work.

All of the project risk factors can then be ranked by severity of risk and, therefore, overall potential
impact on the project.

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Qualitative Risk Analysis

PMI, 2013 defines qualitative risk analysis as the process of prioritizing risks for further analysis or
action by assessing and combining their probability of occurrence and impact.

The qualitative risk analysis process is performed regularly throughout the project life cycle. Some of the
tools and techniques that can be used to analyze risk qualitatively are risk probability and impact
assessment, probability and impact matrix, risk data quality assessment, risk categorization, risk
urgency assessment and expert judgment .

Quantitative Risk Analysis

Quantitative risk analysis is the process of numerically analyzing the effect of identified risks on overall
project objectives. The key benefit of this process is that it produces quantitative risk information to
support decision making in order to reduce project uncertainty (Project Management Institute (PMI),
2013) . According to Turner (2009), this will only be conducted on larger, more complex projects,
because considerable time and effort is required to do it. Turner (2009) also states that there are several
ways of doing quantitative risk analysis on project (J. Rodney , Ledwith , & Kelly 2009). Data gathering
and representation techniques, quantitative risk analysis and modeling techniques and expert judgment
are some of the techniques and tools used to analyze risk quantitatively. Project documents are updated
with information resulting from quantitative risk analysis (Project Management Institute (PMI), 2013).

 Risk Response

According to PMI (2013), the key benefit of risk response is that it addresses the risks by their priority,
inserting resources and activities into the budget, schedule and project management plan as needed.
Risk response strategies have varied and unique influence on the risk condition. These strategies should
be chosen to match the risk‘s probability and impact on the project‘s overall objectives.

 Risk Avoidance:

Recognizes that one way to steer clear of untoward events is to avoid doing things that can get us in
trouble (Frame, 2002). Risk avoidance is essentially the philosophy of avoiding risk by negotiations or
deals to get rid of it completely (Roberts et al., 2003) whereby the project team acts to eliminate the
threat or protect the project from its impact (Project Management Institute (PMI), 2013). According to

18
 Winsock (2014), the project plan can be modified so as to avoid the situation that creates the risk and to
eliminate the threat entirely (Winsock).

 Risk Transfer

Risk transfer is defined as response strategy as transferring or plan to shift the consequences of risk
events along with responsibility for its management to a third party(Richardson, 2014; Winsock, 2014).
According to PMI (2013), it typically involves payment of a risk premium to the party taking on the
risk.

 Risk Mitigation:

Risk mitigation is a process designed to reduce the probability or impact of a potential risk to a more
acceptable level. This may also include reducing the consequences of the risk (Richardson, 2014) .
Taking early action to reduce the probability and/or impact of a risk occurring on the project is often
more effective than trying to repair the damage after the risk has occurred (Project Management
Institute (PMI), 2013).

 Risk Exploitation:

This strategy is selected for positive risk impacts where the organization wishes to ensure that the
opportunity is pursued. It seeks to eliminate the uncertainty associated with a particular upside risk by
making sure that the opportunity will have a higher potential to be successful (Richardson, 2014) and
(Project Management Institute (PMI), 2013).

 Risk Sharing:

Sharing a positive risk involves allocating some or all of the ownership of the opportunity to a third party
who is best able to capture the opportunity for the benefit of the project (Project Management Institute
(PMI), 2013).

 Risk Enhancing:

Enhancing a positive risk involves changing or modifying the size of the opportunity by improving its
probability and/or impacts and by identifying and maximizing key drivers to positively influence

19
(Richardson, 2014). PMI (2013), implies that identifying and maximizing key drivers of these positive-
impact risks may increase the probability of their occurrence (Project Management Institute (PMI), 2013).

 Risk Acceptance:

This strategy can be used for negative risks or threats as well as positive risks or opportunities. PMI
(2013), describes this response strategy as a strategy whereby the project team decides to acknowledge
the risk and not take any action unless the risk occurs.

The most common active acceptance strategy is to establish a contingency reserve, including amounts of
time, money, or resources to handle the risks (Project Management Institute (PMI), 2013). Richardson
(2015), states that some risks are so small and easily dealt with that it is not economical to spend time
developing a response mitigation plan (Richardson, 2014)and according to Straw, (2015) this strategy
could include doing nothing(Straw, 2015).

 Risk Monitor and Control

According to Callahan and Brooks (2004), risk control has several features: (1) monitoring project
results for signs that risks may occur or may have occurred, (2) reviewing risk responses that have been
taken to see if they were effective, (3) reviewing project goals and objectives to ensure that they are still
valid, and (4) reviewing the project context to see if any changes in external factors may affect the
project. Control risk is the process of implementing risk response plans, tracking identified risks,
monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout
the project(Richardson, 2014).

2.2. Conceptual framework

This research proposal assess the project risk management practices of Challenge construction projects.
As shown on the theoretical literature review, a formal model of project risk management is suggested
to be used. Accordingly Challenge construction project’s risk management process steps will be
reviewed against the formal project risk management model including the commonly applicable
techniques in each steps of the process.

20
21
Steps in project management

Risk Planning

Risk Identification
Sound Project Risk
Management

Risk Analysis (Qualitative &

Quantitative)

Risk response

Risk Monitoring and control

2.2 Chapter Summary

This chapter mainly focused on giving more literature whilst attempting to answer the main research
questions which show the significant relationship between the effect of risk management and project
success. Furthermore, the next chapter presents the following: research design, the population of the
study, the sample and sampling techniques, instruments for data collection and method, data analysis and
presentation methods and the research procedures.

22
 3.CHAPTER THREE
3.1. RESEARCH METHODOLOGY
This chapter will be describes the methodology of the research proposal. A description of data collection
procedure will be adopted for this research. This chapter will be also provides the information about
research strategy, research design, target population and sample size. A detailed methodology and tools
used will be described.
3.1.1.Description of the study area
The research will be conduct the presents of risk management practice and challenges on public building
and road construction projects in Oromia region Mojo City. The city strategically located at the center of
the country’s corridor of Dry port.
3.1.2.Population of the study
Statistically, Population will be explained to be units that have the chance to be involved in the
survey sample. The units can be people, employee or members of a particular set, For the purposes
of this study, the considered population of this study will be to include clients, consultants and
contractors involved on on-going and time delay projects in Mojo city public building and Road
construction projects. First populations of seventy eight (78) clients, consultants and contractors
involved on on-going and time delay projects in Mojo public building and road construction
projects will selected.
3.1.3. Sample and Sample Size
Evan, (2008), defined sampling as the process used in selecting representative units of a population
for the study in a research investigation.
Scientific knowledge will be derived from samples. Sampling procedures will be helps in solving
problems in scientific research works (Evan, 2008). The sample size for the study will be arrived at
using statistical calculation. The formula as shown below derived by (Evan, 2008), will be used to
the sample size formulas for small (hyper geometric) populations are shown below.

n= N*Z2*p*q
E2 (N
– 1)
+Z2*
p*q

23
•n is the required E Sets the accuracy sample proportion. If you want to know what
sample size proportion of

•N is the population Individuals are in favor of some policy, with an accuracy of plus or minus
size 3%,
•P and q are the then E is set to 0.03.
population proportions.
(If you don't know what
these, are set them each
to 0.5.
•Z is the value that
specifies the level of
confidence you want in
your confidence
interval when you
analyze your data.
Typical levels of
confidence for surveys
are 95%, in which case
z is set to 1.96.

24
 3.1.4..Research Design
The research can be both qualitative and quantitative in nature. Some data will be collected in
descriptive form, while other data will be in numeric form. The research can be an observational
descriptive research i.e. it involves observing the situation as it will be without getting involved
and changing things.
Data for the research will be collected using both primary and secondary sources. The primary
data will be obtained through questionnaire directed to contractors, consultants and clients that are
involved in Mojo public building and Road projects. The secondary data will be obtained from
thesis, journals, books and different articles in published documents. The secondary data will be
used to get an insight of the problem and will be used as criteria for developing and analyzing the
primary data.

3.1.5.Data gathering instruments

Among the available methods in collecting data three methods will be adopted. These are
literature review, interviews and questionnaires. Literature will be review to establish what others
have been documented on the subject matter. Useful information will be collected from seminar
and workshop papers and journal papers. Questionnaires will be used to gather information for
the study. The questionnaires will be both open-ended and closed Questionnaires. Structured
interviews with selected clients, consultants and contractors and case study will be conduct to gain
information in the subject matter.
3.1.6.Validity and Reliability of Data

To test the validity and reliability of the study, I will analyze the existing situations, examining the
questionnaires and interviews. Hence, I would have tried the valid and reliable data to realize the
objective of this study.

3.1.7. Method of Data Analysis

Data analysis is a technique that typically involves multiple activities such as gathering, cleaning, and
organizing the data. These processes, which usually include data analysis software, are necessary to
prepare the data for project success purposes. Data analysis is also known as data analytics, described as
the science of analyzing raw data to draw informed conclusions based on the data.
Data analysis methods and techniques are useful for finding insights in data, such as metrics, facts, and
figures. The two primary methods for data analysis are qualitative data analysis techniques and
quantitative data analysis techniques. These data analysis techniques can be used independently or in

25
combination with the other to help business leaders and decision-makers acquire business insights from
different data types.
I will analyze the questionnaires, focus group discussion, and interview and field observation for the
realization of the goal of the study.
3.18. Ethical Consideration
I will conduct the study with honesty and integrity. I will gather appropriate information from concerned
bodies and will provide respect and polite. Also, I will keep the confidentialities and secrets of the
participants. I also will denote and respect all material resources and original contributions of other
thoughts through citations. Hence, without considering individual ideology, religion, and ethnicity, I
would apply original study with all ethical responsibilities.

26
 References
Addis, M. (2014). A Study on Construction Contract Risk Management Practices in Ethiopian Building
Construction Projects. Addis Ababa University: un published masters thesis.
Alefrdo, S.,Ximen, F.,Larissa, R.,& Sergio, A. (2015). Evaluating risk management practical in construction
origanization . Porcidia- social science $ behavioral sciences, 201 - 210.
Beranger Y. & Justus N. (2016). Risk management in the construction industry. MATEC Web of
Conferences DOI: 10.1051/matecconf/20166. 1University of Johannesburg, Johannesburg, South Africa.
Bhavsar, J. K. (2014). A Study of Risk Factors Affecting Building Construction Project.
International Journal of Engineering Research & Technology.
Boudicca, H. H. (2015). How to Measure the Effect of Project Risk Management Process on the
Success of Construction Projects. International Journal Of Business & Management, 3(12),99 - 112.
Ciocoiu , C. N. (2015). Implementation of an integrated risk management framework: a multicriteria
approach for Romanian SMEs. Düsseldorf: Lap Lambert Academic Publishing.
Divvy Gupta, M. S. (2016). Identifying key risks in construction projects. . International Journal of Civil
and Structural Engineering Research.

Fraser, R. S., & Simkins, B. J. (2016). The challenges of and solutions for implementing enterprise risk
management. Business Horizons, 59 (6), 689-698.
Keçi, J. & Musta faraj, E. (2013). Practices, Barriers and Challenges of Risk Management Implementation in
Albanian Construction Industry. ATINER'S Conference Paper, (pp. Series, No: CIV2013-0639 ,6 - 9).
Athens.
Krishna, P.,Bhatt, R. & Bhavsar J.,J. (2014). Astudy of risk factors affecting building construction
projects. International journal of engineering research & technology, 3(12) 831 - 834.
Kuang, Z. (2011). Risk Management in Construction Projects: Application of Risk Management in
Construction Period. Bachelor of Architectural Technology and Construction Management. Via
University College, Horsens Campus, Denmark.
Manna, G. (2013). Managing Risk of Construction Projects A case study of Iran. A thesis submitted in
partial fulfillment of the requirements of the University of East London for degree of Doctor of
Philosophy.
Mazlina, M., & Amirah, A. (2015). A Case Study of Enterprise Risk Management Implementation in
Malaysian Construction Companies. International Journal of Economics and Financial Issues,, 5 (15),
70-76.
Mitikie, B.B., Lee, J.& Lee, T.S. . (2017). The Impact of Risk in Ethiopian Construction Project
Performance. Open Access Library Journal, , 4: e4233. 2-6.
Olamiwale, I. (2014). Evaluation of Risk Management Practices in the Construction Industry in
Swaziland. Master of Quantity Surveying Thesis, Tshwane University of Technology, Pretoria, South
Africa.
PMBOK. (2017). A Guide to the Project Management Body of Knowledge. USA: Project Management
Institute.
PMI. (2013). A guide to the project management body of knowledge, fifth edition.
27
Newton Square, USA.: Project Management Institute.
R. A., Bahamid & S. I., Doha. (2017). A review of risk management process in construction projects of
developing countries. IOP Conference Series: Materials Science and Engineering.
Renault, B. Y., Agumbaa, J. N., & Balogun, O. A. . (2016). Drivers for and obstacles to enterprise risk
management in construction firms. Construction Conference (pp. 402-408). Budapest: Procedia
Engineering.
Renuka, S. M. (2014). A Review on Critical Risk Factors in the Life Cycle of Construction Projects.
Journal of Civil Engineering Research, 31-36.

Surabhi ,Mishear & Brajesh, Mishra. (2016). A Study on Risk Factors Involved in the Construction
Projects. International Journal of Innovative Research in Science, Engineering and Technology,
5(2),1190 - 1195.
Tang W., Qing M.,Duffield C.,Young D,& Lu Y. (2007). Risk Management in the Chinese Construction
Industry. Journal of Construction Engineering and Management, , 133(12),944 - 956.
Temesgen, T. (2015). Right of Way Risk Management of Road Construction Projects in Urban Areas: A
Case Study of Addis Ababa, degree of Master thesis, Addis Ababa University. Addis Ababa University.
Addis Ababa

28
 Work Plan and Budget Breakdown

No Activities Jaunar Feb March Apr May june

y

1 Topic
selection

2 Proposal
writing

3 Proposa
defence

4 Data
collection

5 Data
analysis

6 Research
writing

7 Presentatio
n

29
30
Item Qty Unit price Total cost

Transport 8 75 600

Internet cost 6 times CDMA/500 3,000

Paper 4 trip 650 2,600

Stationary 500
materials

Proposal 4 300 1,200

binding

Thesis 4 300 1,200

binding

Other 1 5000 5,000

Miscellaneou
s cost

Allowance of 20 1000 20,000

Enumerators

Total 34,100

Contingency 6,500

Gross Total 40,600

31
 Appendix

HARAMBEE UNIVERSITY

DEPARTMENT OF PROJECT MANAGEMENT (POST

GRADUATE)

Questionnaire: This questionnaire is for All concerned body of Mojo town selected government Projects.

Dear Respondents!

My name is Buruse Roba . I am a graduate student in Project Management from Harambee University.
The main objective of this questionnaire is to gather data on the research topic “The effect of Risk
Management on Project Success: The Case of Mojo Town Selected Government construction projects s.”
The questions are required only for research purpose. Therefore, you are kindly requested to provide real
responses so as to attain the objective of the study. For doing this, the researcher has grateful for you.

Thank You!

Section -1 – General organizational information

32
 Personal information
Job/Administrative__________________title of responding officer (optional)_____________

Section-2 – Risk management practices

1. The following list of risks associated to building construction projects identified from literature
review. The aim of the questions below is to evaluate the probability of occurrence
(frequency) and impact of risks on building construction projects targets via on cost, time
and quality objectives. Please think in terms of your organization’s experience and/or your
knowledge to identify from the list in the following table and rank them in order of
probability of occurrence and severity of impact by indicating your response using ticking
“X” in the appropriate spaces. You can add other sources of risks to the list, if any,

Degree of impact

No Identified Risks Frequency Contribution to Contribution Contribution

cost to time to Quality

Mediu

Mediu

Mediu
Likely
High

High

High
Less

high
Design related risks

1 Design errors and

Omissions

2 Design process takes

longer than anticipated

3 Stakeholders request

late changes

33
4 Failure to carry out the
works in accordance
with the contract

Physical related risks

5 Occurrence of
accidents because of
poor safety procedures

6 Supplies of defective
materials

7 security of material
andequipment

8 varied labor and

equipment
productivity

Logistic related risk

9 Improper site
investigation

10 inaccurate project

34
 program

11 Unavailable labor,
materials and
equipment

12 High competition in
bids

13 undefined scope of

working

14 poor communications

35
 between the home and

field offices (contractor

side)

Legal related risks

15 Ambiguity of work
Legislations

16 difficulty to get permits

delayed disputes
resolutions

17 legal disputes during

the construction phase
among the parties to

the contract

18 No specialized
arbitrators to help settle
fast

Environmental related risks

19 Adverse weather
Conditions

20 difficulty to access the

site

36
21 Environmental factors
(floods, earthquakes,
etc.)

Construction works related risks

22 Gaps between the

implementation and the
specifications due to a
misunderstanding of
drawings and

Specifications

37
23 actual quantities differ

from the contract

quantities

24 design changes

25 lower work quality in

the presence of time

constraints

26 Rush bidding

27 undocumented
change

orders

Management related risks

28 Poor communication

between involved
parties,

29 Ambiguous planning
due to
project

Complexity

38
30 changes in

management ways
information

unavailability

31 Resource management

Cultural related risks

32 Religion

33 Cultural custom

Financial related risks

34 Delayed payments on

Contract

35 Unmanaged cash flow

39
36 Inflation

37 financial failure of the

contractor

38 Exchange rate

Fluctuation

39 monopolizing of
materials due to closure
and other unexpected

political conditions

Political related risks

40 New governmental acts

or legislations

41 Unstable security
circumstances

(invasions)

40
The table below contains some techniques used in risk identify and risk analysis, please assign the relative use
of each technique. “X “(Please rate from 5 to 1 where, 5= Always, 4 = very frequently, 3 = frequently, 2=
occasionally and 1= Never)

Risk Identify Technique

1 2 3 4 5

Documentation Reviews

Expert Judgment

Past experience

Information Gathering Techniques(Brainstorming,

Delphi technique, Interviewing with experts)

SWOT Analysis

Others ,Please specify

41
Risk Analysis Technique

Expert Systems (including software packages, decision

support systems, computer-based analysis techniques such
as @Risk

Probability analysis (analyze historical data)

Sensitivity analysis

Simulation analysis using simulator computer packages

Direct judgment using experience and personal skills

Comparing analysis (compare similar projects through

similar conditions)

Decision trees

Expected monetary value

Others ,Please specify

42
In handling or dealing with the risk in a project, how often do you use the following response methods and
techniques? “X” (Please rate from 5 to 1 where, 5= Always, 4 = very frequently, 3

= frequently, 2= occasionally and 1= Never)

Risk Response methods 1 2 3 4 5

Avoid the risk

Reduce the likelihood of occurrence

Reduce the consequences

Transfer the risk

Retain the risk

Contingencies

Insurance

Share the risk

Risk postponing

Others ,Please specify:

43
 In order to monitor and control the risk response method and risk preventive action taken, how often
do you use the following monitoring methods? “X “(Please rate from 5 to 1 where, 5= Always, 4 = very
frequently, 3 = frequently, 2= occasionally and 1= Never)

Risk monitoring methods 1 2 3 4 5

Periodic document review

Periodic risk status report

Periodic trend reporting

Others, Please specify:

4. Please rate the following possible challenges in risk management application based on their
significance at your organization. “X” (please rate from 5 to 1 where, 5=highly significant, 4 =
significant, 3= moderately significant, 2= low significant and 1= negligible)

44
Challenges in risk management

1 2 3 4 5

Lack of information and knowledge

Lack of practical experience

Lack of political, financial... stability

Lack of time

Lack of money

Lack of familiarity and understanding

Lack of policy and procedures

Lack of organization support

Lack of transparency among stakeholders

Lack of joint risk management

Lack of formal risk management

Lack of expertise to lead RM team

Lack of cooperation and commitment among

construction

45
team members

No guidelines on the standard procedure of

managing risk

Multiplicity of variable factors in construction

projects

Unsupportive culture

Communication and transparency with project

stakeholders

Availability of resources

Not enough historical data

Difficulties in interpreting the results

Insufficient ongoing project information for

decision Making

46
6. Please rate how important the following factors to improve risk management at your organization.
“X” (Please rate from 5 to 1 where, 5=highly important, 4 = important, 3= fairly important, 2= not so
important and 1= un-important).

Factors to improve risk management 1 2 3 4 5

Participation through the whole project life cycle

Training in RM

Early identification of potential of risks

Effective information exchange between the

actors

General condition of contract

Increased regulation

Culture and risk awareness within organization

Legal and regulatory compliance requirements

Others, Please specify:

47
48