RISKS IN CONSTRUCTION INDUSTRY

How the Small and Medium Enterprises in the Construction Industry Mitigate Risks

By

Table of Content

Contents

Background to the Research3

Problem Statement4

Aim of the Research5

Objectives of the Research5

Research Questions6

Significance of the Study6

Scope of the Study7

Theoretical Context7

Enterprise Risk Management8

Structure of the Dissertation8

Chapter I: Introduction8

Chapter II: Literature Review9

Chapter III: Methodology9

Chapter IV: Data Analysis and Discussion10

Chapter V: Conclusion10

Chapter Summary10

Construction Industry11

Types of Construction Projects12

Types of Organizations in the Construction Industry13

Small and Medium Sized Enterprises of the Construction Industry13

Risks and Challenges of SMEs15

Risks and Its Stakeholders16

SMEs Clients Risks16

Project Scheduling17

Variation in the Project17

Quality & Performance Expectation17

Deficient Project Document &Approval18

SMEs Designer's Risks18

Variation of the Design18

Program Scheduling and the Designer18

Inaccurate Cost Estimation19

Inadequate Site Information19

SMEs Contractor Risks19

Inappropriate Planning19

Lack of Coordination & Cooperation20

Insufficient Construction Material& Equipment20

Safety and Security20

Noise Pollution20

Inclement Climate21

SMEs Sub- Contractor Risks21

Low Management Competency21

Technological Improvement21

SMEs and their External Issues22

Price Inflation22

Industrial Actions22

Mitigation against SMEs Risks and Challenges22

Techniques to Mitigate Construction Risks23

Program Evaluation and Review Technique23

Critical Path Method23

Activity Based Costing24

Other Effective Risk Mitigating Steps for SMEs24

Risk Management at an Early Stage25

Communication of Project Lifecycle25

Rigorous Risks and Checklists26

SMEs Culture26

Collaboration of Project26

References27

APPENDIX32

Participants of the Survey32

Participant's Consent Agreement33

Survey Questionnaire34

CHAPTER 1: INTRODUCTION

Background to the Research

The complexity and impediment of the construction industry has been evident since the time construction industry was actually incepted. The risks associated with the construction business are partially due to the rendezvous of many parties in one single project from the inception and conception stage to the final erection of the project as a complete asset. In the construction industry change is inherent (Onyango, 2012, pp.1-3). For years, construction industry has been rendered to adverse effects of changes which ultimately lead to the failing of the projects such as not meeting the project deadline, its anticipated cost and the set quality targets. In the construction industry there is no such perfect engineers, perfect designs and the perfectly anticipated natural forces. From the construction industry change cannot be eliminated. Since ages these prevalent risks are creating an adverse effect on the construction projects.

The construction industry is estimated to be dominated by small and medium sized enterprises in United Kingdom. The dominated industry encompasses more than 7% of the total workforce working in different departments and sub- departments of the construction company. With this dominate nature the construction industry is exposed to many fatal accidents along with other monetary risks (Onyango, 2012, pp.1-3). The risks associated with the construction industry in the small and medium sized enterprises are similar worldwide and are often related to the safety and health of the workforce. In addition to the fatal accidents construction workers are exposed to numerous injury risks and hazards. The risks associated with the construction industry are numerous such as weak communication, lack of cooperation, high risk of illness or injury and other natural climatic forces.

With the increase competition the small and medium sized companies of the construction industry are rendered with competitive challenge to hack with all genus of risk and sustain their competitiveness. In the recent years many preventive measure and control methods have been developed to manage with the ...