Managing risks in project cost of foreign funded power transmission line projects in Sri Lanka

Abstract

A risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on a project objective. Inherently, power transmission line (PTL) projects are riskier than most of the other construction projects. In Sri Lanka, PTL projects are in a boom, however the practice and knowledge in risk management is at minimum level in this specific area. This research work is a comprehensive study of risk factors and risk response measures related to cost aspects of PTL projects in Sri Lanka. Risk factors and risk response measures were identified through an extensive literature survey and a pilot survey with experts in the industry. These identified risk factors were further studied through a questionnaire survey for their probability and impact with a scale ranging from very low to very high scoring from 1 to 5. Further, in the questionnaire survey, the respondents were asked to select the widely used and best proposed risk response measures for each risk factor, form the list developed by the pilot survey. The risk rating was calculated for each risk factor using the information gathered by the questionnaire survey and classified from the range of very low to very high. According to the client’s perception ‘way leave clearance’ became the most significant risk factor where as in view of the contractor and overall, it became ‘exchange rate fluctuation’. By using the information gathered from the questionnaire survey, a risk response framework was developed for risk factors with risk level medium or above in view of the client and the contractor. Among the response measures ‘transfer risk to contractor’, ‘accept the risk and have a contingency plan’ ‘ accept the risk and take no action’, ‘placing conditions on bid’, and ‘claiming for the damage if risk occurred’ were the most preferred risk repose measures.