Apportionment and Ranking of Risk Elements in Construction Industry of Sri Lanka-Contractors’ Perspective

Abstract

This study provides the results of a survey of major contractors engaged in the Sri Lankan construction industry. It is aimed at identifying common risk elements affecting construction industry projects, determining how they are apportioned between the owner and the contractor, and quantifying and ranking their significance. The previous studies provided a list of 52 risk elements and with the help of a pilot study it was reduced to manageable 25 risk elements having a great relevance to the Sri Lankan construction industry. Altogether 72 respondents selected from among major contractors in Sri Lanka (C1 to C4) were involved in the questionnaire survey of the study. The analysis of the results show that only some risk elements are apportioned more to one party (apportionment of at least 65%) either contractor or owner. Shortage of labor, materials, tools and equipment (82%), Low productivity of labor and equipment due to complexity of work (78%), Labor disputes & trade union action (76%), Delays due to sub-contractors, suppliers and other bodies (74%), Difficulty to coordinate with sub- contractors (74%), Corruption (70%), Delayed payment by owner (68%), and Accidents (66%) are apportioned more to contractors whereas, Delay in approvals and permits (70%), is apportioned more to the owner than to the contractor. The risk elements were ranked according to their significance and the most significant risk elements are, in descending order of significance are; Shortage of labor, materials, tools and equipment, inaccurate and incomplete design, Financial failure resulting from owner and contractor, Substandard quality of work. The results indicate that contractors perceive that risks are apportioned disproportionately more towards them. The implication of this is that naturally contractors tend to quote higher bid prices to cover their potential risks.