Risk identification and risk handling in construction: a consideration of the project life cycle in sri lankan road project

Abstract

Risk is an inescapable dimension of construction projects, particularly in road construction, which makes effective risk management crucial in the achievement of project goals with risk identification, analysis and handling as important steps in this process. The present study aims to identify the severe risk factors and the strategies for handling them at each stage of the project life cycle in road construction projects via a three-round comprehensive Delphi survey. It also introduces alternatives to the present risk response measures adopted in road construction projects in Sri Lanka, while attempting to develop a risk management model for road construction. The findings of the study reveal that although risks are spread throughout the whole project life cycle, the construction phase is the most risky phase followed by the design phase. Delays in payment by the client were found to be the most critical risk factor in the construction stage while errors in estimated cost and construction period were the most critical risk factor in the design stage. The study revealed that the most commonly used risk response measures by the owner/consultant and contractor were the allocation of contingency plans and claims for damages. It was also found that the lack of joint risk management mechanisms by parties and shortage of knowledge on risk management were the most common barriers to risk management. A consideration of the life cycle of a project makes it clear that critical risks at the conceptual and design stages are mostly apportioned to the owner or consultant while at the construction stage a high percentage of critical risk is allocated to contractors. Shared responsibility is more the norm in the operational stage although, at all stages, some portion of risk is shared by the other party. Based on data from three rounds of the Delphi survey, the study finally proposes a risk management model which has the potential to enhance the identification, allocation and handling of severe risks throughout the project life cycle. The study concludes that risk management should be a shared responsibility among parties to the contract, and education on risk management is needed to ensure quality construction activities at all phases of the project life cycle.