Risk management to minimize disputes in construction project in Sri Lanka

Abstract

The study aims to bring out the management and mitigating factors of risks that can lead to disputes in construction projects. The study starts by outlining the theories of risk management asserting that risks may be both opportunities and threats based on their influence on project objectives. The risks theories highlighted here are the risk management theory, the prospect theory, the agency theory, the systems theory, and the real option theory since all of them help in giving an overall understanding of the risks with aims at minimizing. The study presents the major causes of conflict in construction, which include financial risk, quality risk, environmental risk, schedule risk, design risk, supply chain risk, stakeholder risk, safety risk, and legal and regulatory risk. The research adopted a qualitative approach using qualitative research techniques. The high-risk areas are reflected as design variations, cost overruns and modifications of projects’ scope, while the areas of low risk are identified as underground assets together with contaminated land. Consequently, several key risk mitigation strategies are proposed after data analysis. The key strategies are efficient contract administration coupled with improved communication, provision for contingency, use of modern systems such as BIM & IoT, feasibility analyses, training sessions, and precaution. Such strategies concern the enhancement of strategic thinking and of the proactive planning, as fundamental for diminishing the tendency toward conflict and for guaranteeing the project success. A comprehensive risk management framework has been developed by comprehensively identifying the risks systematically, categorizing them, and adopting effective ways of remediating the identified risks. Thus, the application of the mentioned multifaceted approach can help construction organizations manage risks, avoid conflicts, and reach favourable outcomes. Thus, the study highlights the need to enhance the organizational learning culture, engage with the key stakeholders, and adhere to the legal and regulatory requirements to improve risk management within the construction sector.