Project risk management by small-scale contractors in Sri Lankan building construction

Abstract

The construction industry remains one of the most dynamic and challenging industries in the world due to the complexity of its production process. This makes it subject to more risk and uncertainty than other industries that make it difficult for newcomers as well as small-scale contractors to be sustainable in the construction industry. The identification and assessment of new risks along with their interrelationships and coming up with the appropriate responses to new risks is a cumbersome process entailing some degree of complexity. The present research focuses on the identification of critical risks, the allocation of those risks among the small scale contracting parties, and the determination of appropriate response measures to managing the risks thus identified. The study first elicited the views of senior construction professionals on risks in the small-scale contractors in a preliminary survey prior to carrying out a questionnaire survey among a selected group of small-scale contractors. Sixteen (16) significant risk factors were identified and evaluated by using the Relative Importance Index (RII). The research further worked out the allocation of risk among the contracting parties and the appropriate response measures. On the basis of the research outcomes, the study proposes a risk management framework for appropriate risk management among small-scale contractors. The findings reveal the importance of paying attention to risk aspects by small-scale contractors in construction projects and identifying the problems relating to inadequate knowledge or techniques of small-scale contractors that may pose barriers to it. The paper proposes proper education and training of such contractors as one measure to overcome the identified barriers. It recommends the hiring of risk management consultants and the bearing of the risk by the party that has most control over it rather than passing it on to the other party as ways to control risks.