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0 Introduction
Risk management (RM) is a concept which is used in all industries, from IT related
business, automobile or pharmaceutical industry, to the construction sector. Each
industry has developed their own RM standards, but the general ideas of the concept
usually remain the same regardless of the sector. According to the Project Management
Institute (PMI), project risk management is one of the nine most critical parts of project
commissioning. This indicates a strong relationship between managing risks and a
project success. While RM is described as the most difficult area within construction
management, its application is promoted in all projects in order to avoid negative
consequences.
One concept which is widely used within the field of RM is called the risk management
plan, Risk management plan is a document that a project manager prepares to foresee
risks, estimate impacts, and define responses to issues. It also contains a risk
assessment matrix where a risk is "an uncertain event or condition that, if it occurs, has
a positive or negative effect on a project's objectives.
The construction industry operates in a very uncertain environment where conditions
can change due to the complexity of each project. The aim of each organization is to be
successful and risk management can facilitate it. However it should be underlined that
risk management is not a tool which ensures success but rather a tool which helps to
increase the probability of achieving success. Risk management is therefore a proactive
rather than a reactive concept.
2. Project Info
Our case study is AKLEH Highway Phase 2 (Ampang-Kuala Lumpur Elevated Highway
(Akleh) Phase 2 East Bound from Ulu Kelang Interchange (Km 6.0).
Akleh Phase 2 is an additional route connecting to the existing deck (AKLEH Highway)
that will involve the expansion of the existing two-lane dual carriageway into a threelane dual carriageway from KM 4.6, PersimpanganJalanJelatek until KM 6.0, JalanUlu
Kelang Interchange towards Ampang Area by providing a new three-lane route along
the 1.4 km. With the availability of this latest route, it expected to reduce up to 35% of
traffic problems during the peak hours. The three-lane one-way route is wider and it can
contribute to a more comfortable drive and safer for motorists that heading towards
JalanUlu Kelang, Middle Ring Road II (MRR2) and Ampang.
Total project costs are RM 98,891,792.70 which is up to 100 million is entirely borne by
the concessionaire, Projek Lintasan Kota Sdn Bhd. The construction is completed within
24 months (2 years) and completed 7 months ahead of the original plan. The new route
also has the capacity to accommodate a wide area in peak traffic conditions.
Akleh Phase 2
Concessionaire
Project Developer
Lead Consultant
Road Safety Audit
Environmental Management Plan
Program Management Solution
Contractor
4.
Research methodology
3
Questionnaires were developed into three (3) major section (A ,B and C). Section
(A&B): Aimed to obtain information about caused of risks in construction projects,
it was asked to rate those initially identified fifty-Six (56) factors according to their
impact (I) and likelihood (P). A survey was conducted through distributed
questionnaires in which respondents were asked to rank and score these factors
according to their experience and position. Section (C): Personal information of
the respondent was collected (e.g., work experience of construction projects and
work position.The company for involved for this surveyed by questionnaires is
PROLINTAS SDN BHD . Totally fifteen (15) person approached for these
4
questionnaires and nine (9) out of fifteen responses were received with response
rate equals to 60%.
Assessment of feedback from questionnaire survey was made. Analysis was
carried out for nine (9) responses to identify major risk contributing factors.
Analysis is discussed in details, on the basis of which recommendations to
construct projects were made.
government policies19)
Poor supervision 20) Bureaucratic system and long procedure for approval 21)
Compliance with Government 22) Delay in payment for claim 23) Cash flow
difficulties 24) Price inflation of construction materials 25) financial failure with the
contractor 26) Exchange rate fluctuation 27) Monopolizing of material due
closure and other unexpected political condition 28) Lack of financial resources
29) Change in taxation/new tax rates 30) Method of construction defined in
drawing and specification is inappropriate and inapplicable to construction 31)
Design and drawing change 32) Defective
Rush
design
37)
awarding the design to unqualified design 38) Change of scope 39) Pollution 40)
Ecological damage 41) Adverse weather conditions 42) Difficulty to access the
5
(floods,
earthquakes,
etc.)
44)
Compliance with law and regulation 45) Inaccurate project program 46) Poor
communications between the home and field offices (contractor side) 47) Lack of
manpower on site 48)Inaccurate project program
49)
Undefined
scope
of
working 50) Lack of skilled workers 51) Inexperienced staff assigned 52) Losing
critical staff at crucial point of the project 53)
Insufficient
time
to
plan
54)
Unanticipated project manager workload 55) Not enough time to plan 56)
Priorities change on existing program.
6. Questionnaire survey
6.1 Questionnaire design
6
The questionnaire design took into consideration the objectives of the study with the
aim to answer the research aims. Great effort and brainstorming were done for
designing the questionnaire. Meetings with groups members from the different
background and experience were conducted to identify the right questions required
and to present them in a clear and an unambiguous format. Special care also was
done for phrasing the questions that is easily understood by respondents.
6.2 Contents of the questionnaire
The questionnaire was divided into three major sections. The first section contains
the probability of the causes leading to risk and the respondent is asked to state the
probability of occurrence of these causes in his projects on a scale with the ranting
1 representing Inconceivable; 2 Remote 3 Conceivable; 4 possible; and 5
Most Likely.
The second section questionnaire required the respondent to rank these on a scale
with the rating of 1 representing Negligible; 2 Minor 3 Serious; 4 Fatal; and
5Catastrophic according to the degree of Probability risk in construction.
The third section addresses general information about the respondents such as (1)
Years of experience and (2) Position of the respondent.
The design of the questionnaire was based on the fact that they had to be simple,
clear, and understandable for respondents, and at the same time, they should be
able to be interpreted well by us. The questionnaire has a definite advantage of
requiring smaller time to be responded and is more accurate in the final outcome.
Factors causing risk in construction projects in AKLEH were identified through the
literature based on previous researches, journal together with input, revision by
groups members where a total of ninety-nine (56) factors at nine (9) major
categories were identified. The participants were required to rate the factors in the
way they affect risk in construction projects using their own experiences on
construction of highway sites.
respondents
Project Managers,
Site Managers,
Assistant Managers
Project Engineers,
Finance Managers,
HSE Officer,
Site Engineer,
Project Engineer
Sr. Exc. Project
Development
Total
No of respondents
1
1
1
1
1
1
1
1
1
9
Percentage, %
11.11
11.11
11.11
11.11
11.11
11.11
11.11
11.11
11.11
100 %
related research works on risk factor in construction projects. These factors were
classified into nine (9) major categories based on previous section and as advised
by researcher: 1) Construction Factors Category, 2) Legal Factors Category, 3)
Politics and Contracts Provision Factors Category, 4) Finance Factors Category, 5)
Design Factors Category, 6) Design Risk Factors Category 7) Environmental Factors
Category 8) Logistic Factors Category, 9) Organizational Factors Category (see
Table 2). To consider the effect of different levels of the participants experiences, the
results were grouped into four (4) main groups: group 1 for respondents
experience 1 till 5 years; group 2 for respondents experience above 6 till 10 years;
and group 3 for respondents experience above 11 till 5 years and group 4 for
respondents experience above 16 years; Table depicts these groups.
In all surveys, the majority of the respondents have 11 till 15 years experience in
construction/project management or working knowledge of construction/project
management activities. Based on work experience and employment position, it was
inferred that the respondents have adequate knowledge of the activities associated
with construction project risk. This makes them as reliable and credible sources of
information which is crucial to satisfy the research goal. The procedure, findings, and
relevant discussion of the analyses are detailed in the following section.
ID
category factors
01: 08
09:13
13
02
Category
Finance Factors Category
Design Factors Category
Design Risk Factors Category
14: 15
16: 21
22: 29
30: 31
06
08
02
07
32: 38
39: 44
45: 50
06
06
06
Total
51: 56
56
No of respondents
1
4
2
2
9
Percentage%
11..11%
44.44 %
22.22 %
22.22 %
100 %
10
11
12
6.9
6.10
6.11
13
6.12
6.13
6.14
6.15
6.16
6.17
6.18
14
6.19
Figure 2: Risk Analysis
6.20
6.21
6.22
6.23
6.24
6.25
6.26
6.27
15
6.28
6.5 Result and Analysis
6.29
importance of
analysed risk factors, a risk scoring was calculated for each factor.
Then, the
scoring for each factor was determined to identify the level of risk
accordingly.
6.30
6.31
construction project
respondent scoring
6.32
6.33
6.35
6.34
6.36Table 4: Highest Risk Factor cause risk in construction projects.
6.38Category item
6.39T
o
t
a
l
n
u
m
b
e
r
o
f
c
a
t
e
g
o
r
y
f
a
c
t
o
r
s
6.48
6.49
6.37
6.42
6.47
6.541
3
6.40
Nos
6.45
(Hig
6.50
6.55
12
6.41Percenta
ges %
6.51
6.5634%
16
6.57
6.58
6.592
6.60
-
6.610%
6.646
6.65
2
6.666%
6.698
6.70
4
6.7111%
6.742
6.75
2
6.766%
6.797
6.80
2
6.816%
6.846
6.85
6
6.8617%
6.896
6.90
5
6.9114%
6.946
6.95
2
6.966%
6.995
6
6.100
35
6.67
6.68
6.72
6.73
6.87
6.88
6.97
6.98
Total
6.101
100
%
6.102
6.103
Figure 2 shows that the controllable risk sources as identified in the study
probabilities are determined, the risk score can be calculated. Risk score is detailed
in Figure 2.
6.104
6.105
6.106
The probability and impact matrix illustrates a risk rating assignment for
individual risk factors in the identified risks categories. The risk matrix shows the
combination of impact and probability that in turn yield a risk priority (shown by the
red, yellow, and green colour). Qualitative risk analysis can lead to further analysis in
quantitative risk analysis or directly to risk response planning.
6.107
6.108
category. Construction Factors Category was the most frequently mentioned risk
factors with 34% from the total of high risk factor. Environmental Factors Category
contributed 17%, Logistic Factors Category 14%, Finance Factors Category 11%
and Politics and Contracts Provision Factors Category, Design Factors Category
Design Risk Factors Category, Organizational Factors Category with 6%
respectively. Respondents believed that these risk events are responsible for poor
17
quality of work, delays and associated losses. Risks with high impact and high
probability, such as Construction Factors Category Environmental Factors Category
contributed Logistic Factors Category Finance Factors Category are required further
analysis, including quantification, and aggressive risk management.
6.109
7.0 Risk Response Analysis
6.110
Risk response is the process of developing options and determining
actions to enhance opportunities and reduce threats to the project objectives. This
process ensures that the identified risks are properly addressed. However, when
the risk events cannot be solved through the other techniques of risk response such
as avoidance, mitigation and transference, the only option remaining is the
acceptance. This technique indicates that the project team has decided not to
change the project plan to deal with a risk or is unable to identify any other suitable
response strategy. Active acceptance may include developing a contingency plan to
execute, should a risk occur. Identification and assessment of risks alone will not
serve the purpose unless meaningful ways to mitigate those risks in a structured
way is planned in advance.
6.111
6.112
These effective responses to the risks should meet a number of criteria
according to Hillson .The risk responses should be appropriate, affordable,
actionable, achievable, assessed, agreed and allocated (Hillson, 1999).
6.113
6.115
6.116 Avoidance
6.123
6.124 Eradicate
the risk
altogether by
eliminating the
cause of the
risk event
6.121
6.122 Acceptance
6.129
6.130 Retained
the risk and
develop plans to
cover the
financial
consequences
6.131
6.132 7.1 Result and Discussion
18
6.133
6.134
6.135
6.136
6.137
6.138
6.139
6.140
6.141
6.142
6.143
6.144
6.145
Design changes were assessed to be critical in construction related risks. The
strategy should
6.146
be to reduce both the likelihood and the impact of this risk. Likelihood can be
reduced by
6.147
starting the construction only after design has been fully completed. However,
whenever this
6.148
is not practical it is worthwhile for the contractor to lessen the impact
associated by
6.149
proposing value engineering solutions to the problems and also discussing
constructability
6.150
issues with the designer before the design is finalized. When the scope is
undefined and the
6.151
design changes are inevitable, the contractor should not take the cost risks
associated with it.
6.152
Rather contractor should opt for cost plus basis of contract for such kind of
projects. Labor
6.153
productivity is also seen as a risk variable whose impact on the project is
quite substantial.
6.154
This kind of risk associated with low labor productivity should be transferred
to the
6.155
subcontractor. Risk pertaining to different site conditions should be
transferred to the owner.
6.156
Similarly unrealistic schedule risk should be transferred to the third parties,
owner as well as
6.157
the subcontractors. Weather delays are uncontrollable and therefore cannot be
avoided. The
19
6.158
best strategy would be to lessen the impact due to the inclement weather. This
risk should be
6.159
retained by the contractor by allocating sufficient contingency in the schedule
for such
6.160
delays. Defective work is the responsibility of the contractor and should be
retained by the
6.161
contractor. To bring the risk to an acceptable level, the contractor should
emphasize on its
6.162
quality control and quality assurance. Equipment failure and labor dispute
were thought to be
6.163
of lesser risk rating and should be retained by the contractor.
6.164
6.165
EXAMPLE
20