LUẬN văn THẠC sĩ (KINH tế) incorporation of risk management as a framework for delay mitigation a study from the construction project in nigeria

Andt o mydarlings is ChristianaPopoola,thankyoufortimetakento provereadthis work.You arethebest.... SystematicriskmanagementapproachcouldhelptomitigatedelayinconstructionprojectinNigeria

InpartnershipwithLJMU(

MBA)ProjectManagementDissertationSupervisor:PaulTaaffe

“Incorporationofrisk managementas aframeworkfordelaymitigation:Astudyf r o m theConstructionprojectin Nigeria”

Writtenby:ArogundadeAbayomi(1641288)Da

te:12-08-2013

Wordcounts:20086

Listoftables/

illustrations……… 6Declaration……

………

8Acknowledgement………

9Abstract……… ….101

Introduction……… 111 1 RationaleforTopic……… 11

1.2 RiskManagementinbrief……… 13

1.3 Needforthepresentstudy……… 15

1.4 Suitabilityoftheresearcher……….… 16

1.5 Approachtothedissertation……….….17

1.6 Recipient forthisresearch……….…… 18

1.7 ScopeLimitation……… 18

1.8 Organizationofthedissertation……….……192

LiteratureReview……… 21

2.1 ProjectManagement……… ….21

2.2 RiskManagement……… ….23

2.3 DelayMitigation……… 27

2.4 Construction/Nigeria……… 33

3 ResearchMethodology……… 41

3.1 Introduction……….41

3.2 ResearchDesign……… 43

3.2.1 ResearchQuestion……….43

3.2.2 Researchobjectives……… 44

3.2.3 Researchhypothesis……… 44

3.4Researchphilosophy……… ………45

3.5ResearchApproach……… 47

3.6ResearchStrategy………48

3.7ResearchChoice……… 49

3.8TimeHorizon……… ………….…… 50

3.9Sampling……… ……… 51

3.10Datacollection……… ………54

3.11DataAnalysis……… ……… 55

3.12Plan……… ……….56

3.13Limitation……… ……….57

3.14Personalbias……… ……… 57

3.15Ethicalimplication……… ……….58

3.16TimeAllocation……… ……… 59

3.17Cost……… ………

593 1 8 TimeperiodAllocate……… ……….59

4 DataAnalysis……… ……… 60

4.1Introduction………

……… 604.2StructureofdataAnalysis………

……….604 3 AgeandDemographicsection……….

………….

… 614 4 Findings……… 68

4.4.1 Objective1……… …68

4.4.2 Objective2……….… 72

4.4.3 Objective3……… 77

4.4.4 Objective4……… 85

4.5Conclusion………92

5 ConclusionandRecommendations……… ……….……… 93

5.1 Discussion……… ……… 93

5.1.1Hypothesis 1……… ……… 94

5.1.2Hypothesis2……… ……… 96

5.2 GeneralConclusion……… ……….99

5.3 Recommendations……….……… 100

6 Personalreflectiononownlearninganddevelopment……….………102

6.1 Reflectiononprocess……….……… 102

6.1.1 InformationGatheringstrategy……….………….…….103

6.1.2 SpecificAcademicresources……… 1046.

2 Reflectiononsources……….

… 1046 2 1 Assumption……….……… 106

6.2.2Selectionofresources……….….… 106

6.2.3Lessonlearnedinfinding……….….107

6.3 ReflectionondissertationFormulation……… …

1076 4 Reflectiononyourlearning……… 109

6.4.1LearningStyle……….1 0 9 6.5 Developmentskill……… 112

6.5.1Informationandcommunicationskills………

….1126 5 2 PersonalManagementskill……….……

… 1126 5 3 Cognitiveskill……….

……… …

1136 5 4 Interpersonalskill………

……… 113

7 Bibliography……… ……… 115

7.1 Books……… …….…….115

7.2 Journals……….……….… 118

7.3 Websites……….……… 125

8 Apendix……… 126

8.1 Questionnaire……….….… 126

1.ResearchOnion………

422 T i m e PeriodAllocate……….59

3.Gender……….……….62

4 Age……….………… 63

5.Nationality……….……… 64

6.J o b description……….…….6 5 7.Yearsof experience……….………

678.ConstructionManagement………

………….68

9 DelayFrequency……….………7010

Delayon Execution……….………7111

Delayon Closure……… ……… 72

12.Projectfailure……… …………73

13 Dispute……… ……… 75

14.Increasein cost………

……….761 5 Communicationbarrier………

… …………781 6 Levelof corruption………

………… 7917.Contractorcompetency………

….……….81

18.ContractorexperiencetoProject………

……… 821 9 Stakeholdersinfluence………

.……… 8320.Scope creepinfluence……….

……… 8521.Projectawareness……… ……….8722.Knowledgecompetency………

…………88

23.Levelof risk……….………….…… 90

24.Systematic riskManagement……….….………

9125.ResearchCategory……….………

10526.Kolb’slearningStyles………

…… 110

Ih e r e b y d e c l a r e t h a t n o p o r t i o n o f t h e workreferredt o i n t h i s dissertationhasbee

ns u b m i t t e d i n s u p p o r t o f anapplicationf o r anotherdegreeo r qualificationora n y other

u n i v e r s i t y orInstitutiono f learning.F u r t h e r m o r e , allt h e workint h i s dissertationi s entirelymyo w n , u n l e s s i f referencedi n t h e t e x t asspecificsourceandi n c l u d

e d i n bibliography

Signed:

Date: ArogundadeAbayomiAnthony1

2-08-2013

onlyb e c a u s e o f hispatience,knowledge,suggestionsanddirectionsthatIwasabletocompletethiswork.Iwouldalsol i k e tothankmylecturersDr.AlanGrahamandDr.NicoleGrossfortheirsupportandi n p u t t o t h i s research.

Mydeepestgratitudegoesto myparent,SirandLadyArogundade,whosu pp or te d myambitiontodomyMastersabroadandstoodbymeallthroughtheprogram.Youdidn’to n l y w a l k

b u t l e f t a longtimep r i n t i n mylife.T o youI dedicatet h i s work.T o mysiblings:FolashadeA r o g u n d a d e , T a i w o ArogundadeandKehindeA r o g u n d a d e , t h a n k youguysyoukept megoing

Icannotb u t m e n t i o n t h e s u p p o r t ofmybetter half,OpeyemiIkuseruf o r herl o v e andpatient,andhowshefindsmeamazingdespitemyflawsandweakness.Tomyfriends:MobolajiObisesan,DamolaAdekanmbi,ToluBanjoko,SeunTaiwo,MaryFiona.WhatcanI really d

ow i t h o u t you?

I cherishallyouri np ut Andt o mydarlings is ChristianaPopoola,thankyoufortimetakento provereadthis work.You arethebest.

Delayis o n e o f t h e biggestproblemsc o n s t r u c t i o n projectfacesi n Nigeria.D e l a y canleadtomanynegativeeffectssuchasprojectfailure,disputesbetweenstakeholdersandalsoeconomicinstability.Eventhoughvariousstudieshavebeenconsideredinthecausesandeffectso fdelaysi n Nigeria,t h e s e studiesseldomd i s c u s s h o w r i s k managementcouldbeintegratedtolessenthedelayinconstructionprojectsinNigeria.Systematicriskmanagementisexpectingtheunexpected;itisatoolwhichhelpscontrolr i s k inconstructionprojects.Theobjectiveofstudyisto:

(1)todeterminetheimpactofd e l a y inNigeria(2)tounderstandtherateofdelayinconstructionprojectinNigeria(3)T o findtherooteventthatcausesconstructiondelayinNigeria( 4)D

i sc ov er thelevelofeffective systematic riskmanagementthat

isinvolvedinconstructionprojectinNigeria.Inallthe150structuredquestionnairesthatweresenttothreeconstructionsfirm,therewasaresponserateof80%.Typicalresultshowsbothhypotheses(1)Delayhasagreatimpacto n t h e m a s s i v e projectfailureandh y p o t h e s i s ( 2 ) Systematicr i s k managementapproachcouldhelptomitigatedelayinconstruction projectinNigeria,wastestedandaccepted.Thestudyrecommendedthatriskmanagementcanhelplessendelayinconstructionprojectifapplied in asystematicapproach

Itishopedthatthesefindingswillguideeffortstoenhancetheeffectiveness ofconstructionprojectinNigeria

AccordingtoVetiva(2011)Nigeria’sConstructionsectoraccountsfor1.4%ofitsGDP(Grossd o m e s t i c profit)m o r e i m p o r t a n t , i s t h e factt h a t despitet h e growthseeni n t h e contributionsectoro u t p u t ,

( 7 yearCAGRo f 3 5 % ) i t s contributiont o totalGDPhasremainedatabysmallylowlevels.In1981,theconstructionsectoraccountedfor58%ofNigeria’sGDPandi n t h e l a s t threed ec a

d es , Nigeria’stotalGDPhasraisedt o a p p r o x i m a t e l y 495timesitssize.Onthecontrary,Constructionsectorhasonlygrownto1 2 5 t i m e s itssizei n 1981.Notably,t h e driverso f Nigeria’sGDPovert h e l a s t threedecadeshaveremainedthesame

Am a j o r disparagementfacingthe NigeriaConstructioni n d u s t r y ist h e growingrate o f d e

l a y inprojectdelivery,with t h e increasingtrendofdelay inconstructionproject,theimpactofdelayhasleadtothemajoritiesofprojectfailures.Constructiondelaymeansat i m e slippageeitherb e y o n d t h e contractdateo r beyondt h e d a t e t h a t t h e partiesh a v e agreedu p o n

f o r t h e d e l i v e r y o f t h e project.Haseebeta l

(2011)d e f i n e d Constructiond e l a y asexecutionlaterthanintendedplanned,orparticularperiod,orlaterthanspecifict i m e thatalltheconcernedpartiesagreedforconstructionproject

Delayhasana d v e r s e effectimpacto n t h e projectsuccessi n termso f t i m e , cost,andquality.Manyprojectsexperienceextensivedelaysandtherebyexceedinitialcostestimates.Inadditiontoimpactingtheeconomic feasibilityofprojectscapitalbaseline,e x t e n s i v e delayscouldcausea groundf o r d i s p u t e s o r lawsuitsbetweenownersandcontractors,increasedcosts, loss of productivityandrevenue,andcontracttermination.

IthasbeenresearchedandconfirmedbynumerousresearcherthatConstructionfailureiso n t h

e increasei n N i g e r i a basedo n delay.Delaysrepresentanareao f l e a k a g e s int h e ConstructionProject.InNigeriat h e problemo f delaysi s s e v e r e e s p e c i a l l y wheno n e considersthepresenteconomicconditionofthecountry.Danladietal.(2012)statethatD e l a y isoneof themajorproblemsinNigeriaconstructionindustry

AccordingtoKasimetal

(2012)constructiondelayisauniversalevidentrealitynotonlyi n Nigeria,howeverallcountriesarefacedwiththisglobalfact.Adelayoccursineveryconstructionprojectandthesignificantofthesedelaysvariesconsiderably fromprojectt o project.B a r r y ( 2 0 1 1 ) s t a t e t h a t d e l

a y i s a r e a l i t y i n t h e constructionprocessi n t h e U n i t e d S t a t e andthroughoutt h e world.Surveysillustratest h a t c o n s t r u c t i o n projectssufferdelayinLibyaandtheUKbutthereismoredelayinLibyathanintheUK.Studiesf o u n d thatabuildingprojectmightbedelayedby41to46daysinLibyaor34to38daysi n t h e UK,whenconsideringthemostcriticaldelayfactors (Shehob, 2012)

t r y isnoexception,duetothedynamicnature ofconstructionproject,itmakesitspronetorisk.

Riski s a multifacetconcept.Int h e concepto f constructionindustry,itcouldb e thelikelihoodoftheoccurrenceofadefiniteevent/factororcombinationofevents/

factorswhichoccursduringthewholeprocessofconstructiontothedetrimentoftheprojec

t,alackofpredictability aboutstructureoutcomeorconsequenceinadecisionorplanning

situation,theuncertaintyassociationwithestimateofoutcomes.Inadditiontothedifferentd e f i

n i t i o n s o f r i s k , therearev a r i o u s wayso f categorizingr i s k f o r differentpurposest

o o S o m e categorizeri sks i n constructionprojectsb r o a d l y intoexternalr i s k s andinternal

r i s k s w h i l e o t h e r c l a s s i f y r i s k i n m o r e detailcategorieso f politicalrisk,financialrisk,marketrisk,intellectualpropertyrisk,socialrisk, safetyrisk

Riskisinherentanddifficulttodealwith,andthisrequiresapropermanagementframeworkb o t

h theoreticalandpracticalmeanings.R i s k managementi s a formalando r d e r l y processo

f s y s t e m a t i c a l l y identifying,analyzingandr e s p o n d i n g t o r i s k s throughoutthelifecycleo faprojecttoobtain theoptimum degreeofrisk elimination,mitigationand/orcontrol.Significantimprovementstoconstructionprojectmanagementperformancesmaybeachievedfromadoptingtheprocessofriskmanagement

Constructionprojectsareofdifferentsizesandofdifferentnature,hencetheriskassociatedw i t

h t h e m a l s o varies.Furthermore,r i s k managementi n t h e Constructionprojectmanagementcontextisacomprehensiveandsystematicwayofidentifying,analyzingandrespondingtoriskstoachievetheprojectobjectives.ConstructionProjectscanbeextremelyc o m p l e x andf

raughtwithuncertainties.Riskanduncertaintycanp o t e n t i a l l y causeda d e l a y f o r Const

ructionProjects.M o s t o f t h e projectmanagementissuesthatimpactaprojectarisesfromassociateduncertainty

1.3 NEEDFORTHEPRESENTSTUDY

Thisresearchi s novelandrelevantt o t h e e x t e n t t h a t thoughtherearea p l e t h o r a o f LiteratureandresearchonDelayinConstruction,RiskmanagementinConstructionandentirefailureinConstruction,yetmostofthosepassworksdwellsquarelyontheUnitedS t a t e ofAmerica,Canada andcountriesoftheEuropeanUnion, Asianwith littleorno m e n t i o n

o f Africa,especiallywesternparts ofAfrica (e.g.Nigeria)

Despitet h e u n i q u e n e s s

o f constructioni n d u s t r y t o t h e growthofn a t i o n a l economy,Nigeriastillwitnessalotofconstructionprojectfailureduetodelay.Mohammedetal

(2012)statedthat“DelayisoneofthemajorproblemsinNigeriaconstructionindustry”.Ayodeleetal

(2011)a l s o buttresst h e factt h a t “ d e l a y h a v e knocko n effecto n t h e constructioni n

d u s t r y a n d i n indeedi n t h e wholee c o n o m y ” A c c o r d i n g t o kontangora(1993)ascitedbyAyodeleetal

(2011)thereareabout4000uncompletedorabandonedprojectbelongingtotheFederalGovernmentofNigeriawithanestimatedcostofaboveN 3 0 0 billionwhichwilltake30yearstocompleteatthepresentexecutioncapacityoftheGovernment,alsot h i s i s s u e s o f d e l a y h a s beenl

e f t w i t h o u t adequateattentionf o r t o o l o n g whichis now havingamultipliereffectontheconstructionindustryinparticularandt h e nationaleconomy asa whole.Ibironke(2013)alsostressthat “delayareoneofthebiggestproblemsconstructionfirmsface.SevenoutoftenprojectssurveyedinNigeriasuffereddelaysintheirexecution”

However,withtherapidincreasingfailureinconstructiond u e todelayinNigeria,thisresearchbecomesnecessarysoastohaveabasisforweighingthecausesandimpactofd e l a y inconstructionproject,andimportant ly toe x a m i n e howRiskmanagementcould

beu s e asa t o o l t o lessend e l a y i n ConstructionP r o j e c t s V e r y often,Contractorso rProjectManagersm i s t a k e s a ri sk assessmento r Mo nt e Carlosimulationf o r r is k management.Riskanalysisorriskassessmentisjustonecomponentofasuccessfulriskmanagementprogramforthebestreturns,riskarenotjustanalyzedatonepointintime,b u t

HavingstudiedAccountingp r i m a r i l y andw o r k e d f o r f o u r yearsasanaccountant,t h e researcherhaswhatittakestoengageinthisresearch.ThisiscoupledwiththeknowledgeandresearchskillsthathavebeengainedfromtheMBAprogramaswellasreliableindustrycontactsalreadymadethat willfacilitatethisstudy

Theaimo f t h i s r e s e a r c h i s t o i d e n t i f y t h e causesande f f e c t s o f d e l a y inConstructionprojectsinNigeria.Theimportanceofriskmanagementinconstructionproject,andhowi t couldhelplessent h e everi n c r e a s i n g d e l a y i n constructionproject.T h i s s t u d y w i l l contributetotheexistingstoreofknowledge.Withthismotive,researchwillbe

conducteda m o n g threeconstructionfirmst o findanswersf o r t h e f o l l o w i n g researchquestion.

“Cantheintegrationofsystemicriskmanagementapproachhelptomanagethecausesofd e l a

y inNigeriaConstruction Project?”

Inordertoanswertheresearchquestionfurther,theresearchercameoutwiththef o l l o w i n gresearchobjectives:

1 Tounderstandtherateof delayinconstructionprojectinNigeria

2 Todeterminetheimpactofdelayin a ConstructionProject

3 Tofindtherooteventthatcausesconstructiondelayin Nigeria

4 TodiscoverthelevelofeffectivesystematicriskmanagementthatisinvolvedinconstructionprojectinNigeria

Hencetofacilitatetheinvestigationjustifyingtheresearchobjectivesandtoanswertheresearchquestion,certainassumptionshavetobeconsideredinitially.Sothehypothesest h a t needt

o beprovedordisapprovedareasfollow:

1 Delayhasagreatimpacton themassiveprojectfailureinNigeria

2 SystematicriskmanagementapproachcouldhelptomitigatedelayinconstructionprojectinNigeria

1.5 Approachtothedissertation

Theobjectivesderivedwillbeobtainedsystematicallyintheresearch.Firstly,secondaryresearchisconductedusingrelevantsourcestounderstandtheresearchproblemareain

depth.Primaryresearchwillbeconductedusingquestionnairesadministeredtotherespondents.Thequantitativedatathusobtainedwillbeanalyzedstatisticallyu s i n g ( S P S S ) Itw i l l t

h e n becheckedi f t h e resultsprovedo r d i s a p p r o v e d t h e hypotheses.Basedon

Therearesome l i m i t a t i o n s i n t h i s study.T h e m ai n i s s u e whi le conductingthe p r i m a r

y researchi s t o remainu n b i a s e d T h e researcherh a s remainedneutralt o h i s bestw h i l econductingthequestionnaires.Thenthe majorlimitation wasDistance–

T h e researcherw o u l d havelovedtodofacetofacequestionnairesurveyasthiswillhelptothrowmorelightforthepurposeofthisresearchandtogiveexplanationstoquestionstherespondentmightbeskepticalabout.Thiswillhelptocompletethequestionsappropriatelywithouterror.Butdistanceandpresentfinancialc o n s t r a i n t w o u l d notallowsucha means,t h e authordecidedtosettleforo n l i n e surveyf o r thisresearch.Thestudy,beingc r o s s