RISK ANALYSIS OF CONSTRUCTION PROJECTS IN THE PERSPECTIVE OF CONTRACTORS

Abstract

Construction industry plays a central role in economic and social development of Sri Lanka. As construction projects are inherently risk prone, risk management is a key area in construction project management. Risks can impact project scope, budget, timeline, and resources. Despite its importance, not many studies in the area are available in Sri Lankan context. With objectives of studying risk parameters and risk factors affecting construction projects in Sri Lanka, identifying existing risk prevention and mitigation measures, and recommending appropriate strategies to improve current risk management practices, this study considered the perspective of construction contractors. Study sample was selected from contractors registered in Construction Industry Development Authority (CIDA) using stratified random sampling method. Data was collected via a structured questionnaire. Industry professionals were interviewed to obtain feedback on risk parameters and risk factors most relevant for Sri Lanka. All categories of contractors identified financial risks as the most critical. By referring to Risk Assessment Matrix, criticalness of risks and urgency for taking appropriate actions can be identified. For small scale contractors, the extreme risks included cost overruns, delayed payments and poor resource management, which indicated need for immediate improvements. For large and medium scale contractors, impact and frequency of all risk factors were found to be in high and moderate region, which require improvements at some point. Applying best practices of similar previous projects was considered as the highest ranking risk preventive measure, while improving coordination among all parties concerned and effective supervision were identified as the best mitigation measures.