RISK ANALYSIS AND MANAGEMENT PRACTICE IN ROAD CONSTRUCTION PROJECT: THE CASE OF OMO RIVER -TERCHA AND DURAME- MAZORIA ROAD PROJECTS

Abstract

Construction projects such as road involve many partners with different objectives, who are subjected to many risks in an uncertain environment. Hence, proper risk analysis and management is precursor to mitigate risks such as cost overruns and schedule delays. Therefore, the objective of the study was to analyze risk factors and management practice associated to Omo River -Tercha and Durame- Mazoria river road construction projects. Methodologically, the study employed descriptive research design. Data were collected from 49 respondents which were decomposed to client (8), consultants (20), and contractor (21). The survey data were analyzed using descriptive statistics and Liker scale parameters. The results of the study revealed that majority of the respondents have a good understanding about risk management but 50% of the respondents replied that there is no risk management practice. Risk factors were identified from the three sides: (i) From the client side: Scope changes, payment delays and schedule pressure;(ii) From consultant side: delay in contractor’s payment certification, poor quality of design and design Change from the consultants side, and;(iii) From the contractors’ side: exchange rate fluctuation, inflation and sudden changes in price and insufficient cash flow. There is little effort to identify, analyze, respond, monitor and manage risks but they not consistently made. The project under Chinese construction management (Omo-Tercha) has mean scores of 3.61, 4.03, and 3.61 respectively for the client, consultant and contractor associated risks respectively. On the other hand, a project under domestic contractor (Durame – Mazoria - Durgi) has mean scores of 3.06, 2.92, and 2.98 respectively for the client, consultant and contractor associated risks. The former are relatively risk taker compared to projects under local contractors. To conclude, ERA has better risk management score in its road construction projects which are managed by domestic contractors compared to projects handled by Chinese contractors. The advantage of proper risk analysis is not well understood by the clients, contractor and consultants. Therefore such understanding should be improved. Involving the various stakeholders (consultants, the contractors and the insurance companies) in discussing the risk management process at the planning stage is indispensable. Arranging capacity building programs for the clients, contractor and consultants play role in improving risk analysis and management skills. Finally, determining the relative importance of other project management knowledge areas towards mitigating risks can be an interesting investigable issue of future research.