Evaluating the Impact of Risk Factors on Construction Projects of Foci in Nigeria

Abstract

Risk management is a vital project management planning and control tool for reducing uncertainty and improving decision-making. Risk cannot be avoided but must be recognized, assessed and managed. One of the challenges facing the construction in Nigeria is how to assess the risk of cost overruns and deliver projects within budget. These risks can cause losses and lead to increase in costs, time delays and lack of quality project delivery. The purpose of this paper is to identify and assess the impact of the risk factors on construction projects of Federation of Construction Industry (FOCI) in Nigeria and likelihood of occurrence and degree of usage of risk analytical techniques. A total of 171 self-administered questionnaires were sent out to registered construction firms with the FOCI in Nigeria and 146 was returned representing 85.38% of respondent rate. Results of the study indicated that unavailability of funds, construction delay, inadequate specification with MIS 3.42, 3.18, 3.05, 3.04 and 3.03 ranked first, second, third, fourth and fifth, respectively as the most impactful risk factors to construction projects. Delphi Method, influencing diagram and portfolio with mean score of 3.38, 3.28 and 3.14, respectively were prominent among the analytical techniques on construction projects. However, Monte Carlo Simulation and Latin-Hyper-Cube with mean score of 2.82 and 2.92 respectively were the least from the rear. T-Test showed that only Sensitivity Analysis (111.425, P<0.05), Probabilistic analysis (55.534, P<0.05), Influence Diagram (26.164, P< 0.05), Decision Tree Analysis (25.726, P<0.05), Latin – Hyper-Cube (22.430, P<0.05), Monte Carlo Simulation (20.247, P<0.05), Delphi Method (18.493, P<0.05) as frequent of usage of alternative decision, have significant influence on risk analysis. From this study, various sets of risk factors impact differently on construction projects. Therefore, there should be adequate provision and incorporation of risks factors into the bid estimates and contractors should be encouraged to assess and consider these risks factors when bidding; so as to avert the problem of time and cost overrun.