Construction is a very risk-inclined industry with a relatively poor reputation for handling the risk (Shen et al. 2001
). The construction industry and, moreover, construction project activities are risky (Wang et al. 2004
). The accomplishment of project success in the construction industry mainly relies upon the level of risk (Kartam and Kartam 2001
). With the increasing association of many contracting parties, such as contractors, subcontractors, suppliers, owners, and designers, the level of risk increases (Iqbal et al. 2015
). This level of risk can be decreased by adopting risk management practices (Aleshin 2001
; Iqbal et al. 2015
Projects from the construction industry are different in size (small, large, medium) which involves risk of varying degrees of impact (Hwang et al. 2014
). Frequently, the risk is not dealt with satisfactorily, and, as a result, the industry is facing poor performance (Iqbal et al. 2015
). Many infrastructure projects, being massive in shape, involve huge budgets leading to huge monetary losses, and these losses are caused by the various risks linked with such megaprojects (Deviparasath 2007
). These types of losses needed to be identified and mitigated. The whole process of identification and mitigation is termed as risk management (PMI 2017
Many risk management frameworks have been developed by various researchers. (Iqbal et al. 2015
) developed a risk management framework to report the significance of different types of risks and the effectiveness of risk management techniques practiced in construction projects. Risks events were identified, classified, and assessed by Aleshin
) in his proposed framework for practical recommendations of risk management to joint projects in Russia. (Choudhry and Iqbal 2012
), in their study, identified and prioritized common risks, management techniques to address those risks, the current status of the implementation of risk management systems in organizations, and their barriers to effective risk management in the construction industry. A risk management framework was proposed by Wang et al.
) who emphasize the risk identification process, the techniques, the risk evaluation process, and an effective way for mitigation measures. In addition, a risk model (named Alien Eyes’ Model) was introduced, which shows hierarchical levels of risk and the affected relationship between the risks. Shen
) introduces a risk management model to identify critical risks and their mitigation plan from the contractor’s perspective. In addition, there is a limited application of analytical techniques available to assess the critical risks in the Hong Kong construction industry. To identify and assess the risks in the joint venture project, Bing and Tiong
) proposed a comprehensive risk assessment model which is effective for the identification of critical risk factors and provides a way to assess the identified risk in a better way.
Management of projects is concerned with the utilization of skills, tools, techniques, and knowledge about the activities of projects, keeping in mind the core goal of the stakeholders’ expectations in a project (Hwang et al. 2014
). The construction sector is a standout amongst the most neglected sectors in Pakistan (Hameed and Woo 2007
). Risk analysis and management is a critical part of project management. Risk is the quality of a system that relates to the possibility of different outcomes (Jaafari 2001
). Risk is an event having an impact on the organization’s objectives and may affect the performance of the organization in terms of low productivity, poor quality, and an increase in the budget (Akintoye and MacLeod 1997
; Loosemore et al. 2012
). Management of risk is considered to be the most important part of the execution in construction management (Tang et al. 2007
). It is mostly concerned with the triple constraints (namely, time, cost, and quality) of the project, the integration of the project, communication, human resources (HR), and the procurement process. It also helps to develop the future vision of projects as it recognizes likelihoods and uncertainties (Borge 2001
). It is characterized as a framework that expects to recognize and assess all risks to which the project is exposed with the goal that an alert judgment can be made how to deal with the risk (Zou et al. 2007
; Flanagan and Norman 1993
; Barber 2005
). The above research highlights that many researchers have done research on risk management, but very little or no effort has been made from Pakistan’s perspective. Due to inadequate risk management practices in the construction industry of Pakistan, many projects are not completed on time and within the allocated budget. There is still an immense need to train and educate employees about risk management practices in the construction industry. For this purpose, this research aims to develop a framework to investigate risk management practices and their implications to produce future benefits for construction projects in Pakistan.
This study focuses on risk management practices adopted by the contractor’s firms in the construction industry of Pakistan. The principal objectives of the research are; (i) to study, identify, and prioritize the risk management techniques, (ii) to identify and prioritize the project success factor in the construction industry, (iii) to apply the effective knowledge of risk management in construction projects, (iv) to study and investigate the relationship between implementing effective risk management and the success of construction projects in Pakistan. The basic aim is to help contractor firms to take care of their upcoming and current projects by having a focus on implementing risk management practices and analyzing the effect of risk management on the success of construction projects.
This research is organized as follows: Section 1
describes the introduction of risk management, its definitions, and the practices previously accomplished. Section 2
states the research methodology for the current study, leading to a proposed framework for risk management in Section 3
. Section 4
describes the risk management techniques for the current study. Results and a discussion are provided in Section 5
, leading to the conclusion of the research in Section 6
2. Research Methodology
This section presents the research methodology adopted for this study. It begins with understanding risk management. A literature survey was performed on risk management, its techniques, and current findings on risk management. Based on a literature review and a discussion with the top management of the construction industry, a questionnaire (5-point Likert scale) was developed. It consisted of three major sections, namely, (i) respondent’s basic profile, (ii) questions related to aims of investigating risk management, and (iii) questions related to the success criteria (PSF, i.e., project success factors). The questionnaires were filled in by 270 respondents through field links (filled in by hand in a face-to-face meeting) from the target population. The target population consisted of the contractor companies listed with the Pakistan Engineering Council (PEC). These companies are categorized as CA, CB, C1, C2, C3, and C4 based on their tendering limit, as depicted in Table 1
. The construction projects, including bridges, flyovers, buildings, infrastructures, roads, and dams, were the major focus of this research. In addition to this, the target population includes project managers, deputy project managers, senior site engineers, and planning engineers working in different construction companies.
There are different respondents working on different projects belonging to different categories of registration under the PEC. According to Table 2
, the largest number of samples were collected from the two companies with category CA and CB with 34.4% and 32.2%, respectively. Moreover, 58.5% of the people from whom data was collected were highly experienced (more than 20 years of experience). Based on their experience, it can be projected that the collected data is reliable and precise. The quality and reliability of the data can be affirmed by 35.6% and 21.5% of the responses were collected from deputy project managers and project managers, respectively. In addition, 41.1% of the samples were collected from infrastructure projects, and 47.1% of the projects cost more than 300 million rupees.
6. Conclusions and Recommendations
This research presents an innovative framework for risk management in the construction sector of Pakistan. For this purpose, a survey-based study was conducted which aimed to investigate the risk management practices used in construction projects in Pakistan.
This research study is an effort to evaluating the effect of risk management in the construction industry of Pakistan. It will help the contractor firms of the construction industry (CI) to find the weaknesses in terms of implementing effective risk management. A comparison of the risk factors of construction mega-projects will develop a sense of competition among the project stakeholders, i.e., contractors need to improve their risk management practices. This effort fuels the evolutionary process of changing the mindset of all contractors to invest in risk management practices for better productivity.
The major outcomes of the research are as follows:
In Pakistan, the most widely used risk management techniques to identify risks are: (i) prospect of lesson learned from past projects (mean 2.54), (ii) risk review meetings (mean 2.51), and (iii) Delphi techniques (mean 2.40). The most widely used risk assessment and analysis techniques in Pakistan are: (i) expert judgment (mean 2.44), (ii) WBS (mean 2.39), (iii) risk index method (mean 2.28), and (iv) data gathering and representation techniques (mean 2.20). The construction industry adopts the approach of (i) decision making and risk management plan with a mean of 2.40, i.e., it is frequently used for the process of risk response and treating the risks in an effective way. The industry seldom opts for (ii) cost–benefit analysis and sharing the risk (mean 2.28) and (iii) transferring the risk (mean 2.29).
The results of the study disclose about project success factors that if (i) there is no complaint and regrets from clients (mean 2.53), (ii) the project achieved all objectives (mean 2.47), and (iii) it followed all technical specifications (mean 2.43) then project has achieved a milestone in term of achieving the success criteria. However, (iv) project completed within schedule (mean 2.29) and (v) no changes in scope (2.73) are rarely considered effective factors for the success of projects in the perception of Pakistan’s largest contractors. The study also reveals the association of risk management practices and project success and that there is a higher degree of correlation between effective risk management and project success.
The study reveals many aspects of risk management practices by studying the perceptions of the largest Pakistani contractors in the construction industry. The results of the study provide an opportunity to project managers, assistant project managers, and senior key members of a project to take care of ongoing and upcoming projects of their contractor firms by following the proper risk management techniques highlighted in this study. Enlightening the results from a starting point in this study is that the level of “risk identification” processes used in the construction industry of Pakistan is low. Immediate mitigation measures are not in place if a risk event happens.
Future research can be conducted in other developed and non-developed countries to investigate the risk management practices and their implications in terms of usage and to investigate the relationship between effective risk management and project success. There is a major need to adopt and implicate the systematic approach of risk management in the local environment of Pakistan so that the threats of risk can be minimized individually and collectively. Finally, the standards of risk management in the construction industry need to be developed.