Risk analysis for projects in the building industry

Abstract

This research addresses the various risks and risk analysis techniques in the building industry in South Africa. The principal objective of the research was to identify the risk analysis techniques used in the evaluation of building construction projects by project managers in the building industry in South Africa and determine the strengths and weaknesses of these techniques. The literature review revealed a list of risks and twelve risk analysis techniques applicable to the construction industry. It also revealed the strengths and weaknesses of these techniques. The descriptive survey method is used as the methodology for the research. A postal survey of sixty-eight project managers selected from the Professional and Projects Register 98 was conducted during November 1998. A response rate of 28% was achieved. The survey showed that the risks that occur in building projects can be ranked on the basis of importance and frequency of occurrence. In addition, a visual comparison and Spearman’s rank correlation coefficient showed a moderate positive relationship between the importance and freraency of occurrence of external predictable risks, internal non-technical risks, technical risks and legal risks. Analysis of the responses showed that the twelve risk analysis techniques are used in building construction projects but only to a very limited extent. Several reasons were indicated by the respondents for not using the techniques. The most predominant reason was that experience and judgement of management is perceived to be sufficient. It was recommended that bodies such as the Project Management Institute, the Master Builders Association, the Council for Scientific Research in collaboration with tertiary institutions, should try and increase awareness on risk analysis, provide education on training on risks analysis and promote research on risk management.