Level of Risk for Each Risk Factor
4.3.2 Level of Risk for Each Risk Factor
All risks observed in the questionnaire can happen to any construction projects. The main purpose of this study is to identify the level of risk for each factor that can influence the delivery of building projects. The likelihood of the occurrence and level of impacts were sorted (highest to lowest importance) according to their means values (descending) and standard deviation values. Table 4.2 show the level of risk for each risk factor under study.
From the study, the writer concentrated on the top 10 risk factors that have the most important influenced on the project delivery. Among the 124 risk factors, the highest mean of 2.54 was the material factor which under the technical risk classification. Affordable material is more expensive than presented in bills of quantity (BQ) was found to have significant impact on the project particularly in construction stage that can be realistically predicted at the time. This happened due to the material price escalation when the unprecedented oil crisis was hit hardly all over the nation. As
a result many contractors could not complete their contracts on time. Invariably, most materials would increase in price due to inflation and other reasons.
Another risk factor that affected to the project performance was heavy rain under the physical risk classification which is ranked second with 2.34 mean. This problem was due to the projects awarded at end of 2007 whereby heavy rain occurred during the monsoon season and most of the contractors were given extension of time under that reason.
Material cost is higher than predicted under financial risk classification and sub contractors takes jobs in several project under personal risk – subcontractor classification received the third and forth highest rank, which was at 2.15 and 2.12. This factor related to the projects which executed simultaneously during 9MP when demand of materials especially steel reinforcement price began to rise. Steel fabricators generally were willing to commit to lump sum steel pricing required to participate in most lump sum construction projects even though they did not have the benefit of lump sum or guaranteed pricing from their suppliers. When steel prices began rising rapidly, many fabricators found themselves in a bind - locked into price commitments but facing rising prices from mills and wholesalers. Similar problems have arisen with other construction commodities such as cement and cement bricks. This has caused bad impact to the contractors where they had bought materials at higher price and subsequently delay the physical progress on site.
For sub contractors especially nominated sub-contractors (for electrical and mechanical works) the opportunity of many projects launched by the government had made them eager to have many contracts at a particular time. They tend to grab many projects because of limited nominated subcontractors throughout Malaysia. This has caused delayed to the project and certain works were not properly done by the workers. As a result repetitive works have to be done and these have negatively impact to the main contractor’s physical progress.
A retention fund is not returned factor received fifth ranking under financial risk category is also a critical risk factor in building projects. Another critical factor was late in material delivery, lack of funds to proceed with work and lack of skilled labour. It received the sixth, seventh and eight ranking followed by the subcontractor unable to afford adequate labour and unable to finish work on time which received less critical mean, ranking ninth and tenth respectively.
Table 4.2 : The level of risk for each risk factor
Rank Risk classification
Risk factor
Mean
Std. Deviation
1 Technical risk - material
Affordable material is more expensive than
presented in bills of quantity (BQ)
2 Physical risk
Heavy rain
3 Financial risk
Material cost is higher than predicted
4 Personal risk - subcontractor
Sub contractor takes jobs in several projects
5 Financial risk
Retention is not returned
6 Technical risk - material
Late in material delivery
7 Personal risk - subcontractor
Lack of funds to proceed with work
8 Personal risk – technician and labour Lack of skilled labour
9 Personal risk - subcontractor
Subcontractor unable to afford adequate labour
10 Personal risk - subcontractor
Unable to finish work on time
11 Financial risk
Adequate payment for variations
12 Technical risk - material
Material shortage
13 Personal risk – technician and labour Frequent job change by skilled labour
14 Technical risk – ground condition
Unforeseen problems
15 Financial risk
Payment risk of completed work
16 Technical risk - material
Quality of material below standard
17 Financial risk
Financial problems due to errors in estimating
18 Financial risk
Slow payment by clients due to dispute
Rank Risk classification
Risk factor
Mean
Std. Deviation
19 Construction design causes risk
Errors in drawing
20 Personal risk – technician and labour Poor workmanship
21 Technical risk – construction process Severe climate causes low productivity
22 Personal risk - subcontractor
Problems in coordination
23 Personal risk - subcontractor
Low productivity
24 Personal risk – technician and labour Low productivity
25 Technical risk – construction process Red tape in liaison with public services consumes
too much time
26 Personal risk - subcontractor
Lack of required technical skill
27 Technical risk – construction process Delay on information from designers / JKR / public
local authority
28 Technical risk – construction process Coordination problems
29 Technical risk – construction process Delay in possession of site
30 Technical risk – construction site
Construction site is adjacent
31 Financial risk
32 Political and regulation risk
Cost for corrupt government officials
33 Construction design causes risk
Non-standard details of drawing includes low qualiy
of work and error in estimate
34 Personal risk – technician and labour Unable to understand drawings
35 Personal risk – technician and labour Communication problems
36 Contractual risk
Misinterpretation
Rank Risk classification
Risk factor
Mean
Std. Deviation
37 Personal risk – technician and labour Strikes and labour disciplines
38 Physical risk
39 Technical risk - technique
New technique is required
40 Financial risk
Exchange rate fluctuation
41 Construction design causes risk
Likelihood of change
42 Personal risk – engineer
Lack of experienced staff and foreman
43 Technical risk - equipment
Low productivity and efficiency
44 Personal risk – staff, foremen
Incompetence and lack of responsibility
45 Construction design causes risk
Incompatibility between drawing and method
46 Technical risk – ground condition
Errors in information of site investigation
47 Technical risk – construction site
Access problems
48 Technical risk – equipment
Inappropriate equipment causes problems
39 Political and regulation risk
Customs and import restrictions
50 Safety-accident risk
There is no fire protection system on site
51 Technical risk – equipment
High maintenance cost
52 Technical risk – material
Proposed materials are not approved
53 Technical risk – construction process Insufficient time to prepare bids
54 Political and regulation risk
55 Personal risk – subcontractor
Subcontractor abandons projects
56 Technical risk – construction process Failure to construct as planned
Rank Risk classification
Risk factor
Mean
Std. Deviation
57 Contractual risk
Unfair or unreasonable stipulation
58 Personal risk – client
Change orders
59 Personal risk – staff, foremen
60 Financial risk
Labour cost is higher than predicted
61 Financial risk
Loss due to default of contractor, subcontractor,
supplier or client
62 Technical risk – equipment
Unavailability of spare parts or cost is high
63 Technical risk – equipment
Frequently out of order or damaged
64 Political and regulation risk
Long procedure for approval and permits
65 Personal risk – technician and labour Use of illegal foreign labour
66 Physical risk
67 Technical risk – construction process Communication problems
68 Technical risk – construction site
Work hours are limited
69 Construction design cause risk
Need innovative construction method
70 Technical risk – ground condition
Inadequate site investigation
71 Physical risk
72 Technical risk – construction process Irregularity of work load
73 Personal risk – client
Quality expected beyond standard and specs
74 Contractual risk
Ambiguous clauses that have several meanings
75 Personal risk – consultant / JKR
Delays in materials and shop drawings approval
Rank Risk classification
Risk factor
Mean
Std. Deviation
76 Financial risk
Liquidated damage for delay
77 Personal risk – consultant / JKR
Does not understand his role or duty
78 Technical risk - material
Material damage during storage
79 Safety-accident risk
Inappropriate machine includes accident
80 Safety-accident risk
Severe accidents occur
81 Personal risk – consultant / JKR
Poor construction method
82 Construction design cause risk
Need new materials and equipment
83 Financial risk
Local and national taxes are high
84 Personal risk – consultant / JKR
85 Financial risk
Insufficient insurance
86 Personal risk – client
Client lacks managerial capability
87 Contractual risk
Extent of work differs from contract
88 Personal risk – consultant / JKR
Communication and coordination problems
89 Environmental regulations cause risk Construction process causes pollution
90 Technical risk - technique
Quality criteria are difficult to achieve
91 Technical risk – construction site
Local regulations
92 Construction design cause risk
Inadequate or ambiguous specifications
93 Environmental regulations cause risk Waste treatment required by law
94 Construction design cause risk
Incomplete design scope
95 Safety-accident risk
There is no fence or protection net
Rank Risk classification
Risk factor
Mean
Std. Deviation
96 Personal risk – consultant / JKR
Does not understand his role or duty
97 Technical risk – construction process Errors or omissions in Bill of Quantities
98 Financial risk
Bid and construction bond are unfairly called
1.02133 100 Technical risk – construction site
99 Safety-accident risk
Machine is not checked before operating
0.94760 101 Technical risk – material
Theft
1.24609 102 Political and regulation risk
Material damage during transportation
1.10075 103 Technical risk – construction process Communication problems
Requirement to use local labour
1.16746 104 Physical risk
1.04704 105 Contractual risk
Fire
1.05055 106 Technical risk – equipment
Work conditions differ from contract
0.99679 107 Personal risk – staff, foremen
No reserve equipment
1.19221 108 Technical risk – construction site
Brawls
1.07043 109 Personal risk – consultant / JKR
Traffic congestion
1.13275 110 Personal risk – Engineer
Unaccountability of work
1.15477 111 Contractual risk
Brawls
1.06160 112 Personal risk – technician and labour Absenteeism
Red tape in litigation
1.06257 113 Political and regulation risk
1.04205 114 Personal risk – client
Unstable politics
0.98031 115 Technical risk – construction site
Interference
Project is threatened by hooligans
Rank Risk classification
Risk factor
Mean
Std. Deviation
116 Personal risk – consultant / JKR
0.98711 117 Political and regulation risk
Poor construction method
1.05216 118 Technical risk – ground condition
Frequent changes in law
1.00462 119 Personal risk – technician and labour Gambling on site
No site investigation or boring log
1.04330 120 Personal risk – consultant / JKR
1.06379 121 Environmental regulations cause risk Preserving historical finds
Delays in materials and shop drawings approval
0.75883 122 Political and regulation risk
1.10360 123 Technical risk - equipment
War, revolution and civil disorder
0.96617 124 Environmental regulations cause risk Local environment regulations obstruct construction
Need to import from other countries
process