I.I BACKGROUND OF THE STUDY
Consequences of uncertainty and its exposure in a project, is risk. In a project context, risk is the chance of something happening that will have an impact upon objectives. It includes the possibility of loss or gain, or variation from a desired or planned outcome, as a consequence of the uncertainty associated with following a particular course of action. (Deviprasadh, 2007). Risk thus has two elements: the likelihood or probability of something happening, and the consequences or impacts if it does. Managing risk is an integral part of good management; it is fundamental to achieving good business and project outcomes and the effective procurement of goods and services Risk management provides a structured way of assessing and dealing with future uncertainly. Project risk management includes the processes concerned with identifying, analyzing, and responding to project risk. It includes maximizing the results of positive events and minimizing the consequences of adverse events.” (Deviprasadh, 2007).
Project Management Institute (2004) defines project risk as an uncertain event or condition that, if it occurs, has a positive or a negative effect on at least one project objective, such as time, cost, scope, or quality. A risk may have one or more causes and, if it occurs, one or more impacts Construction projects vary in type and nature and a large number of people with professional skills. The variations are endless, but what all projects have in common is their exposure to risk (Flanagan and Norman, 1999).
Civil engineering is the branch of engineering that deals with the creation, improvement, and protection of the communal environment, providing facilities for living, industry and transportation, including large buildings, roads, bridges, canals, and other engineered constructions (Stark, 2008). It is characterized by its high magnitude, uncertainties and the level of risk involved (Seeley and Murray, 2001). Civil engineering is a professional engineering discipline that deals with the design, construction, and maintenance of the physical and naturally built environment, it is traditionally broken into several sub-disciplines including environmental engineering, geotechnical engineering, structural engineering, transportation engineering, municipal or urban engineering, water resources engineering, materials engineering. Coastal engineering, surveying, and construction engineering. (Oakes 2001).
Civil engineering takes place on all levels: in the public sector and in the private sector from individual homeowners through to international companies (ICE, 2007), Civil engineering was first introduced as a profession in 1828 and the Royal charter of the Institute of Civil Engineers (2007) defined civil engineering as the art of directing the great sources of power in nature for the use and convenience of man, as applied in the construction of roads, bridges, aqueducts, canals, river navigation and docks, and in the construction of ports, harbours, moles, breakwaters and lighthouses, and in the art of navigation by artificial power for the purposes of commerce, and in the construction and application of machinery, and in the drainage of cities and towns (ICE, 2007). Construction engineering is a civil engineering sub discipline that involves planning and execution of the designs from transportation (Wikipedia, 2011). The modes of transportation as identified by Lam (1999) are roadways, railways, waterways, and airways. A road is a route on land between two places which typically has been paved or other wise improved to allow travel by some conveyance (Wikipedia, 2011).
Cost overruns and delays are not unusual in civil engineering works. This pattern of risk is’ largely influenced by the financial structure of the projects (Lam, 1999).
During limes of foreign exchange and interest role fluctuations, most conventional projects funded by direct capital injection from the governments may be affected by cost increases in their imported elements. The use of project finance in privatized projects also means that lenders rely solely on the prospective income stream for repayment of their loans. Late completion will erode the financial plan and extra interest costs on the part of the sponsors. There are also uncertainties as to the level and stability of income which depends on the market condition of the product in question. In road project, land acquisition can be a slow and expensive process especially when a long road has to go through different municipalities or different provinces having non-standardized land resumption procedures. Right of way disputes sometimes creep in, as is the likelihood of treading on archeological mines and former industrial site with contaminated grounds (Lam, 1999).
There are many examples of non-achievement of time, cost and quality of projects due to the absence of risk management techniques in project management. Therefore, the success parameters of a construction project, namely, the timely completion, staying within the specified budget, and achieving requisite performance would depend upon the capability of each party in risk management. (Perera, 2009).