Performance of projects fails due to poor implementation of risk management practices in place

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

The current globalization and complex business environment leads many business to think beyond just profitability only. Factors such as perpetual perplexity and dynamics in social, political and economic environment (Luo, 1999), strong competition (White and Frame, 2004), rapid technological advancements (Baldwin and Li, 2002), and methodological changes in the value chain are among other issues urging for companies to establish strong risk assessment system.

In recent years, intense research has been conducted on the field of project risk assessment Project risk assessment is considered one of the most important and critical factors in the ten areas of project management listed in the PMBOK Guide, alongside integration management, scope management, time management, cost management, quality management, human resource management, communication management, procurement management and stakeholder management (Project Management Institute, 2016). According to Voetsch et al., (2004), there is significant relationship between the risk managing approach of a business’ management and the project’s success. In the modern and rapidly changing business world, companies have wide access to resources and tend to seek the cheapest and most efficient solution. Many companies focus solely on a core business which makes use of subcontracting via a third party. Thus, companies try to form alliances with other partners on a single project, in order to improve its efficiency and success. However, this typically increases the complexity of the project, as its network grows. Thus, based on these organizational changes and the external environment, many uncertain situations emerge, which in turn make organizations and projects more vulnerable to risk. According to Acharyya (2008), every business function is associated with risk, and this risk can affect the business to a large extent. Besides that, due to the advancement of technology, companies’ expectations of projects have increased significantly. This greater expectation brings additional challenges and as the project becomes more complex, the probability of exposure to risk also increases. This project complexity is the most crucial factor which significantly increases the likelihood of facing risk during the project. Thus, maintaining and efficiently utilising a proper Risk assessment system increases the probability of the project’s success

There are multiple types of risk assessments, including program risk assessments, risk assessments to support an investment decision, analysis of alternatives, and assessments of operational or cost uncertainty. Risk identification needs to match the type of assessment required to support risk-informed decision making. For an acquisition program, the first step is to identify the program goals and objectives thus fostering a common understanding across the team of what are needed for program success. This gives context and bounds the scope by which risks are identified and assessed (Garvey, 2008).

In the developing country context, especially in Africa, risk assessment in the construction sector is an amorphous affair faced with higher levels of risk as compared to the developed countries. The level of adoption of formal risk assessment strategies is not widely studied either. In Ghana for instance, Boadua, Fianko and Chileshe (2015) observed a limited level of adoption of formal risk assessment strategies among construction oriented firms, with low levels of procedural documentation. One reason that was forwarded for this state of affairswas the low levels of awareness regarding appropriate tools and techniques to effectively manage construction risk. Consequently, the construction sector in Ghana faces many problems related to frequent cost and time overruns(Fugar & Agyakwah-Baah, 2010). Within the mass construction market in Ghana, Ahadzie, Proverbs and Olomolaiye (2008), observe that the most crucial project performance success criteria were overall project cost and quality

Risk assessment among construction firms in Kenya has gained increased prominence owing to what Ngundo (2014) observes as an increase in infrastructure development in the country. The rise of many construction projects, most notable in real estate at the mass market level, has been faced with a lot of uncertainty, resulting in outcomes that fail to meet minimum standards benchmarked against best practice in the sector. Ngundo (2014) attributed the low levels of project success to failure to develop proper procedures, lack of sufficient training and capacity building programs, incompetence among project staff, low levels of formal quality management support and low levels of management commitment. As a result, project risk assessment planning was characterised by poor risk identification, assessment, prioritization, mitigation and control. The overall outcomes were weak and inappropriate risk assessment measures that increased the vulnerability of the construction firms to risk.

The construction industry is one of the major industries contributing significantly to the socio-economic development growth (Choge & Muturi, 2014). Construction projects comprise of five major phases namely planning, programming and design, procurement, construction and project close out. Each phase has its own typical risks. The risks at planning phase include poor scope definition, poor estimates and budget based on incomplete data. The programming and design may have risks such as over-design, poor constructability, poor estimating and scope creep. The procurement phase is often plagued by risks of incomplete documents, poor contracting strategy, insufficient competition and fraud in the bidding process. The construction phase is faced with risks of change orders, delays and quality concerns. The risks at project close out include snag/punch lists issues, insufficient time for testing and commissioning and claims (Olwale & Sung, 2010).

More than Sh1 trillion shillings have gone into roads projects in the last one decade, which has increased classified road network to more than 160,000 kilometers from less than 60,000 kilometers a decade ago. To support existing and future development, Infrastructure the country needs to spend Sh1 trillion over the next five years, which will go towards new roads and maintenance of those in place. In the 2019-20 financial year, Treasury has allocated Sh180.9 billion for on-going roads construction projects as well as the rehabilitation and maintenance of roads (Kenya National Treasury, 2019). Low absorption of development expenditure and reductions during supplementary budgets especially for infrastructure projects however remain a major risk to infrastructure as a key driver of economic growth. This is because the delayed completion of projects which, according to Treasury, leads to delayed returns on investment, a move that could hurt achievement of the government’s Big Four Agenda. The proposed study will be built on this background.

1.2 Statement of the problem

Performance of projects fails due to poor implementation of risk management practices in place. There are a number of well-established techniques and tools used for managing project risks in large organizations (White and Fortune, 2002); there has been little research publications on the tools and techniques used in managing project risks in small projects and performance (Bryde, 2003).It has been observed and decried by the public and other users of Government funded projects that they always lag behind in time, which conversely have a bearing on cost, due to various factors. Among such, as observed by Waihenya (2011) and Mbatha (2006) that variation in cost of building materials, changes in design of building, changes in finishes by client, contractor running out of money to run projects for some time, hiring extra tools during construction not anticipated, under-estimation of cost of construction by the project Quantity Surveyor, application of wrong time estimation model and increment weather patterns, among many others. Most of the existing studies based on risk management practices and performance of public projects point at the contractor as the sole contributor to delays and project failure and ignore the complexity of risks in the entire phase of project implementation Kimani (2004), and Kivaa.

Nakuru is set to benefit from Sh1.8 billion worth of low-volume sealed roads when the Kenya Urban Roads Authority (KURA) moves to ease traffic congestion in the town. The three-year project seeks to pave 22 kilometres of roads diverting from the major highway, a development expected to reduce the number of vehicles that pass through the town’s centre. The roads to be constructed serve Menengai and Milimani estates and seek to improve the access to Nakuru GK Prison, London estate and part of the western side of the town. They also link Industrial Area, Kaptembwa, Bondeni, Naka, Free Area and Mwariki estates of the eastern part of the town. The project being carried out by Chinese firm Weihai International Economic and Technical Cooperative is set to run for 30 months (Business daily, 2020).

Most construction projects are always facing challenges of delays, budget overruns, change of designs due to disputes over invasion of human settlements to the road reserves and illegal construction of buildings on public land, public utilities and along power lines. This had made construction of roads take more time than planned. This study therefore to fill this research gap by investigating the influence of risk assessment by KURA in enhancing performance of construction road projects in Nakuru Town which is an area that has not received attention in empirical investigation.

1.3 Objectives

To investigate the influence of risk identification on performance of construction road projects
To examine the influence of risk evaluation on performance of construction road projects

iii. To assess the influence of risk communication on performance of construction road projects

1.4 Research Questions

How does risk identification influence performance of road construction projects?
What is the influence of risk evaluation on performance of road construction projects?

iii. How does risk communication influence performance of road construction projects?

1.5 Significance of the study

The results of this research are expected to indicate the correlation between risk management practices during the planning stage and the construction project performance. The planning stage provides the greatest opportunity in the project life cycle to govern and control scope, costs and schedule through sound risk management practices (Wallace & Blumkin, 2007). It is expected that the results of this study will inform policy makers and property developers on the benefits of the architect/engineer selection process and the site selection and validation process at the project planning stage. The research findings will also form a basis for further studies by scholars will might be interested in furthering the research topic.

1.6 Scope of the study

The scope of this research will be roads to be constructed which will serve Menengai and Milimani estates. The roads also seek to improve the access to Nakuru GK Prison, London estate and part of the western side of the town. They also link Industrial Area, Kaptembwa, Bondeni, Naka, Free Area and Mwariki estates of the eastern part of the town. The respondents will be the professionals in the project from KURA and the construction form contracted to the work. Risk identification, risk evaluation and risk communication are the independent variables while performance is the dependent variable. The study will adopt descriptive research design while primary data will be used which will be collected using structured questionnaires. The study will be conducted within a period of two months.

1.7 Limitations and Delimitations of the study

Some of the respondents might be unwilling to provide information for fear that the information will be sensitive and confidential. However, the researcher will ensure proper communication is made on the purpose of the study and assure respondents of confidentiality on information provided.

1.8 Assumptions of the study

The study assumes that the respondents will divulge material information relevant to the proposed study. The study assumes that KURA carries out risk assessment on road construction.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter highlights the relevant literature, information and other studies carried out in the field of construction industry by various institutions, scholars and researchers and provide detailed discussion on theoretical review, empirical review and conceptual framework.

2.2 Theoretical review

The study will be guided by the following theories.

2.2.1 Enterprise Risk Management

Theory According to Nocco and Stulz (2006), Enterprise Risk Management (ERM) is a risk management theory advocates for recommends for the measurement and management of notable risk facing a given entity whole than the management of each risk independently. Its main aim is to combine the risk management silos in an organization into one holistic and comprehensive framework. The ERM risk management framework of managing risk emphasizes that senior company executives and employees should actively be involved in risk management process of analyzing and responding to a wide range of company risks (Hallowell, Molenaar, &Fortunato, 2013). This concept encourages all members of the organization to be involved in the management of risks and not only one or a few members. The ERM also highlight the importance of clear process and policies for managing risks. According to Olson and Wu (2010), the theory also affirms that if organizations can embrace formal policies that define risks appetite, strategic goals, tolerance and systematic processes then they can improve their risk management capacity of identifying, analyzing, and treating of risks. The theory also stresses on a creation of risk management culture where all stakeholders are empowered and accountable to manage risks. Cormican (2015) suggested that ERM practices involve increased competitive advantage, stakeholder confidence and long-term viability of organizations. The ERM theory has become popular in project management techniques despite the fact that it was developed for management of company risks. Drumll (2001) explains that adopting ERM philosophy in the construction industry is a wise decision as it applies to industries that have very high rates of failure like construction industry. These failures are as a result of failure to identify, mitigate and control risk across the entire business making this theory relevant to this research. This theory will be relevant to the study as it will serve as the main theory.

2.3 Empirical Review

Past studies relating to variables under study are discussed below.

2.3.1 Risk identification

Identifying risk is the first step in the risk management program usually informal and can be performed in various ways depending on the organization of the project team. It means that the identification of risks relies mostly on past experience that should be used in upcoming projects.

In order to find the potential risks, an allocation needs to be done. This can be decided and arranged by the organization step which determines which risk components may adversely affect which project objectives and documents their characteristics.

Construction risks are classified in many ways by risk types, natures, and magnitudes,the sources and origins or project phase. Some of the existing researches propose a hierarchical structure of risks which classifies the risks according to their origin and the location which the risk impacts to the project.

Risks and other threats can be hard to eliminate, but when they have been identified, it is easier to take actions and have control over them. If the causes of the risks have been identified and allocated before any problems occur, the risk management will be more effective. Risk management is not only solving problems in advance, but also being prepared for potential problems that can occur unexpectedly. Handling potential threats is not only a way to minimize losses within the project, but also a way to transfer risks into opportunities which can lead to economical profitability, environmental and other advantages (Ropel 2011).

The purpose of identifying risks is to obtain a list with potential risks to be managed in a project .In order to find all potential risks which might impact a specific project, different techniques can applied. It is important to use a method that the project team is most familiar with and the project will benefit from. The aim is to highlight the potential problems, in order for the project team to be aware of them (Mikaela Ropel, 2011).

According to Irem Dikmenet (2013), risk management paradigms exist as methodologies rather than systems which can fully support the risk management process. The existing risk management support tools are usually based on quantitative risk analysis whereas the other phases are carried out external to the software. Risk registers and risk assessment tools are proposed as decision support systems which can only be used at specific stages of a construction project for specific purposes such as time/cost estimation at the bidding stage, country risk assessment during international market selection etc. Moreover, the proposed risk management support tools usually do not foster integration of risk management activities between the parties involved in the construction supply chain, do not consider impact of risks on all of the project success criteria, and cannot handle subjectivity. The major objective of this paper is to make a critical review of existing risk management support tools and propose development of a risk management corporate memory coupled with a decision support tool for successful management of risk.

Risk management is receiving much attention, as it is seen as a method to improve cost, schedule, and technical performance of new product development programs. However, there is a lack of empirical research that investigates the effective integration of specific risk management practices proposed by various standards with new product development programs and their association with various dimensions of risk management success.

According to Low Sui Phenget (2008) ,External risk management encompasses many areas such as finance, politics and national cultures, and there are many literatures that focus significantly on risk management in each area. Managing external risks are not unlike managing project risks and the same principles that are applied to project risk management may well be used to manage external risks. However, although external risk management is a critical success factor for many construction firms who have ventured out of their home countries, like project risks, this is often neglected by construction firms and construction firms generally either do not have sufficient knowledge pertinent to external risk management, or tend to overlook the effects that a lack of external risk management may have on their businesses. The objective of the study is to examine how construction firms attempt to manage external risks during the period that they venture into host countries. The study anchors on the external risk management practices of Chinese contractors that have ventured out of Mainland China into Singapore. A survey was conducted of all Chinese contractors in Singapore to gain a better insight into the external risk management practices which a typical Chinese contractor implements.

According to Martin (2010), by adopting risk management, savings potentials can be realized in construction projects. For this reason, for project managers as well as real estate developers, a consideration of the risk management process is worthwhile. The risk management process comprises 6 process steps. The integration of a risk management system in construction projects must be oriented to the progress of the project and permeate all areas, functions and processes of the project. In this, particular importance is attached to the risks in the personnel area, for, particularly for enterprises providing highly qualified services, specialized employees are essential for market success.

According to Maytorena (2004),Both the identification and analysis phases of the risk management process are considered the most important, for they can have a big impact on the accuracy of the risk assessment exercise. Currently it is assumed that construction project managers rely largely on experience to identify projects risks. These decisions, influenced by individual perception and attitudes, are made primarily under conditions of uncertainty. How individuals respond to risky or uncertain situations therefore requires an understanding of how individuals intuitively assess the situation they perceive, before expressing a response. The project interviewed fifty one construction project managers using Active Information Search (AIS) as a data collection method and cognitive mapping as a data capturing tool. Results suggest that the role of experience in the risk identification process is much less significant than is commonly assumed to be. By contrast, level of education and style of enquiry do play a significant role in risk identification performance.

According to Mehdi Ebratet (2013), Managers require a good understanding about the nature of risks involved in a construction project because the duration, quality, and budget of projects can be affected by these risks. Thus, the identification of risks and the determination of their priorities in every phase of the construction can assist project managers in planning and taking proper actions against those risks. Therefore, prioritizing risks via the risk factors can increase the reliability of success. In this research, first the risks involved in construction projects has been identified and arranged in a systematic hierarchical structure.

According to .Nakhon (2014), in the construction of an infrastructure project, completion delay is one of the major risks to the financial outlook of an infrastructure project under construction. During the construction phase, if the project is delayed, project managers can take specific actions to shorten the duration of certain activities on the critical path in order to restore the project to its original schedule. However, not all management actions to shorten the duration of activities are cost-effective: the cost of reducing some activities’ duration may exceed the savings. Risk that project managers cannot economically reduce through management feedback reactions should instead be transferred to third parties such as insurance companies that have risk pooling capacity. This paper present a novel way of managing completion delay risk through “dynamic risk insurance” by combining a technique known as the envelope method with a stochastic-based Monte Carlo method.

According to Samer Ezeldin (2006), it presents a comprehensive methodology that addresses the risk identification and response methods for developing countries represented by Egypt. The paper is based mainly on the approaches used by large contractors either domestic or international. The investigation, via a comprehensive questionnaire survey, tries to identify the most critical and significant risks that face the contractors working in the Egyptian construction industry and their associated effectively employed risk mitigation/elimination measures. Twenty-nine (29) construction project risks are classified into six (6) main categories according to their type and hundred and forty (140 risk) mitigation/elimination measures are introduced to overcome the impact of risks under each of these risk categories. According to the collected data and the results of the statistical analysis procedures employed, the most critical risk encountered by the contractors working in the Egyptian construction industry are: 1)the financial inability of the client; 2)them proper management of construction projects; 3)inflation and interest rates; 4)in-house cash shortage; and 5)Foreign exchange and convertibility. 101 risk response methods were found to be effective from the 140 methods introduced. The most commonly used risk response method was the risk reduction technique.

According to Shahid (2015),Construction projects are facing a number of risks which have negative effects on project objects such as time, cost and quality. The study is based on findings of a questionnaire-based survey on risk management in construction projects in Pakistan, reporting the significance of different type of risk, ultimate responsibility for them and the effectiveness of some most common risk management techniques practiced in the industry. Two types of risk management techniques were considered: preventive techniques which can be used before the start of a project to manage risks that are anticipated during the project execution; and remedial techniques that are used during the execution phase once a risk has already occurred. The study revealed that financial issues for projects, accidents on site and defective design are the most significant risks affecting most of construction projects. As further reported, the contractor is responsible for management of most risks occurring at sites during the implementation phase, such as issues related to subcontractors, labour, machinery, availability of materials and quality, while the client is responsible for the risks such as financial issues, issues related to design documents, changes in codes and regulations, and scope of work. It demonstrate that the productions of proper schedule by getting updated data of the project and guidance from previous similar projects are the most effective preventive risk management techniques while close supervision and coordination within projects are the most effective remedial risk management techniques. The study recommends preparation of a proper schedule and good coordination during the implementation stage very important as they may help project managers to focus on critical areas for better management of projects in Pakistan

According to Terry Lyons (2004), provides the results of a survey of senior management involved in the Queensland engineering construction industry, concerning the usage of risk management techniques. These are described in comparison with four earlier surveys conducted around the world and indicate that: the use of risk management is moderate to high, with very little differences between the types, sizes and risk tolerance of the organizations, and experience and risk tolerance of the individual respondents; risk management usage in the execution and planning stages of the project life cycle is higher than in the conceptual or termination phases; risk identification and risk assessment are the most often used risk management elements ahead of risk response and risk documentation; brainstorming is the most common risk identification technique used; qualitative methods of risk assessment are used most frequently; risk reduction is the most frequently used risk response method, with the use of contingencies and contractual transfer preferred over insurance; and project teams are the most frequent group used for risk analysis, ahead of in-house specialists and consultants.

According to Wael Sharmaket(2008)studied risks impact construction projects and cause changes in their management plans. Unfortunately, not all of them can be identified in advance. Hence, risk management in construction requires proactive as well as reactive treatment. Among the other risk management tasks, risk treatment requires a sound methodology to rapidly develop concrete change actions and alter the corresponding project management plans. In this paper, process modeling techniques are used to develop configurable treatment templates, which describe how treatment can change the schedule plan. Such templates can contribute in structuring configurable reference models which in turn can be tailored and assembled to form up-to-date project schedules. Risk data as a part of reference repository may serve as means of knowledge management by providing all available risk-related information as response to critical events.

Gitau (2015) conducted a study on the effects of risk management at project planning phase on performance of construction projects in Rwanda. The study targeted architects, engineers, project managers, quantity surveyors, contractors, and, regulatory authorities in operation in Rwanda and key clients with major investments in the construction industry. The study used both qualitative and quantitative methods of data collection. The study established that there exists a positive

Amemba (2015) did a study on the effect of implementing risk management strategies on supply chain performance: a case of Kenya medical supplies agency. The study employed a descriptive research design using a case study. The research established that risk identification, implemented in the KEMSA supply affected the performance to a great extent

2.3.2 Risk evaluation

Risk evaluation is defined as determination of risk management priorities through establishment of qualitative and/or quantitative relationships between benefits and associated risks.”Risk evaluation attempts to define what the estimated risk actually means to people concerned with or affected by the risk. A large part of this evaluation will be the consideration of how people perceive risks. Assessing is the second step where collected data about potential risk are analyzed. Risk analysis can be described as short listing risks with the highest impact on the project by quantifying their occurrence rates. In the analysis of the identified risk, two categories of methods (qualitative and quantitative) have been developed. The qualitative methods are most applicable when risks can be placed somewhere on a descriptive scale from high to low level. The quantitative methods are used to determine the probability and impacts of risk identified and are based on numeric estimation (Nerija, 2012). There are many factors which should be considered when a project risk manager select a risk assessment method as per the cost of employing the technique, the level of external party‟s approval, organizational structure, agreement, adoptability, complexity, validity, and credibility and automation. It is essential for the risk manager to have high quality data in order to effectively apply the quantitative methods, even if it is not easy to obtain such high quality data relative to risk items in the construction industry. The difficult is attributed to address the uncertainties and subjectivities associated with construction activities. Beside the lack of collectability, the uniqueness, and non-repetitive nature of construction projects impeded using probabilistic risk quantification approaches. Pejman (2012) companies tend to use qualitative approach since it is more convenient to describe the risks than to quantify them (Michaela, 2011). In addition, there is also a semi quantitative technique to allow some relative risk ranking, but these techniques are still unable to provide detailed assessment of large and complicated projects or systems. It is difficult to control or mitigate the risks solely using qualitative risk assessment. A combination of qualitative and quantitative risk assessment is beneficial to successfully identifying the risks associated with the project while controlling the cost, time, and resources (tarkumar shah, 2004).Although qualitative method helps with understanding the process, and it is highly recommended as an initiation of the risk management process irrespective of the fact that qualitative risk analysis is going to be done (Tarkumar shah, 2004).

Roque and de Carvalho (2013) carried a study on understanding the impact of project risk management, evaluation of risks on project performance in Brazillian Vendor companies. The objective of the study was to comprehend the impact of risk evaluation on IT project performance and to investigate the degree of diffusion of project risk evaluation in Brazilian. The methodological approach involved a survey of 415 projects at different companies in IT sectors in Brazil. The results demonstrate that adopting risk evaluation and planning has a significant positive impact on project success as project staff were able to identify and take measures to mitigate occurrence of risks to a greater extent.

Addison and Vallabh, (2002) carried out a study on impact of project risk evaluation performance of software projects in IT enterprises in China. The study adopted a survey research design. Data collection was achieved through the use of a structured questionnaire, which asked respondents questions aimed at achieving the study objective. The study further found that as management involvement increases, the risk of unclear or misunderstood scope/objectives appears to decrease and improve project performance. The p-value showed a relationship between project risk evaluation and project performance was significant at a 95% confidence level.

2.3.3 Risk communication

Many modern organizations carry out their business tasks using the project-based approach. Realization of projects requires a specific approach to task realization and appropriate management. Appropriate project management is of particular importance for the success of their implementation, and includes a number of areas, which are described in detail by many authors (among others Kerzner2013; Meredith & Mantel, 2011; Schwalbe, 2013). The rules of conduct related to respective areas have been collected in methodologies or sets of principles, such as Project Management Body of Knowledge, Prince2, and many others, e.g. Adaptive Project Framework, Agile Software Development or Scrum, which are dedicated to IT projects.

One of the areas of project management described within these methodologies is communication

management, which is considered to be of crucial importance to the success of the project, and on the one hand its importance is exalted by most stakeholders, but on the other hand, the communication processes and practices formalized in the company’s project management methodology are neither followed nor prioritized by project managers (Monteiro de Carvalho, 2013). Also Papke-Shields and co-authors, in their research on the use of project management practices and the link thereof to project success, discover that practices related to communication are not given enough attention, while at the same time communication practices are found to be associated with most of the success dimensions (Papke-Shields et al., 2010). That is why despite the existence of principles and methodologies mentioned above and many available ICT tools and systems, we are still witnessing many project failures or projects experiencing serious problems that result from improper communication management (among others Conboy, 2010; Stoica & Brouse, 2013).

This situation calls for new solutions, which could give more precise and practical guidelines to project managers and team members concerning communication management patterns that should be applied to ensure effective communication. Such communication management patterns would be suited to the characteristics of the project, the project team and its environment. The present paper constitutes the first step in developing a method of formulating project communication management patterns, and its aim is to identify real-life project communication management practices and accompanying factors described in subject literature, and to analyze and summarize this knowledge. Communication management is broadly described in the literature (see e.g. Dow & Taylor, 2010;Kliem, 2007 and papers cited therein), mainly due to the great importance that is attributed to this area of project management (Purna Sudhakar, 2012), and because of its impact on the success of the project (Ofori, 2013; Kerzner, 2013), in particular IT projects (Holzmann & Panizel, 2013) carried outby dispersed teams (Tone et al. 2009; Sidawi, 2012; Wagstrom & Herbsleb, 2006; Niinimäki et al.,2012; Han & Jung, 2014). Effective communication management within virtual project teams is of paramount importance and a fundamental competency that, if properly executed, connects every member of a project team, so that they can work together to achieve the project’s objectives. If communication is not managed effectively and fully understood by Project Managers, project outcomes may be at risk. According to PMI’s Pulse research, 55 percent of Project Managers agree that effective communication with all stakeholders is the most critical success factor in project management (PMI,2013). Effective project communications ensure that the right information reaches the right person at the right time and in a cost-effective manner. Communication is the key to keeping team members, managers, and stakeholders informed and on track to pursue the project objectives, as well as to identifying issues, risks, misunderstandings, and all other challenges to project completion. Effective communication is a critical element of team effectiveness, both in traditional and virtual teams (Pitts et al., 2012).White and Fortune in their empirical study on practices in project management established a list of critical success factors for a project and ‘clear communication channels’ was a number 6 factor on the list. It is worth noting that number 1 factor, which was ‘clear goals/objectives’ is also strongly dependent on clear and precise communication (White & Fortune, 2002). In another study on critical factors that contribute to the success of a project, the author lists ‘effective communication’ among the four most important factors, next to ‘top management support’, ‘clarity of purpose and goals’ and ‘stakeholders involvement’ (Ofori, 2013). Effective communication techniques and appropriate leadership styles are emphasized by Nguyen as the success factors for building and managing high performance global virtual teams (Nguyen, 2013). Earlier research reports that 74% of the problems in distributed projects were caused by “communication and contacts” (Komi‐Sirviö & Tihinen, 2005).

Affare (2012) carried out a study on an assessment of project communication management on construction projects in Ghana. The research sampled 97 professionals working with consultants, project clients and contractors with D1K1 classification. The research established that within the Ghanaian construction industry, there is a strong appreciation of the importance of project communication and its importance within the industry. The research also established that poor communication had resulted in project delays, project cost overrun and project abandonment.

Naqvi and Aziz (2011) study examined the impact of stakeholder communication on project performance. A sample of seventy information technology projects was selected from twenty four software house differently. Data was collected using questionnaires based on the quality of communication by stakeholders used by the project managers and its effects on IT projects were obtained in a sectional manner. Data analysis comprised of frequency distribution, Pearson correlation and linear regression. The study findings showed that project outcome dependency and stakeholder communication strongly correlates with each other.

2.3.4 Project performance

Project Management Body of Knowledge guide defines cost estimates as a developed approximation of the monetary resources needed to complete project activities. The accuracy of cost estimates starting from the planning phase of a project through to the tender estimate can affect the success or failure of a construction project. Many failures of construction projects are as a result of cost escalations (Gkritza & Labi, 2008). The process of determining the project budget involves aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline (PMI, 2008). The project budget that results from the planning cycle must be reasonable, attainable, and based on contractually negotiated costs and the statement of work. The basis for the budget is historical cost, best estimates, or industrial engineering standards. The budget must identify planned manpower requirements, contract-allocated funds, and management reserve Performance results standards are quantitative measurements and include such items as quality of work, quantity of work, cost of work, and time-to-complete (Kerzner, 2009).

Earned value is a management technique that relates resource planning to schedules and technical performance requirements. Earned value management (EVM) is a systematic process that uses earned value as the primary tool for integrating cost, schedule, technical performance management, and risk management. A variance is defined as any schedule, technical performance, or cost deviation from a specific plan. The cost variance compares deviations only from the budget and does not provide a measure of comparison between work scheduled and work accomplished. In order to calculate variances, we must define the three basic variances for budgeting and actual costs for work scheduled and performed (Archibald, 1976).

The first variable is the budgeted cost for work scheduled (BCWS) which is the budgeted amount of cost for work scheduled to be accomplished plus the amount or level of effort or apportioned effort scheduled to be accomplished in a given time period. The second variable is the budget cost for work performed (BCWP) which is the budgeted amount of cost for completed work, plus budgeted for level of effort or apportioned effort activity completed within a given time period. This is sometimes referred to as “earned value.” The third variable is the actual cost for work performed (ACWP) is the amount reported as actually expended in completing the work accomplished within a given time period. BCWS represents the time-phased budget plan against which performance is measured. For the total contract, BCWS is normally the negotiated contract plus the estimated cost of authorized but unpriced work (less any management reserve). For any given time period, BCWS is determined at the final cost account level by totaling budgets for all work packages, plus the budget for the portion of in-process work (open work packages), plus the budget for level of effort and apportioned effort (Kerzner, 2009).

2.3.5 Project Time performance

The project time schedule includes a planned start date and a planned finish date for each activity. A project schedule may be presented in a summary form referred to as a master schedule or milestone schedule or may be presented in detail. Often, the project schedule is presented graphically using milestone charts, bar charts, and project schedule network diagrams. The schedule baseline is developed from the schedule network analysis and is accepted and approved by the project management team as the baseline with baseline start dates and baseline finish dates. The baseline is a key element in schedule control and time management. Project time performance is established by measuring, comparing and analyzing schedule performance such as actual start and finish dates, percent complete, and, remaining duration of work in progress. The performance is assessed by the use of techniques such as earned value management (EVM), schedule variance (SV), schedule performance index (SPI). These techniques help to assess the magnitude of schedule variances. The critical chain method compares the amount of buffer remaining to the amount of buffer needed to protect the delivery date and thus can help determine the schedule status (PMI, 2008). The total float variance is an essential planning component to evaluate project performance. Project management software for scheduling such as Ms Project and task provides the ability to track planned date versus actual dates and to forecast the effects of changes to the project schedule.

2.4 Research Gaps

There is no research on risk management in construction projects in kenya. Despite the volumes of literature on risk management in construction industry, delays and cost overrun remain an every day event in most construction projects. There is therefore need for research to develop a better understanding of what effective risk management is in construction industry. While the literature review indicates that the planning stage provides the best opportunity for risk management for project success, very little research has been done to show the impact of specific process at this stage on project performance. This research aims to contribute to this knowledge and with an emphasis on kenya construction industry

2.4.1 Summary of gaps in the literature review

Study variable

Researcher

Tittle of the study

Methodology, findings and conclusion

Gaps in knowledge

Risk identification

Amemba (2015)

Effect of risk management strategies on supply chain performance

The study employed a descriptive research design using a case study. The research established that risk identification, implemented in the KEMSA supply affected the performance to a great extent.

The study focused on supply chain rather than construction projects

Risk identification

Gitau (2015)

Effect of risk management at project planning phase on performance of construction projects

The study targeted architects, engineers, project managers, quantity surveyors, contractors, and, regulatory authorities in operation in Rwanda and key clients with major investments in the construction industry. The study used both qualitative and quantitative methods of data collection. The study established that there exists a positive correlation between risk evaluationand performance of construction projects

The study failed to examine risk registration and risk checklist elements which are key in risk evaluation

Risk evaluation

Roque and de Carvalho (2013)

Impact of project risk management, evaluation of risks on project performance

The methodological approach involved a survey of 415 projects at different companies in IT sectors in Brazil. The results demonstrate that adopting risk evaluation and planning has a significant positive impact on project success as project staff were able to identify and take measures to mitigate occurrence of risks to a greater extent.

The focus of the study was IT sectors as opposed to construction project

Risk evaluation

Addison and Vallabh, (2002

Impact of project risk evaluation performance of software projects in IT enterprises

The study adopted a survey research design. Data collection was achieved through the use of a structured questionnaire, which asked respondents questions aimed at achieving the study objective. The study further found that as management involvement increases, the risk of unclear or misunderstood scope/objectives appears to decrease and improve project performance. The p-value showed a relationship between project risk evaluation and project performance was significant at a 95% confidence level

The focus of the study was IT sectors as opposed to construction project

Risk communication

Affare (2012)

assessment of project communication management on construction projects

The research sampled 97 professionals working with consultants, project clients and contractors with D1K1 classification. The research established that within the Ghanaian construction industry, there is a strong appreciation of the importance of project communication and its importance within the industry.

The study did not focus on road construction project

Risk communication

Naqvi and Aziz (2011)

impact of stakeholder communication on project performance

A sample of seventy information technology projects was selected from twenty four software house differently. Data was collected using questionnaires based on the quality of communication by stakeholders used by the project managers and its effects on IT projects was obtained in a sectional manner. Data analysis comprised of frequency distribution, Pearson correlation and linear regression. The study findings showed that project outcome dependency and stakeholder communication strongly correlates with each other.

The study did not focus on road construction project

2.5 Conceptual Framework

The hypothesized relationship between variables is showed in figure 2.1.

Independent variables dependent variables

Risk identification

Brainstorming
Questionnaires
SWOT analysis,
risk questionnaires
Expert systems

Project Performance projects

Project completed within schedule
Project completed within cost.

Figure 2:1 conceptual framework

Source: (author, 2020)

Risk identification involves the determination of risks and how they affect the performacnce of a project. This will be determined by the use of brainstorming, questionnaires, SWOT analysis, risk questionnaires and expert systems. Brainstorming is the most common and involves the opinion of the individuals involved in the identification.

Risk evaluation will involve both the identification and measurement of the risk. This will involve the methods qualitative risk analysis and quantitative risk analysis techniques are used. These two methods will be used to quantify the risk for uncertain events especially where the number of outcomes is higher.

On risk communication the study will examine whether there is effective communication across channels on projects and feedback mechanisms. Communication is important in mitigating and addressing issues arising from risks. With proper communication risks can be minimized or minimized.

On performance of projects the study will assess whether projects are completed within schedule and also whether project are completed within cost. Being a dependent variable, it will be dependent on the the three independent variables: risk identification, risk evaluation and risk communication.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

Seeking to evaluate the entire dimension regarding to this study. This chapter gives the studies technique to be adopted. It discusses the studies design with a view to be used, the population, sampling strategies, data collection method, how validity and reliability of the research instruments is to be ensured, data analysis and presentation approach as well as ethics to be observed in the study period.

3.2Research philosophy

The pragmatist research philosophy will form the basis of this research; it deals mostly with the facts. According to this philosophy the nature of the research is usually guided by the research problem. The practical findings based data collection from the field is considered to be the most important. The researcher also enjoys the freedom to make choices from on the methods, techniques and the procedures to be used that will ensure the needs and the aim of the research is met. A pragmatist point of view is such that they don’t view the world as absolute unity, instead the truth is what is currently in action and does not depend on the mind that may not be subject to reality.

3.3 Research Design

A descriptive survey research design will be used in this study. Kothari, (2009) notes that a descriptive research design is used when data is collected to describe persons, organizational settings or phenomenon. This is supported by (Mugenda & Mugenda, 2008) who states that this type of design enables one to obtain information with sufficient precision so that hypothesis can be tested properly. According to Easterby-Smith, Thorpe and Jackson (2008), (2006), descriptive surveys are interested in addressing specific characteristics of a selected population of subjects at a point in time, or at varying times for the purpose of comparing the relationship between variables. The research design will be chosen because it will be the most appropriate method when the researcher seeks to study the phenomenon being studied and the relationship between variables.

3.3

Study area

The study area will be Kenya urban roads authority as well as the contracted firm that was requested to work .All this research will be conducted at Kenya urbans roads authority central rift offices which is situated at Nakuru.

3.3Target Population

Population refers to the larger group from which a sample is taken (Orodho, 2005). It can also be defined as the total population from where the research seeks to make an inference. The target population or this research is 60 professionals from KURA.

Sample and Sampling Size

The sample will consist of 60 professionals from KURA. These will include contractors, consultants, engineers, project team, technical auditors and the contractors. Since the target population is small, a census survey method will be used. The main aim of choosing this type of population is to be able to get current and past information from people who have participated in construction projects.

Performance of projects fails due to poor implementation of risk management practices in place

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2.1 Introduction

This chapter highlights the relevant literature, information and other studies carried out in the field of construction industry by various institutions, scholars and researchers and provide detailed discussion on theoretical review, empirical review and conceptual framework.

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