Risk analysis and management systems in South African construction project management practices

Cook, Iain Murray

Title: Risk analysis and management systems in South African construction project management practices
Creator: Cook, Iain Murray
Subject: Construction projects -- Management
Subject: Construction industry -- Risk management
Subject: Project management -- South Africa
Date Issued: 2016
Date: 2016
Type: Thesis
Type: Masters
Type: MSc
Identifier: http://hdl.handle.net/10948/3469
Identifier: vital:20433
Description: Risk management (RM) should be seen as one of the most important functions in the South African built environment. Without the effective management of the risks associated with the industry, the noble vision of a sector that is efficient, profitable, and sustainable cannot be achieved. By embracing tried and tested policies that successfully mitigate risk, industry stakeholders will achieve many project successes, and will outlast any competitors that choose to ignore, or are ignorant of the fact, that the negative impact risk has on projects is inversely proportional to the level of RM employed. Construction Project Management (CPM) practices, realising that there are excellent business opportunities across South Africa’s borders, and faced with a competitive South African market, are engaging with developers and government entities involved in cross border projects in the hope of securing these potentially lucrative African projects. With this move into Africa comes increased uncertainty and risk for these CPM practices, and other project stakeholders. Similarly, CPM practices that have made the strategic decision to remain operational only within South Africa’s borders, are faced with a competitive and complex built environment and industry, made increasingly challenging by a weakening economy, exacerbated by industrial strikes, infrastructure deficiencies and a decrease in industry skill levels. This study reports on Project Managers’ (PMs’) perceptions of project failures and inefficiencies resulting from inadequate RM on projects, including the RM methodologies currently being employed. The study focused on perceptions of PMs who operate within South Africa’s borders, PMs that operate across border into other African countries, as well as PMs who operate exclusively within South Africa’s built environment framework. A study was undertaken incorporating qualitative methodologies via a normative survey. The survey was split into three main phases. Phase one employed the use of a pilot survey executed with the objective of further investigating the main sub-problems to gain more insight into the related issues and challenges. For the pilot survey, PMs were selected based on their engagement in CPM activities within South Africa as well as across South Africa’s borders into other African countries. Phase two of the main survey, with the sample stratum being the Association of Construction Project Managers (ACPM), was aimed at PMs within the ACPM who have engaged, or are engaging, in CPM activities both within South Africa’s borders as well as across South Africa’s borders into other African countries. Phase 3 of the main survey, with the sample stratum being the ACPM, was aimed at PMs within the ACPM who have engaged, or are engaging, in CPM activities within South Africa’s borders only and have not engaged in cross border activities. Survey findings identified the commercial sector and value of the projects undertaken by the practices, the level of risk associated with different client typologies, the link between inadequate RM and project inefficiency and failure, and the importance of RM on projects. Findings also identified that RM methodologies are employed by CPM practices, and that CPM practices generally endeavour to create a culture of risk awareness amongst employees. Further findings indicated that CPM practices may not always understand the risks associated with new industry sectors, regions or countries that they are considering operating within, and that that there is room for improvement regarding the effectiveness of current RM systems. Survey findings also indicated that risk is not always transferred to the correct project stakeholder most suited to managing the risk, and CPM practices are not always able to accurately quantify the costs associated with project risk. Furthermore, it was identified that CPM practices do not always undertaken risk assessments (RAs) at the correct project stage resulting in inadequate risk contingencies allowances, regular risk reviews are not always undertaken for projects, project pre-mortems are seen as valuable tools by CPM practices as a method to reduce future risk, and project post-mortems relative to ‘lessons learnt’ are not always undertaken. Conclusions outline the link between effective RM, project inefficiencies and project failure, as well as the increase or decrease in risk relative to ineffective or effective use of risk identification and management methodologies for time, cost, and quality factors respectively. Conclusions also outline the fact that although CPM practices generally understand the link between RM and project success, they are not always able to fully comprehend the risks associated with new industry sectors, regions or cross border countries. This indicates that without the adequate identification of risk, the RM process or steps that follow the qualitative risk identification process will have little or no value. This is indicative of the requirement for professional associations to consolidate risk data for industry activities with the aim of improving the level of RM industry wide. Recommendations highlight the importance of the compiling of sector specific risk registers, compiled by the South African Council for the Project and Construction Management Professions (SACPCMP) with registered member input, made available to all PMs via the SACPCMPs online database. Further recommendations include: the engendering, by senior management of CPM practices; a healthy ‘risk aware’ culture, by promoting RM practices aligned with best practice methodologies; the implementation of well balanced and formal RM systems throughout the CPM practice, with the aim of achieving effective RM without overburdening PMs with unnecessary documentation or ‘paperwork’; the attendance of risk conferences and workshops by all CPM practices, aimed at specifically identifying challenges that exist with RM and methods that can be employed to improve the status quo; the attendance of formal risk training courses, by all CPM practices, aimed at improving the knowledge base of PMs relative to effective RM, and the appointment of risk professionals, driven by the monetary value and risk levels of the project, to undertake the RM process and unburden PMs from the task, allowing PMs to concentrate on the other project knowledge areas.
Format: xxi, 277 leaves
Format: pdf
Publisher: Nelson Mandela Metropolitan University
Publisher: Faculty of Engineering, the Built Environment and Information Technology
Language: English
Rights: Nelson Mandela Metropolitan University

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