Risk Management of Housing Project

IJSTE - International Journal of Science Technology & Engineering | Volume 3 | Issue 09 | March 2017 ISSN (online): 2349-784X

Risk Management of Housing Project Vyas Nipul D. ME Student Department of Civil (Infrastructure) Engineering LDRP, ITR, Gandhinagar, India

Jitendrasinh D. Raol Assistant Professor Department of Civil Engineering LDRP, ITR, Gandhinagar, India

Abstract Construction is high risk activity, risk and uncertainty are inherent in construction projects whether it is building, commercial and industrial or any specialized structure such as bridge, warehouses, water retaining structure etc. today, advanced technology and mechanization has touched all fields of civil engineering and has made the construction process more complex and uncertain. The risks and uncertainties associated with construction projects affects the entire spectrum of project objectives i.e. performance, productivity, profitability and quality. This has stressed the importance of risk management. Risk management applied to each phase of construction project is vital to all parties involved. The aim of risk management is not necessary to eliminate total risk. The presence of risk can be sometimes forces the decision-makers in planning and results into some potential benefits. In addition, the presence of risk increases the amendment to control. This study aims to emphasize on risk management process and considering the specific area of housing schemes. Studying of various risk encounter during the housing project also suggesting appropriate method and technique for the housing project. The methodology for this study include various literature review and information regarding risk management, interview and data collection from the selected sites, analysis and scrutiny of data collected, analysis will be done using risk matrix and other techniques. Conclusion and suggestion will be carried out as per analysis of data. Keywords: Risk management, Housing project, Risk matrix ________________________________________________________________________________________________________ I.

INTRODUCTION

Risk and Risk Management: Risk is virtually anything that threatens or limits the ability of a community or non-profit organization to achieve its mission. It can be unexpected and unpredictable events such as destruction of a building, the wiping of all your computer files, loss of funds through theft or an injury to a member or visitor who trips on a slippery floor and decides to sue. Any of these or a million other things can happen, and if they do they have the potential to damage your organization, cost you money, or in a worst case scenario, cause your organization to close. Risk Management: Risk management is a process of thinking systematically about all possible risks, problems or disasters before they happen and setting up procedures that will avoid the risk, or minimize its impact, or cope with its impact. It is basically setting up a process where you can identify the risk and set up a strategy to control or deal with it. Risk Management in Construction: Risk management in construction projects is of great importance, as shown in Fig 1. Although at the start of a project, through the introduction of risk management, an increased expense is incurred, this is compensated for, in particular through the advantages of risk management. In the planning phase possible risks for the subsequent project success can be identified and reduced through their incorporation into the planning. This has in particular effects on the observance of set dates and deadlines and thus also on the maintenance of the project costs. For the principal, observance of its due date for putting into service an operating unit is of great importance. The risk potential analysis of a project states to what extent project risks influence the risk situation of the enterprise. Risk potential should be estimated without a detailed consideration of the individual risks at as little expense as possible. Depending on the assessment of the risk potential, the risk management process is set in motion. II. METHODOLOGY Methodology adopted for this thesis is collecting and identifying different risks in housing project by doing literature review. after that a questionnaire is prepared which are distributed in professional ( engineers, supervisors etc. ) working in housing sector and by analyzing the results of this survey whole data analysis stage is done using risk matrix and paired comparison. Conclusion is given on the basis of data analysis.

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III. DATA COLLECTION Risk Identification For the purpose of risk analysis we have to collect data. For this data collection we have few methods which are shown in fig Questionnaires or Checklists:- Questionnaires are usually drawn up from a combination of previous experience and specific project criteria. There are two forms of questionnaire, one is a very general form with non-specific prompts or questions and the other can be detailed as is required by the particular project. Questionnaires also facilitate consistently presented answers from different team members which allow less time consuming and more meaningful comparisons. Therefore the risk manager can ascertain more readily any apparent consensus. Interviews: This is technique that has been used historically by personnel departments and other consultants to extract information. It has also been used by risk managers to identify possible risk in a development. The interviews may take place on a one to one basis or on a many to one basis. The many to one basis should consist of projects members from different disciplines so that the subjects raised can be viewed from different perspectives. The problem with this method is that it is time consuming not only to carry out the interviewing but also record the risks arrived at there from. Expert System: A lot of research is being done on artificial intelligence and expert systems. Specifically, one of the most sophisticated models that can be developed for risk management is by making use of knowledge-based systems or human-computer cooperative systems. This system is designed to assist the project managers in achieving more effective control over risks by providing them with appropriate knowledge, gathered from many project managers and compiled into a knowledge-base. It is designed to warn project managers of risks that may follow etc. While doing this, the logical thinking and the intuitive thinking of the managers is accounted for in the system The Delphe Technique:The Delphe technique attempts to produce objective results from subjective discussions. It is a systematic, interactive forecasting method which relies on a panel of independent experts. This method may be applicable to the identification of risks but it is more suited to attaching likelihood of occurrence and potential impacts of previously identified risk events. This method basically involves the following sequence of events:  A questionnaire is forwarded to all the appropriate members of the project team by the appointed risk manager.  The members of project teams give their objective views in response to the questionnaire and return them to the risk manager.  The risk manager then collects these results and redistributes them. Each project participant now receives a different set of views and is requested to reconsider their original answers and resubmit them to the risk manager.  These revised results are again collected by the risk manager and redistributed again in the same manner as above. This iterative process is continued until the risk manager is satisfied that a consensus o opinion has been reached Questionnaire prepared for survey scale used for it is also shown below, Table – 1 Scale for survey Scale 1/5=0.2 2/5=0.4 3/5=0.6 4/5=0.8 5/5=1

Probability Scale Rare 1 Occasional 2 Some what frequent 3 Frequent 4 Very frequent 5 Table – 2 questionnaire survey

Sr. NO

RISK CODE

1 2 3 4 5 6 7

O1 O2 O3 O4 O5 O6 O7

ORGANIZATIONAL RISK Inexperienced staff assigned Loosing critical staff at crucial project of time Unanticipated project manager workload Inconsistent cost, time, scope and quality objectives functional units not available over loaded Priorities change on existing program New priority project inserted into program

8 9 10

M1 M2 M3

MATERIAL RISK Non availability of material Defective material Poor transportation for material

CATEGORIES OF RISK

Impact Very low Low Moderate High Very high

PROBABILITY 0.2

0.4

0.6

IMPACT 0.8

1

2

3

4

5

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Risk Management of Housing Project (IJSTE/ Volume 3 / Issue 09 / 081)

FORCE MAJEURE Rain Earthquake Flood Fire Riot

11 12 13 14 15

F1 F2 F3 F4 F5

16 17 18 19

A1 A2 A3 A4

20

A5

21 22 23 24

A6 A7 A8 A9

ACTIVITY DELAY RISK Construction delay Delay in payment, handling and drawing Unavailability of material, manpower, machinery Delay in approval Mobilization of sufficient resources on time and to budget poor quality work Site condition causing problem Low productivity of labor Break down of machinery

25 26 27 28 29 30 31

FI1 FI2 FI3 FI4 FI5 FI6 FI7

FINANCIAL RISK Inflation Penalty for activity delay Change in design/variation in design Theft Taxation Project cost comes to be high Capital arrangement is not sufficient

32 33 34

L1 L2 L3

LOBOR RISK Unavailability of local & skilled labor Strikes by labor Accidents

35 36

EN1 EN2

ENVIRONMENTAL RISKS Air pollution Noise pollution

37 38 39 40 41 42 43 44 45 46

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10

PROJECT MANAGEMENT RISK Local agency issues Estimating and /or scheduling error Unplanned work that must be accomated Pressure for acceleration of work Ability to deal with local labour unions Incompentency in management capabilities Incompentency in project management Priority of client change Lack of upper management support lack of coordination

47 48 49

C1 C2 C3

COMPLETION RISK Receipt of all planning and other approval Project is not finished Proper design of project after completion

50 51 52 53 54

LE1 LE2 LE3 LE4 LE5

Legal risks Dispute amongst contractor Dispute regarding measurement of work Work overlapping with other contractor Price escalation is not provided Project duration is not real

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IV. DATA ANALYSIS Risk matrix: A risk assessment matrix is a project management tool that allows a single page – quick view of the probable risks evaluated in terms of the likelihood or probability of the risk and the severity of the consequences. A risk assessment matrix is easier to make, since most of the information needed can be easily extracted from the risk assessment forms. It is made in the form of a simple table where the risks are grouped based on their likelihood and the extent of damages or the kind of consequences that the risks can result in. A sample risk assessment matrix can be downloaded for free from here. Making a risk management matrix is the second step in the process of risk management, and it follows the first step of filling up a risk assessment form to determine the potential risks. The preparation of risk assessment forms is a more elaborate task and involves determining risks, gathering risk data, determining the probability and the impact levels of the risks, understanding consequences, assigning priorities and developing risk prevention strategies. On the other hand, a risk assessment matrix just provides the project team with a quick view of the risks and the priority with which each of these risks needs to be handled. Also in project planning, a different type of risk assessment template can be created in Excel and used to assess the overall risk of initiating a project. Base on the data collected a risk matrix can be prepared as followed VERY HIGH(5) HIGH(4) MODERATE(3) LOW(2) VERY LOW(1) PROBABILITY/ IMPACT

F2,F3 F5,A9,FI7,P6,C1

RARE(0.2)

Table – 3 Risk matrix A7,FI6,L2,P1 M1,A2,P8,C2,LE4 M3,F4,A1,FI3,FI4,LE3,LE5 M2,L3,EN1,P3 A3,A5,A6,L1,P7,LE2,O5 A8,FI1,P2,P10,LE1,O1 F1,A4,FI5,EN2,O3 O2,O4,FI2 OCCASIONAL(0.4)

SOMEWHAT FREQUENT(0.6)

P4,O6 P5,C3,O7 P9 FREQUENT(0.8)

VERY FREQUENT(1)

V. CONCLUSION Risk management can be implemented successfully and efficiently in construction industry but it requires some trustworthy database, past experience and commitment to do. Risk management is the concept in construction industry that is making its own mark as a crucial and important part of project management. It has been said that it is only for insurance, this is wrong to quote like this. It is a systematic analytical approach starting with risk identification and its mapping, probabilistic risk analysis and evaluation of significant risks and development of management or control strategies to eliminate, avoid, transfer or reduce certain risks. After gathering data and analyzing it, few concluding remarks are,  Risk identification is much more important phase in risk management process rather than risk analysis. As the risk are identified, it is easy to allocate percentage or weight age to each risk based on history and past experience.  The study include some data gathering or data collection techniques which was questionnaire or opinion survey and interview as well as discussion held with project expert but here the most important thing about gathering data it is that sample size selection which should be large enough. ACKNOWLEDGMENT I wish to express my deep sense of graduate to my internal guide Asst.Prof Mr. Jitendrasinh Raol and to our Head of Department Asst. Prof. Mrs. Ankita J Parikh of LDRP-Institute of Technology and Research, Gandhinagar for their able guidance and useful suggestions, which helped me in completing the project work, in time. I would like to take this opportunity to express my sincere gratitude and extend my heartiest thanks to Prof.(Dr) Gargi Rajpara, Principal for lighting the very first ray of hope in pursuing a career in Infrastructure Engineering ever since my college time and till now. REFERENCES [1] [2] [3] [4] [5] [6]

Nerija Banaitiene and Audrius Banaiti, Risk Management in Construction Projects 2012 Luiz Carlos Di Serio, Luciel Henrique de Oliveira, Luiz Marcelo Siegert Schuch ,Organizational Risk Management – A Case Study in Companies that have won the Brazilian Quality Award Prize on 2011-2012 Mr. Satish K. Kamane, Mr. Sandip A. Mahadik, Risk Management in Construction Industry 2014 The Principal Policy Manager, Building Policy Unit, Strategic Asset Management, Department of Housing and Public Works, GPO Box 2457 , Risk management, Brisbane 2009-2010 www.spms.ntu.edu.sg/mas/Safety/Safety_Doc/RA%20SPMS%20180512.xls http://www.stakeholdermap.com/risk/risk-management-construction.html

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Risk Management of Housing Project

Published on Jun 10, 2017

International Journal of Science Technology and Engineering

Construction is high risk activity, risk and uncertainty are inherent in construction projects whether it is building, commercial and industrial or any specialized structure such as bridge, warehouses, water retaining structure etc. today, advanced technology and mechanization has touched all fields of civil engineering and has made the construction process more complex and uncertain. The risks and uncertainties associated with construction projects affects the entire spectrum of project objectives i.e. performance, productivity, profitability and quality. This has stressed the importance of risk management. Risk management applied to each phase of construction project is vital to all parties involved. The aim of risk management is not necessary to eliminate total risk. The presence of risk can be sometimes forces the decision-makers in planning and results into some potential benefits. In addition, the presence of risk increases the amendment to control.