THE PRACTICE AND CHALLENGES OF RISK MANAGEMENT IN THE CONSTRUCTION SECTOR: THE CASE OF SELECTED HIGH-RISE BUILDING IN BOLE SUB-CITY, ADISS ABABA

Abstract

Construction is a risk prone industry. Occurrence of risks in construction could affect project objectives negatively. Involvement of risk management plan and process is the best possible way to exist in this hasty environment. This is because analysis of risks gives better understanding of risks and the resulting impact of the risks, if they occur. This enables the project management team to have a better estimate of the impacts of risks. The estimated project cost is the sum of the baseline cost and an allowance to handle the cost impact of risks (i.e. contingency). Having a realistic estimate of this allowance would mean better estimate of project cost. This study focuses on the practice and challenges of risk management within the construction sector, specifically analyzing high-rise building projects in Bole sub-city, Addis Ababa. The research identifies key shortcomings in the implementation of risk management strategies, which have negatively affected project objectives. It highlights that while some studies have explored the practical aspects of risk management, there is a notable gap concerning the specific risk factors affecting project outcomes and the corresponding mitigation strategies. The research employs an exploratory design to analyze risk management practices among Grade-1 construction companies. Both quantitative and qualitative data collection techniques, including questionnaires distributed to industry professionals. The findings reveal that the primary challenges in risk management include insufficient resources, lack of training, and inadequate risk identification processes. Data analysis indicates that a significant portion of construction firms recognize the importance of risk management but often lack dedicated departments to manage these aspects effectively. The study identifies critical risk factors such as high inflation, delayed payments, poor resource management, and economic instability, all of which frequently contribute to project delays and cost overruns. The research concludes with recommendations for enhancing risk management practices to improve project delivery in the Ethiopian construction sector.