Investigation of Optimization of Risk Allocation in Construction Projects

Running head: INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN
CONSTRUCTION PROJECTS
Investigation of Optimization of Risk Allocation in Construction Projects
Name of the Student:
Name of the University:

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INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN CONSTRUCTION
PROJECTS
Abstract
In the construction industry, the concept of risk management is taken as a procedure to identify,
allocate the resource and mitigate the risks which are occurred into the construction industry.
Higher the risks in the construction, it provides with higher effect on the project participants,
while the construction management is required in the industry to manage and handle the risks.
The paper is tending to review the existing literature based on the construction risk management
and risk management processes. The literature study is lacked to processes of risk management
which has ability to capture impact of risks based on selected research objectives. The study is
aimed to review the methods of risk allocation used to reduce risks from the construction project
industry. The survey is used to collect data and information to review various risk classification
as well as sources in existing literature study work.
Keywords: Risk management, risk allocation, risk classification, construction management.

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INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN CONSTRUCTION
PROJECTS
Acknowledgement
The research is conducted to enrich the experience of my life. The research enhances my
knowledge and skills on the selected research topic. With gaining of the knowledge, it gives me
opportunity to face some challenges and overcome them. Without the guidance of my professors,
friends and family, I would not able to complete the study. They all contribute me to enhance my
knowledge on the research topic. I would also like to thank my supervisor -------------- for
providing me constant support and guidance during the entire research process. Without all their
help, I am not able to collect primary data and valuable resources. Finally, I would also like to
thank the professionals from the construction Industry who help me to participate in the survey.
It also provides us valuable results for the project work. All their support inspires and enlightens
me to go through the research process.
Heartfelt thanks and warmest wishes,
Yours Sincerely,

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INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN CONSTRUCTION
PROJECTS
Table of Contents
Chapter 1: Introduction..................................................................................................................10
1.1 Background of the study......................................................................................................10
1.2 Aim of the study..................................................................................................................11
1.3 Objectives of the research study..........................................................................................11
1.4 Research questions...............................................................................................................12
1.5 Research hypothesis.............................................................................................................13
1.6 Problem statement...............................................................................................................13
1.7 Rationale of the study..........................................................................................................14
1.8 Outline of the research methodology...................................................................................14
1.9 Structure of the study...........................................................................................................15
1.10 Chapter summary...............................................................................................................16
Chapter 2: Literature Review.........................................................................................................17
2.1 Introduction..........................................................................................................................17
2.2 Types of risk in construction industry.................................................................................18
2.3 Assessment of construction project.....................................................................................22
2.4 Risk allocation methods and mechanisms...........................................................................24
2.5 Risk Management Plan........................................................................................................27
2.6 Problems that are related with the risk allocation methods.................................................30

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INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN CONSTRUCTION
PROJECTS
2.7 Optimal risk allocation and its related factors.....................................................................31
2.8 Literature Gap......................................................................................................................32
2.9 Summary..............................................................................................................................32
Chapter 3: Research Methodology................................................................................................34
3.1 Introduction..........................................................................................................................34
3.2 Method Outline....................................................................................................................34
3.3 Research Philosophy............................................................................................................35
3.3.1 Justification for selection of the chosen Philosophy.....................................................36
3.4 Research Approach..............................................................................................................37
3.4.1 Justification for selection of the chosen Approach.......................................................37
3.5 Research Design..................................................................................................................37
3.5.1 Justification for selection of the chosen Design...........................................................38
3.6 Data Collection Method.......................................................................................................39
3.6.1 Data Sources: Primary and Secondary.........................................................................39
3.6.2 Data Techniques: Qualitative and Quantitative............................................................40
3.7 Population and Sample........................................................................................................40
3.7.1 Sampling Technique.....................................................................................................41
3.7.2 Sample Size..................................................................................................................41
3.8 Ethical Considerations.........................................................................................................41
3.9 Research Limitations...........................................................................................................42

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INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN CONSTRUCTION
PROJECTS
3.10 Time Horizons...................................................................................................................42
3.11 Summary............................................................................................................................44
Chapter 4: Data Analysis and Results...........................................................................................46
4.1 Introduction..........................................................................................................................46
4.2 Quantitative Data Analysis..................................................................................................46
4.3 Regression Analysis.............................................................................................................83
4.4 Summary..............................................................................................................................89
Chapter 5: Discussion....................................................................................................................91
Chapter 6: Conclusion and Recommendations..............................................................................95
6.1 Conclusion...........................................................................................................................95
6.2 Linking with the objectives.................................................................................................96
6.3 Recommendations................................................................................................................98
6.4 Limitation of the study.........................................................................................................99
6.5 Further scope of the study..................................................................................................100
References....................................................................................................................................101
Appendix......................................................................................................................................105
Survey Questionnaires.............................................................................................................105

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INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN CONSTRUCTION
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Table of Figures
Figure 4.1: Gender.........................................................................................................................47
Figure 4.2: Age group....................................................................................................................48
Figure 4.3: Position of the respondents.........................................................................................49
Figure 4.4: Experience in the construction industry......................................................................50
Figure 4.5: Knowledge about the risk management in the construction project...........................51
Figure 4.6: Construction project implementation is done based on cost, functionality and time..52
Figure 4.7: Risk identification carried out in the construction project..........................................54
Figure 4.8: Health and safety is the main concern in the construction project..............................55
Figure 4.9: High influence of the construction project..................................................................57
Figure 4.10: Risk allocation is required in the construction project..............................................58
Figure 4.11: Deviation in the construction project in terms of cost and time parameters.............60
Figure 4.12: Optimal risk allocation in construction project.........................................................61
Figure 4.13: Requirement of construction in construction project................................................63
Figure 4.14: Collaboration and trust create key significance positive relations............................65
Figure 4.15: Communicating with identified risks and opportunities in procurement phase........66
Figure 4.16: Design and build is the procurement approach.........................................................68
Figure 4.17: Location and site conditions can affect the construction project..............................70
Figure 4.18: Design documents approved on time........................................................................71
Figure 4.19: Construction work should adhere to quality standards.............................................72
Figure 4.20: Formal organization structure required for resolution of disputes in the project......74
Figure 4.21: Contractor require technical skills and experience...................................................76
Figure 4.22: Project execution affected by weather as well as climatic conditions......................77

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INVESTIGATION OF OPTIMIZATION OF RISK ALLOCATION IN CONSTRUCTION
PROJECTS
Figure 4.23: Risk management is done by adequate design and construction documentations....79
Figure 4.24: Risk allocation is done based on level of the technological sophistication..............81
Figure 4.25: Project is allocated to right resources........................................................................82