LITERATURE REVIEW

Project risk is regarded as an event or occurrence that is uncertain which could positively or negatively
impact on the objectives of a project i.e. project scope, cost, project duration and project quality (Baloi
and Price, 2003). Risks are considered as threats to project success, and are triggered by lack of proper
management (PMBOK, 2000). In construction industry, risk management is broad and requires systematic
process of identifying, analyzing and responding to risk in order to achieve the desired project outcomes
(Adeleke et al, 2018). Unlike other industries, the construction industry is challenged with an enormous
degree of risks and uncertainty (Salleh et al, 2020).

Lack of appropriate risk management practices have been linked to waste of time, cost and effort inputted
in a construction project. Although risks in construction projects are inevitable and almost impossible to
completely eradicate, implementing appropriate risk management practices is crucial in managing various
types of risks (Adeleke et al, 2018). Effective risk management approach requires the implementation of
appropriate systematic methodology, particularly from the area of knowledge and experience.

Studies have shown that project managers, contractors and consultants hardly apply systematic risk
management approaches in the construction industry in Nigeria, consequently causing a negative impact
on project performance (Salawu and Abdullah, 2015; Adeyemo and Smallwood, 2017; Adeleke et al,
2018). Furthermore, Ireogbu (2005) asserted that construction industry in Nigeria hardly place emphasis
on risk management practices during construction project which usually results in project failure in the
long run. Serpell et al (2014) believed that construction firms (both private and public) in emerging
countries have been applying insufficient risk management practices which resulted in poor project
outcomes often time. This study aims at Evaluate project risk management practices in the construction
projects in Nigeria.

The aim of this study is to identify various risks associated with construction industry in Nigeria and the
various risk management practices that are in place to reduce risks among construction firms.

Unlike other industries, the construction industry is challenged with an enormous degree of risks and
uncertainty (Salleh et al, 2020). Lack of appropriate risk management practices have been linked to waste
of time, cost and effort inputted in a construction project (Rohaninejad, M., & Bagherpour,, 2013; Zhao et
al, 2013). Risks in construction projects are inevitable and almost impossible to completely eradicate
which could significantly impact on productivity and performance of construction projects. According to
Baloi and Price (2003), “there is a gap between project risk management techniques and the practical
application by construction contractors, despite the frequent use of construction projects in management
research and the development of several tools and techniques for project risk management”.
Project risk management process consists of techniques and tools used in mitigating risks and uncertainty,
and exploiting the opportunities of positive occurrences. Bahamid and Doh (2017) defined Project risk
management as tools and methods that are comprehensive and organized towards identifying, analyzing
and responding to risk factors with the end goal of accomplishing the project goals. Mhdawi et al (2020)
defined project risk management as “a systematic approach to planning for evaluating, treating and
monitoring the risky events of the project”. Risk management process which includes identification,
analyzing and responding to risks should be implemented in all phases of construction projects (Bahamid
and Doh, 2017; Adeleke et al, 2018).

According to Smith et al (2013), the two main objectives of project risk management in construction
projects are avoidance of threats and exploitation of opportunities. Kendrick (2015) asserted that effective
risk management emphasizes on reducing risk consequences and supporting the practices that adopt an
innovation for sufficient and significant benefits to be achieved.

According to Mahamid, (2013), two significant factors have always attracted attention in the construction
industry; these two are time and cost overruns hence projects completed with significant overruns has
been linked to the construction industry (Abdul-Rhaman et al., 2015). Abderisak and Lindahl, (2015),
reported that the initial budgets of many construction projects had been exceeded with an increase in the
cost up to the range of 50 -100% and sometimes beyond 100% in some cases. The inability to achieve the
desired objectives of the construction projects is usually the aftermath of the occurrence of risks in
construction works. Delays, cost overruns and a shortfall in quality are the most experienced adverse
effects of risk in construction projects.

The main rationale behind project risk management is not the total elimination of the risks that occur but
having proper control over the whole risks (Dallas, 2006). Risk management in the Nigerian construction
industry is still in the infancy phase which is unlike the developed countries (Odusamiet al., 2002).
Harmonising the thoughts of Odeyinkaet al., 2007), the Nigerian construction industry is known for cost
overruns, subsequent delays and project abandonment. Consequently, this study seeks to appraise the
present level of risk management practice in Nigeria. The findings of Odusamiet al., (2002) & Fadun and
Saka (2018) also suggest that it is expedient to assess the factors responsible for the present state of risk
management practice in the Nigerian construction industry. Therefore, this study aims to evaluate the
practice adopted for managing risk in the Nigeria construction industry.

CONSTRUCTION RISK MANAGEMENT IN NIGERIA

It has been reported in previous researches that industries that patronise construction services periodically
do not practice risk management in projects and this has affected the project performance negatively
(Aibinu and Jagboro, 2002). According to Ojo (2010) and Adeleke et al. (2018) who carried out research
on entitlements and contract quarrels in a host of construction projects stated that the consequence of risks
occurrence that was not appropriately assessed or incorporated by either customer, contractors and
consultants as one of the leading causes of claims and disputes in the construction projects.

According to Belel and Mahmood, (2012), who assessed risk management in the Nigerian construction
industry, they identified knowledge deficiency as the most intolerant issue that hinders risk management
practice as well as small experienced staffs as the primary source of risk in construction activities. They
posited that the significant benefit of risk management is its contribution to project success. They opined
that a large number of their respondents are conscious of managing risk with regards to safety threat on
site compared to identifying the concept with relations to accomplishing the objectives of the project
concerning cost, quality and time. They proposed that the workforce in the country's construction industry
should be trained on how to manage risks (Belel and Mahmood, 2012).

Previous research results in Nigeria have established that organisations that employ construction services
on a periodic basis do not analytically practice risk management, which has led to adverse effects for the
performance of projects, for example, total abandonment of project (Aibinu and Jagboro, 2002). Also, a
study conducted by Ojo, (2010), on claims and contract conflicts in numerous construction projects, had
shown that the effect of risks occurrence that was not well assessed or incorporated by clients, contractors
and consultants is a major cause of claims and disputes in construction projects. The country has failed to
focus more on risk management during construction and the inability to manage risks properly
consequently led to an increase in project failure (Nnadi et al. 2018).

PROJECT RISK MANAGEMENT PROCESS

The process of managing risk is the bedrock that is attached to understanding as well as managing risks in
project work. An efficient implementation of the process in a project requires the participation of all the
steps in the process of risk management when dealing with risks. The risk management process consists
of the main stages (Giannakis and Louis, 2011; Ubaniet al., 2015 & Kuria and Kimutai 2018).

Risk Identification

This is the primary phase in the process of managing risk, and it has to do with capturing all the risks that
tend occurring in the course of the project (Nnadi et al., 2018). This first stage lays the foundation for the
succeeding steps of risk assessment and control as it is an eye-opener for organisations to understand
inherent risk areas. When risk identification is done accurately, it guarantees effective managing of risk as
it exposes hidden sources of losses that could escalate into incidences that could not be managed with
unforeseen consequences (Ghasemi, et al. 2018). The outcome of not being able to identify positive risks
is equal to the consequences of not identifying adverse risks (Fadun and Saka 2018).

Risk Assessment/Analysis

According to Kumar et al., (2018), assessing the identified risk is the following phase in the processes of
managing risk after identification. Risk assessment is a process in which usable information is used in the
determination of the frequency of occurrence as well as the degree of consequences in risk management
(Olamiwale, 2014). Having identified all the risks in a project, the next thing to embark on is qualitative
risk assessment which calls for additional analysis via investigating and estimation of the tendency of risk
occurrence and its effect on each of the identified risk (Nnadi et al., 2018). The different factors that
require consideration at this stage include the impact of risk on the objectives of a project and how it can
be managed. Others are the timing of an occurrence, the probability of an event as well as its connection
with other risks. Altogether, they give a proper understanding of each risk and facilitate a better response
to each threat.

Risk Responses

The central component of the risk management process which determines whether any action will be
taken with respect to the risks analysed in the course of identification, qualification and quantification
stages is referred to as risk response (Ghasemi et al., 2018). Risk responses are arrived at by suggesting
many options for the eradication or moderation of an anticipated risk and allocate the best substitute as a
response (Nnadi et al., 2018). Olmiwale (2014), argued that risk response is the procedure of discovering
or fashioning out alternative reactions to risk and the determination of activities for handling the risk,
focusing opportunities and reducing pressures to achieving the objectives of the project. Thus, it has to do
with choosing an appropriate policy to reduce the negative effect of a risk.

Risk Control

Necessary actions must be taken after risk identification, assessment and risk responses have been fully
developed. Execution of risk plan is a part of risk supervision and control which should be a fundamental
part of the project. The first out of the two main challenges encountered in the course of monitoring and
controlling is the implementation of the risk plans as well as their effectiveness. The second main
challenge is the designing of significant documentation to back up the process.

Risks are being managed in such a manner to facilitate the effective management of the project. It is
centred on a proactive approach other than a reactive approach to ensure the right measures are in place as
well as continually refining them.