RISK IDENTIFICATION AND ASSESSMENT IN HOUSING DEVELOPMENT PROJECTS USING ANALYTICAL HIERARCHICAL PROCESS

RISK IDENTIFICATION AND ASSESSMENT IN HOUSING DEVELOPMENT PROJECTS USING ANALYTICAL HIERARCHICAL PROCESS

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ABSTRACT

The construction industry and housing subsector is fraught with risks that have the potential of negatively impacting on the achievement of project objectives. The success or otherwise of most construction and housing projects depends to large extent on how well these risks have been managed. The aim of the study is to identify and assess risk associated with housing development projectswith a view toprioritisingthe identified risk factors to provide stakeholders with basis for sound decision. The study useda three-step identification framework (a literature review of documented past experience, experts‟ consultation and questionnaire based survey)to identify the potential key risk factors. The use of Analytical Hierarchical Process assessment methodology was employed to carry out relative prioritization assessment of the risk factors. The results show that 50 risk factors have relevant impact on housing development project objectives and 19 of these risk factors are of significant level. Similarly, based on the Analytic Hierarchical Process (AHP) relative-assessment ranking, at macro level, Economic risk and Land acquisition risk are found to have the highest level of impact while changes in demand for houses and interest rate fluctuation sub-factors have the highest ranking at micro level. The study concluded that a suitable identification framework and an efficient and flexible risk assessment methodology are keys to the identification and assessment of risks, and achievement of robust risk management system in housing development project. To this end, the study recommendsthe adoption and use of the combination of the multi-technique identification framework and AHP assessment methodology as a suitable model for management of risks in housing development project. In addition, the study drew attention to the need for focus on highly prioritised risk factors to reduce their chances of occurrence and impact on the achievement of project objectives.

CHAPTER ONE

1.0       INTRODUCTION

1.1       Background to the Study

The Construction industry in Nigeria, although generally accepted as very active, is relatively

small contributing only about 1.8% to 3% to the Nigeria‟s Gross Domestic Product (NBS,

2013). The industry provides employment opportunity to teeming millions of the country‟s

workforce and produce wide variety of products ranging from housing; public facilities such as

hospitals, schools, offices and other institutional buildings etc. in addition to other

infrastructural, industrial and engineering fabrications. Massive demand for buildings and

housing, in particular, across all sectors of the economy and the refocusing by the government

on infrastructural development are some of the factors attributed to the growth in the

construction and property sector. In recent years, there has been an increasing emphasis on the

housing subsector by different tiers of government to ensuring adequate provision of decent

houses to the teeming population, yet the adequate provision of this basic need is becoming

more challenging to the construction industry. It is estimated that Nigeria‟s housing deficit falls

around 18-20million Housing Units (HU) with the Federal Capital Territory, Abuja, alone

having close to 3 million HU deficits (FMLHUD, 2006). The reaction of the construction

industry to this finding is of mix feeling. The industry view it as an opportunity for a brighter

feature for, at least, the housing subsector and also as a challenge for the industry to brace up,

by equipping itself, for the handling of not only this present demand but also feature demands

for more houses in the country.

The housing subsector accounts for virtually 30-40% of the construction industry‟s performance

at the moment. However, studies on the performance of the industry have continued to point to

the negative in terms of general performance of the industry(Odusamiet al., 2010; Dantata,

1


2008).Dantata (2008) argued that the major challenge of the industry lies, among others, on lack

of adequate skilled labour force to implement planned work and achieve objectives. On the

other hand, Odusamiet al. (2010) was pointed out the inadequacy of the industry in managing it

objectives at both corporate and project levels to meet the challenges of its clientele. Although

corporate management is important and improvement can be achieve with time, the project level

management transformation is within the doorstep of the stakeholders in the industry. This can

be conceived within the project management framework.

The Project Management Institute (PMI, 2008) in its guidance and standard manual - the Project

Management Body of Knowledge (PMBok) has outlined key knowledge areas that are

sacrosanct to the achievement of success in the management of project endeavours. These are

cost, schedule, scope, human resource, and risk management. The first four components are all

well familiar to most parties in the construction sector; it is the latter that stands out as a major

obstacle to the realization of most projects. Recent study by Rezakhani (2012a) has shown that

there is strong correlation between the industry‟s performance and its capability in managing

project risks. The industry is characterized with high risk which has not always been dealt with

adequately. The housing development (popularly known as housing estates) subsector is

alsobedevilled with high uncertainty and risk due to the complex nature of the procurement

arrangements and the influence of external forces on the housing development projects

generally. This has often resulted in poor performance with increasing cost and time delays

(Bashir, 2012).

To cope with this challenge and other recent industry challenges such as internal competitions;

rapid technological changes; need for more prudency by clients (Egan, 1998; Latham, 1994)

and overriding need for improved performance in the industry (Tah and Carr, 2001), the

promoters of housing projects (developers) have developed series of rules of thumb that relies


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