An evaluation of the impact of risk on project cost overrun in the Nigerian construction industry

Abstract

One of the major reasons for ineffective project delivery in the Nigerian construction industry is the improper assessment of risk factors. As a result, the industry continues to suffer poor performance with many projects failing to meet time and cost targets.• This paper identifies the risk factors inherent in different building procurement methods and assesses their perceived relative importance with a view to evaluating their impact on project cost. The paper reports on a study carried out through a questionnaire survey of professionals within the construction industry in order to asses the relative importance placed on risk factors. Responses from the survey were analysed using relative importance index for the purpose of evaluating the impact of risk on projects cost. Data were collected on selected completed projects and analysed using frequencies, mean values and relative important index.• The main risk factors identified are finance and political influence. A model was developed by relating the variation between the initial contract estimate and the actual project cost to the risk variables. From the analysis, the percentages of projects cost overrun due to the impact of risk were established for each procurement method investigated. The paper recommends that contingency additions should be based on the procurement method used.

Nigeria’s construction industry: barriers to effective communication

“…This factor accounts for 14.78% of variance explained among all barriers (Table 5). According to Dada and Jagboro (2007), the traditional method is the most used in procuring construction projects in Nigeria. In the traditional procurement process, project teams are formed on an ad-hoc basis.…”

An Analytical Network Process model for risks prioritisation in megaprojects

“…Cases: the Constanta Water Project (Arrowsmith, 2011), Prescom in Targoviste project (Arrowsmith, 2011) Government discontinuity Hertogh and Westerveld (2011), Flyvbjerg et al (2003a, 2003b Lack of political support Curtis and Sturup (2012), Frick (2008), Flyvbjerg et al (2003aFlyvbjerg et al ( , 2003b Cases: Constanta Water project ((Arrowsmith, 2011)), Prescom project ((Arrowsmith, 2011)) Political indecision Dada and Jagboro (2007), Ruuska et al (2009), Haynes (2002 (continued on next page) 2015). In addition, the ANP has been widely used in solving many other complicated decision problems.…”

A Life-Cycle Framework for Managing Risks in Public Private Partnership Housing Projects

“…The adoption of informal as against holistic approaches to risk management in PPP have not been effective thereby resulting into project time and cost overruns, low quality of housing units. Studies have reported that improper risk assessment and treatment are among the major reasons for failure of PPP projects and ineffective project delivery in the construction industry in Nigeria (Dada and Jagboro, 2007;Awodele et al, 2009). Risk management should be done proactively and consistently throughout projects' life cycle in order to help in preventing expected risks and to mitigate the impact of threats should those risks occur.…”