Risk Management to Enhance Performance in the Construction SME Sector; Theory and Case Study

Abstract

Dynamic changes and increasing competition in global markets have caused changes in the management of small and medium enterprises (SMEs). Due to this fact, many SME companies try to implement different methods for strategy and operation management, quality and improvement management, risk management, etc. But the problem is the efficiency and implementation of these methods in the SME company. One way to achieve higher efficiency is the integration of management methods, meaning the combination of performance management with quality, process and risk management. This approach is also recommended in the ISO standards for quality. It was reflected in a new revision of the ISO 9001 standards in the year 2015. Performance can be described by the financial and non-financial key performance indicators (KPI), covering the cost, quality and time indicators that have been implemented in the balanced scorecard framework (BSC). The aim of this chapter is to present a methodological framework, which leads to the integration of the key performance indicators (KPI) in relation to the key risk indicators (KRI), which may affect the KPIs and overall SME performance. This framework combines a process analysis and modelling with risk and qualitative or quantitative risk assessment techniques. The case study describes its practical implementation and the verification of the designed framework. The results of this research will help to build an effective management system for performance and risk management and quality management for the business processes of SMEs.

Correlation analysis between risk measurement and project success of small and medium contractors in Gauteng, South Africa

“…Therefore, the remaining 181 were all utilised for the empirical analysis and conformed to the recommended sample size for regression analysis. This equates to a response rate of 80% which is considered high and could have been because of the method employed to gather data in the current study which has also yielded a high response rate in previous studies (Naude & Chiweshe, 2017;Sifumba et al, 2017) conducted on construction SMEs in SA.…”

“…However, these projects are predisposed to a high degree of risk; a reoccurring phenomenon in construction that, if it materialises, can deviate the project from its preestablished goals. The materialisation of time and cost risk can, in extreme cases, incapacitate the economic look of a project, thereby turning a potentially lucrative organisation into an unsuccessful company (Sifumba et al, 2017). The effects thereof may be quantified using many terms: increase cost, time overruns, destruction of property, injury to people, and at times a combination of all of these.…”

“…Such complexity is further exacerbated by several external environmental factors (Chileshe et al, 2016). Regardless of the heterogeneity and importance of the CI with its intrinsic risks, risk management has been sparsely applied and practised in recent years (Moshesh et al, 2018) and its reputation in contrast with other industries is relatively weak (Simota et al (2017). Furthermore, although research into risk management abounds, there has been a scarcity of empirical studies that pursue to examine RM, the relationship between risk management factors and PS, specifically, the relationship between RM and PS of construction SMEs.…”

“…The overall aim of RM is to identify and measure the significant exposures in terms of possible loss to the organisation (Williams, 2016). Some authors defined RM as the process of quantifying and placing risks in some order of priority and highlights decisions to be made (Simota et al, 2017), the evaluation of the likelihood and extent (magnitude) of risk (Acharya et al, 2017). Others (Deloach, 2018;Naude & Chiweshe, 2017) explained the distinction between RM and a risk measure and defined RM as the process of applying measures to enumerate the risk, while a risk measure was defined as the operation that assigns a value to risk.…”

Regression analysis of the influence of demographic characteristics using risk management practices within South African small and medium construction enterprises

“…The findings of some researchers, Moshesh et al (2018), Albasara et al (2018); Simota et al (2017) substantiate that risk management is a required practice to identify, assess and treat risks. However, SMEs lack resources to respond timeously to hazards and Zoghi (2017) notes that despite resource restraints, SMEs need to engage in risky activities if they are to protect the innovativeness of delivering projects.…”