Practises and Impact of Risk Management in the Construction Industry of Pakistan

Abstract

The construction sector in Pakistan is exceptionally risk-inclined, with flexible and dynamic project conditions. Risks essentially influence execution to the extent of project finances, time division and quality. With increment of expanse and the complications of projects, the capacity to oversee risks all through the project lifecycle has turned into a focal component in averting undesirable results. Management is essential to address potential risks exposed to all actors in the industry. As a result of the increasing risks and their identification in most of developed countries, the field of risk management was introduced as a new separate discipline in the construction industry to avert possible risks in every kind of construction projects. In light of these expanding uncertainties in developed nations, risk administration was presented as another different area in the construction sector to successfully oversee risks. In any case, construction industry in developing nations like Pakistan has notoriety for adapting to risks. With quick progressions in the construction business of Pakistan, numerous uncertainties will undoubtedly happen and one might say that a viable framework of risk appraisal and administration for construction is most vital. The main focus and goal of this research is to underscore the role of actors for successful risk administration in construction industry and their inclinations in Procurement strategies, Contract sort, Resource allocation, Risk Aversion strategy and identification of more crucial risks. More profound comprehension is relied upon to add to a very successful risk Management, hence, an improved project outcome and a better profit for all three: clients, consultants and contractors. The study involves Eight Pakistan Engineering Council Categories C-A and C-B Construction Contracting companies, Two Kuwaiti Construction Contracting Companies, Three Construction Consulting Companies and Four Clients. It further comprises a chain of interviews with these clients, contractors and consultants. Furthermore, ten contemporary or old were taken into account to understand and depict a better picture of the data retrieved from the interviews. Two contemporary mass transit projects, in Lahore and in New York were then analysed using Cost-Benefit Analysis and a comparison was drawn to analyse the impact/severity of the risks the Project in Lahore was facing. The findings of this work unveil three critical risks (Financial, Political and Resource Scarcity) Construction industry is facing and their effects on the project cycle. They also highlight preferences of actors in different procurement options and contract types and their roles in Effective Risk Management. In light of these findings, various recommendations encouraging effective and better risk management have been developed and presented for the industry practitioners and Future Researchers.