`RISK INVOLVED IN HIGHWAY CONSTRUCTION

COMPILED BY

ADEOYE PREYE CHARLES

QSV/12/0227

SUBMITTED TO THE

DEPARTMENT OF QUANTITY SURVEYING

TO THE LECTURER-IN-CHARGE

MR. IJIGHA

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ABSTRACT

This study assessed and evaluated the likelihood of occurrence and degree of impact of the risk events in Nigerian highway and road construction projects. The study also proposed and presented the risk management generic model focused on three important stages in highway and road schemes namely: the feasibility study, the design and construction stage. The proposed model deals with actual processes in highway and road schemes, the formulation of the risk management team, and the project life cycle.

The high-risk exposure associated with highway construction projects needs special attention from contractors to analyze and manage their risks. They cannot be eliminated but can be minimized or transferred from one project stakeholder to another. Highway projectscarry out higher risk than traditional because they entail high capital outlays and intricate site conditions.

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TABLE OF CONTENTS

INTRODUCTION

RISKS ASSESSMENT IN HIGHWAY CONSTRUCTION- RISKS INVOLVED IN HIGHWAY CONSTRUCTION- STRATEGIES FOR MITIGATING MAJOR RISK EVENTS IN HIGHWAY

CONSTRUCTION

CONCLUSIONS

RECOMMENDATIONS REFERENCE

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1.0 INTRODUCTION

This study evaluates the likelihood of occurrence and degreeof impact of the risk events in Nigerian highway construction projects. The Federal Government of Nigeria (FGN) is the major client and most Civil / Construction contracts are awarded by the Ministry of Works (MOW) under the Federal Ministry of Works and Federal Road Maintenance Agency are in charge of all highways projects that includes Trunk A roads, Bridges, retaining walls and storm water drainages. The major problem associated with most Highway projects in Nigeria is always cost overruns coupled with delay on completion. Adebayo (2002) attributes the incompletion of projects in Nigeria due to lack of good contractors, managerial skills, corruption and conflict ofInterest. There have also been numerous questions on the quality ofwork and the future functionality of most highway projects for theservice users. The importance of the industry can further be attributed to the role it plays in employment. The Nigerian Construction and CivilEngineering industry is arguably the biggest sector that contributes to the Nation Gross Domestic product. The Industry is the largest employer of both skilled and unskilled workers. The construction and engineering companies can be divided into small numbers of large firms that constitute less than 1% of the whole registered engineering firms. Extensive delays and cost overruns in major civil engineering works has become the norm and even gradual introduction of project management tools to ensure that projects are completed on time and within budget has only minimum and insignificant impact on the industry. It can be inferred that construction and civil overruns are a result of the parties to a contract inability to develop a risk management framework or model to ensure the success of the project. The importance of risk management in the decision making process for construction organizations has also been highlighted by Mills (2001).

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With the Nigerian construction and engineering sector growing at a faster rate; there has been a gradual increase in investment by the Federal Government of Nigeria (FGN) on design, finance and construction of road and civil projects across the country. The oil boom of 1970’s was the major source of funds for financing both civil projects and housing projects in the country and recent Oil boom in the present era provides necessary funds for construction of Highway projects and Bridges. Unfortunately, the failure of major stakeholders in construction industry to be aware of the impact of risk management in major and complex construction and civil works contribute immensely to extensive delays and cost estimates in both public and private sector.Furthermore, the repetitive and continuous delay on most highway project has clearly identified the shortcomings of both the public and private sector to efficiently preside over high risk projects in Nigeria.

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2.0 RISKS INVOLVED IN HIGHWAY CONSTRUCTION

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Defective material and material shortage

Defective material and material shortage are widely recognized problems on highway and road construction sites. Defective material usually arises in situations where there is a considerable degree of incompetence from the contractor supply chain management. The introduction of additional works by the clients, incomplete design and errors in the bill for the engineering measurement is the common factors that cause material shortages at most road construction sites.

Poor quality control and poor performance control

public projects are prone to low or poor quality of work done. There have been claims and counterclaims from contractors, consultants and federal agency on who should be held accountable for poor quality control and performance control. Wang et al., (2004) also identified improper quality control due to the local partner tolerance of defects and inferior quality. Another factor that has contributed to poor quality control is competitive bidding at which the government selects the lowest bid and the contractor in most cases is willing to maximize is profit by compromising on quality. Thuyet et al. (2007) study which sought to identify the risks affecting oil and gas construction projects in Vietnam also found the poor selection of contractors to be closely linked to inadequate tendering. Vietnam, like Nigeria is a developing country, therefore issues surrounding inadequate selection criteria and poor evaluation process appear to be prevalent in developing countries and are a source of poor quality control and performance. The continuous changes and interference at the construction stage is a factor that undermines performance control.

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Poor communication among the project team

Communication between the project team is essential to the successful completion of the project. This risk event was selected based on the study by Santoso et al. (2003) which evaluated 130 risk events with group factor analysis of which poor communication was ranked as a risk event with an above average Impact and likelihood. The nature and procurement for highway and road project have led to communication gaps between the consultants and contractors. Poor communication is also a major risk event in that the clients appoint or select the consultants and in most government funded projects, consultants are selected based on their capability or ability to deliver. The traditional procurement Process which is prevalent in Nigeria only allows the contractor to be party of the project team after the planning and design stage and thereby has little or no contribution to the design. As observed by Gidado (1996 cited in Adebayo, 2002), Nigeria’s construction industry currently uses most of the procurement systems used in the United Kingdom.

Design changes and inaccurate design details

Client frequent changes in design are due to inability to have to provide information on the strength of the sub grade (road foundation) and failure to understand complex or interpret design details for bridges, road and drainages. Another major cause of inaccurate design details occurs when the consultants are inexperienced, or are not competent nor have the structure to handle such complex and high risk projects. A study by Oladapo (2007) found variations to have a significant effect on project cost and time overruns. Although this study was within the building projects context, the issue of design changes which constitute variations could be applicable to the highway and road construction

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projects. Earlier studies such as Kumaraswamy (1997) also identified variations due to client changes as one category of general claim causes. Thuyet et al., (2007) also found ‘design changes’ as one of the top ten risks affecting the oil and gas industry in Vietnam. Among the root causes of design changes identified by Thuyet et al., (2007) were poor design, changing scopes of work, changing specifications or not predicting underground conditions. Wang et al., (2004) categorized the risk event of unanticipated design changes and errors in design / drawings under the project level within their proposed three hierarchical risk management framework for construction projects.

Contaminated soil and unstable soil condition

Contaminated soil and unstable soil condition is a risk event that is usually apparent with state agency and local government road projects in Nigeria. The likelihood of these risk events in a high profile federal highway is low but the lack of funds and technical expertise in geotechnical and soil engineering has made the risk a major factor to the structural failure that is prominent with interstate and urban roads in Nigeria. Time limitations established by the client also contribute to the prevention of an adequate soils report (de la Cruz et al., 2006)

Site flooding and landslide

This is an important aspect in construction in most developed countries as it is predictable but due to the lack of technical expertise and non-development of flood risk management framework, roads in southern part of Nigeria are susceptible to landslide and in most cases site flooding cannot be avoided at the construction stage. Santoso et al. (2003) classified this risk event under physical risk

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Incremental weather

All risks cannot be anticipated and notably unpredictable weather can be a major factor to construction delay.

Quality of brief

Clients brief is important and essential to the project. An incomplete brief can easily lead to misunderstanding, inadequate design information and details, conflict and cost overruns.

Contract flaws

Contract flaws are an aspect of the Highway and road construction project life cycle that cannot be excluded. Contract flaws are impossible to be avoided in construction projects in that it can be an agreement between the client and the consultant, contractor and client, contractor and consultant, contractor and subcontractor. Contract flaws are the major cause of dispute in civil engineering contract and are impossible to contact flaws to be avoided?

Wildlife and preservation of natural environment

There is a need to create awareness for the risk associated with highway and road projects that affect wildlife and alter the environment. Information and ignorance are major factors that affect decision makers at the feasibility stage. The concept of sustainability in civil and construction engineering is aimed at giving the society a healthy environment and reduction of pollutants and most importantly having or sustaining a balanced ecosystem.

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Winds, storms, hurricanes and cyclones They may cause serious

damage, and hence this fact must be taken into account in the project at the time of making the calculations in compliance with the regulations regarding this matter; although the completed projects are protected, this hazard exists during the construction stage.

Floods and water-induced damage

Atmospheric variations imply that hydrological phenomena are likely to happen. Along with the fact that the mere existence of water at the worksite is already a permanent risk for the construction, it can be concluded that damage by water is one of the most frequent ones in insurance claims.

Pollution from diesel construction equipment

It is taking a toll on the health and economic well-being of people. This equipment contributes to particulate and ozone pollution that can cause severe cardiovascular and respiratory illnesses, asthma attacks, acute bronchitis, and even premature death.. Lagging emission standards and very old equipment have made construction equipment one of the largest sources of toxic diesel particulate matter pollution necessitating an accelerated cleanup program to protect the health people.

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3.0 STRATEGIES FOR MITIGATING MAJOR RISK EVENTS IN HIGHWAY CONSTRUCTION

This study had identified the risk events impacting highway and road construction projects in Nigeria. The proposed model classified the mitigating measures into three levels according to the project life cycle. Drawing heavily on the seminal work of Renn (1998), it was pointed out that risk management implied value judgment on three levels and the identification of resilient strategies for coping within remaining uncertainties should form the third level. The first related to list of the criteria which could be equated to identification of risk events as conducted within this study, whereas the second involved the determination of tradeoffs. Given that background, the following sub sections now demonstrate the mitigating measures for the identified risk events impacting highway and road construction projects.

Contaminated soil and unstable soil condition “Contaminated soil and unstable soil condition” risk event ranked highly according to the likelihood of occurrence out of the ten risk events investigated. Although it ranked fifth according to the degree of impact, in most projects, the identified risk event usually delay the work schedule or are an additional cost for the project. It is suggested that at the feasibility, planning and design stage, the design team must be able to have reliable information on the state of the subsurface conditions-rocks, soils, water levels, hazardous wastes, archaeological encounters, existing utilities within the project environments. The gradual and continuous checks of the likelihood of the risk events and how they can be managed must be carried out throughout the project life cycle.

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Poor quality control and poor performance control “Poor quality control and poor performance control” risk event is common in Nigeria due to competitive bidding resulting in the lowest tender being selected. This has a knock on effect of affecting the project duration, cost of the project and quality of the work. One of the mitigating measures for this risk is through the adoption of effective quality control procedures.

Design changes and inaccurate design details “Design changes and inaccurate design details” is also very prevalent in Nigeria. One of the mitigating measures for this risk is to review design with all parties involved.

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4.0 CONCLUSIONS The main conclusions of the study are as follows:

According to research, defective material and material shortage was ranked as the most important risk event based on the degree of impact; and contaminated soil and unstable soil condition based on the likelihood of occurrence. Wildlife and preservation of natural environment was the least ranked (10th) risk event both for the degree of impact and likelihood of occurrence. The level of awareness of risk events in Nigeria was found to be relatively high and the management of risk has not yet been developed for the highway and road construction schemes Drawing on past studies such as Santoso et al. (2003), risks were identified and classified under the three main phases of highway and road construction projects in Nigeria as follows; under the planning / feasibility stage, the following five (5) risk events were identified and considered to be critical; poor quality control and poor performance; poor communication among the project team; contract flaws; quality of the brief; and wildlife and preservation of natural environment. The preliminary engineering and final design phase was found to be affected with the probability of the following (2) two risk events in design changes and inaccurate design details; contaminated soil and unstable soil conditions; and Finally the construction stage established that risk events could differ according to magnitude and the impact they may have on the whole project where is some cases the uncertainty focused on the productivity, conflict, performance related while the most critical and perceived to be unequivocally a risk events notably site flooding and landslide; contaminated soil and unstablesoil condition; inclement weather.

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5.0 RECOMMENDATIONSThere are no clear-cut solutions to the use of risk management processes but the following recommendations which will be of benefit to higher educational institutions, government, clients, andpractitioners for the usage of an effective risk assessment and management processes in Nigerian highway and road construction projects are suggested:

Adopting of Best Practice: The Nigerian highway and construction industry should be ready to adopt project management practices and techniques.

Training Issues: Risk management should be introduced at institutional levels and organizations should be investing in training engineering and construction staff on risk assessment implement.

Tendering Processes: The Government Agency should adopt new approaches to tender adjudication by ensuring that the most qualified contractors having an effective project risk management processes are selected than the lowest bidder.

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6.0 REFERENCES

[1] Chapman C. Key points of contention in framing assumptions forrisk and uncertainty management. Int J Project Manage2006;24:303–13.

[2] Commercial Section of the British Embassy. Overview of Road andBridge Infrastructure in China 2001. Beijing, October, 2001.www.tradepartners.gov.uk/files/china_infrastructure.doc.

[3] Dias A, Ioannou P. Company and project evaluation model forprivately promoted infrastructure projects. J Constr Eng Manage,ASCE 1996;122(1):71–82. March.

[4] Dias A, Ioannou P. A desirability model for the development ofprivately-promoted infrastructure projects. UMCEE Report No. 95-09, Center of construction engineering and management, Civil Eng.

Dept., Univ. of Michigan, Ann Arbor; April 1995.

[5] “F0014-Chileshe-Awotunde ICCREM 2010 Paper Final”

[6] “ Manual-Construction-Risks-ALOP”

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