Sensitivity of Risks in Construction Scheduling

Abstract

Construction industry is growing by leaps and bounds in recent times. The number of stakeholders and investments in the construction industry is increasing. With the growth in population there is a massive increase in demand for on time delivery of finished products. An overall wide spread public awareness and upsurge of rating agencies has increased the quality expectations of the customers. Due to challenges in construction, new processes are devised to improve efficiency and add value to the customer. Hence the construction projects are vulnerable to various technical and business risks that are significant in the execution of the project. The core of this research is based on recognizing the various risks in construction projects. Once the risks are recognized the attempt is to quantify the risks. Subjecting the risks to sensitivity analysis gives a better understanding when the accompanying costs are included. Sensitivity analysis of risks and costs helps to compare the various preferences that a constructor has by using present value analysis. The constructor is equipped to take a reasonable decision based on the data analysis available. This research seeks to identify and assess the risk and to develop a risk management framework which the investors, developers and contractors easily adopt. Risks vary due to differences in prevailing conditions that are specific to a particular region. It is decided to approach a particular geographical region for the research study. The general methodology of this study relies largely on the survey questionnaire that is collected from the experienced engineers of Mangalore region. In order to analyze the risks they need to be quantified. Broad based attempts to quantify risks do not give a fair idea. The study of risks is concentrated to a particular geographical region through a questionnaire survey. The survey questionnaire is designed to probe the cross-sectional behavioral pattern of risks in construction industry. The questionnaire prepared for the pilot survey is formulated by reviewing the relevant literature in the area of construction risk management. It is not possible to give a common risk matrix for construction projects in India. The geographical divide of India is a challenge due to prevailing risk factors. It is invariable to select smaller segments of geographical area for the purpose of study. These regions have similarity in conditions. A model developed in a particular region is easily replicable.Construction activities vary with type of projects. They are classified as private, public or private public partnership projects and so on. In the present study the construction projects in Mangalore city are taken as the pilot sample. The private residential projects that consist of apartments, houses and commercial complexes are considered as the group under study. The risks associated with the above construction activity are obtained through a questionnaire survey. The study is limited to the private construction projects of Mangalore region. The opinions are collected from experienced engineers among the stakeholders. The outcome of the survey is analyzed using various statistical formulae to obtain the risk in construction projects of Mangalore region. The weights given to the risk are an important measure to understand the importance and rank of the risks. The standard deviation of the responses signifies reliability of the data. The research proposes a risk management framework that uses the results of the survey to mitigate the risks in construction. It is done using sensitivity analysis of risk values and cost to obtain a risk cost that mitigates risk. It provides a comprehensive risk management system which is sensitive to the risks and cost of activities in project schedule. The use of time series for price forecasting and Present Value Analysis make the risk management system more credible.