EVALUATION OF RISK RESPONSE BY CONTRACTING FIRMS – A CASE STUDY OF EKITI STATE UNIVERSITY, ADO EKITI, NIGERIA

Abstract

The study evaluates risk response by contracting firms using Ekiti State University, Ado Ekiti as a case study. Construction works are risky and hazardous by nature. It is based on this assertion that this study aims at evaluating the risk response strategies, identifying the key risk factors with a specific objective of determining the level of occurrence of each risk factor, and ascertaining the impact of the identified risk factors on predefined project objectives of cost, schedule, quality and scope. Questionnaires were used to collect primary data for this research from respondents. A total of 55 questionnaires were administered to the registered contractors undertaking building construction works at Ekiti State University, Ado – Ekiti. 46 were retrieved, representing a response rate of 80%. However, 44 questionnaires were found valid for the analyses. Data collected were analysed using both the descriptive and inferential statistics. The descriptive statistics used consist of frequencies, bar charts, percentages, and mean item score. Similarly, the inferential statistics employed was Mann-Whitney U-test. A total of 48 risk factors were identified from review of literatures and respondents were asked to rank these risks according to the level of their occurrence and impacts. From the findings it is evident that inadequate funding by the client, financial instability of contractors and suppliers, fluctuations in market price, inflation (all being finance related), labour, equipment and material availability, and poor project management processes are the top ranked amongst the endogenous and exogenous risk factors identified. Also on a general view, it can be deduced from the findings that the most popular risk response technique among contracting firms that have executed construction projects in Ekiti State University is risk transfer. This implies that in most cases contractors tend to transfer most of the risk that occurs on the project. It is evident that the most common risk response strategies are risk transfer and risk retention or acceptance. In formulating the response strategy for risk factors, the findings shows that most of the assessed risk factors are responded to through transfer of same to the appropriate quarters either through insurance or other means. A total of twenty-two (30) risk factors out of 48 were addressed through the use of this transfer strategy.