RISK MANAGEMENT TECHNIQUES AND REAL ESTATE PROJECTS DELIVERY IN SOUTH WEST NIGERIA

Abstract

The study assessed the risks associated with real estate projects delivery in Southwest Nigeria. It also examined risk management techniques, mitigating strategies and the success factors for real estate projects delivery in the study area. The study population was 434 real estate firms registered by the Nigerian Institution of Estate Surveyors and Valuers. The study adopted multi-stage sampling technique among the professionals in Estate Surveying and Valuation Firms in Southwest Nigeria. The sample size was 240 real estate firms. Two respondents were sampled in each firm giving a total of 480 respondents sampled. In stage one, the researcher used random sampling for Lagos State while in the other States; Oyo, Ogun, Ondo, Osun and Ekiti census sampling was used. Stage two was to stratify the population and used judgmental sampling technique. The third stage was to sample each state separately. Four hundred and eighty (480) Copies of questionnaire were administered out of which three hundred and eighty (380) copies were retrieved making a total 78% response rate. Data collected were analysed using both descriptive and inferential statistical tools. The study revealed that inflation was the most important risk in real estate projects delivery in the study area with a mean score of 3.90. Project Completion Time with a mean score of 3.57 and Project cost with a mean score of 3.56. The study further revealed that Net Present Value” had the highest mean weighted value with a mean score of 3.45. It was the most important risk management technique applied in real estate projects delivery in Southwest Nigeria. This was followed by Project Evaluation and Review Techniques (PERT) with mean weighted value of 3.42. The risk management techniques variable that took third (3rd) position was Internal Rate of Return with mean score of 3.36. Test of Statistical Significance with F- value of 28.826 and P- value of 0.000 showed that there was significance relationship between risk management techniques and number of real estate project executed. The result of the Analysis of Variance showed Risk Premium Method F (5, 366) = 1.316, p = 0.256); and Internal Rate of Return F (5, 365) = 2.071, p = 0.068); were not statistically significant across the cities of the study area. The p-value of Break-even Technique (0.034), Risk Scoring Technique 0.007), Net Present Value (.016), Project Evaluation and Review Techniques (PERT) (0.046), Sensitivity analysis (0.025), Standard Deviation 0.016), Variance Analysis (0.002), and, Correlation Analysis (0.020) showed that they were statistical significant (p<0.05) in risk management techniques in real estate projects delivery across the six states of Southwest Nigeria. The study showed that the Net Present Value, Project Evaluation and Review Techniques (PERT) and Internal rate of return are the most important risk management techniques applied in real estate projects delivery in Southwest Nigeria. The study concluded that real estate projects delivery in South West Nigeria can successfully be delivered if the risk mitigating strategies are well implemented by promoting risks prevention and risk reduction in real estate projects delivery. The study concluded that Inflation risk, project cost risk, and project completion time should be given more attention in other to avoid an increase in project cost.