1.0 INTRODUCTION
Risk is a function of the probability of an event occurring and the
degree of damage that would result should it happen (EPA, 1996). Risk is
defined as “the chance of something happening that will have an impact
on objectives”, meaning, risk can be either positive or negative.
(Australia Social Economic and Environmental Handbook for Risk
Assessment and Management, 2008). A common approach is to define risk as
the combination of the probability (or likelihood) and consequence of an
event (or outcome or result of exposure). This gives rise to the widely
used concept of risk: Risk = Probability x Consequence.
All human endeavours involve risk. The success or failure of any venture
depends on how managers deal with it. Construction industry is no
exception (Thompson and Perry, 1992). The construction industry is
considered to be subject to more risk than other industries. This is as
a result of the complex and time-consuming process of design and
construction as well as the great effort to coordinate multitudes of
human resources, from different establishments, with different skills,
objectives and interests (Othman, 2008). In addition, sources of risk
can be in terms of payment, security deposit and retention, time of
commencement and completion, variation, delay and cost of delay and
liquidated damages. Size can be one of the major causes of risk; so can
changes in political or commercial planning.
Risk management is not a singular process but a complex mix of multiple
views, values, perceptions and qualitative or quantitative approaches.
This means that sound risk management must involve components of
stakeholder engagement, two-way communication and responsiveness. Risk
management is one of the most vital procedures and capable way in coping
with project risks and uncertainties. In order to rescue the poor
reputation of construction industry in project performance, the right
implementation of risk management is essential. With the implementation
of risk management, the common problem in construction projects such as
delay in project delivery, over - budget, unsatisfactory product
quality, unsafe working environment etc. can be eliminated. Therefore,
it could be argued that risk management is important especially during
the decision making process with regard to risks (Lee Chun and Azlan,
2012).
Risk management is a core element of sustainable development.
Sustainable development is normally assessed by reference to parallel
progress in its “three pillars” - economic growth, human development
and environmental protection. These three pillars of
sustainability—social, economic and environmental—present various
risks and thereby provide a complex and often inter-related mix of risks
and opportunities that construction companies need to address. The
challenge of sustainable development presents a variety of risks (and
opportunities) for the construction industry. These need to be
considered in light of social, environmental and economic risks to all
stakeholders affected by construction—local communities, investors and
shareholders, governments, indigenous groups, construction companies and
so on. These pillars of sustainability are pivotal in understanding
risks and the inter-relationships between them. Hence, this study has
the following objectives:
- Identify specific risk in road construction in Nigeria.
- Highlight and evaluate the effectiveness of different risk management
practices available in the construction industry in Nigeria.
- Determine the most suitable method of handling road construction risk
in Nigeria, for sustainable road delivery and management.
- Determine the extent which risk management in road construction
business in Nigeria conform to the concept of sustainable development.