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:
  1. Identify specific risk in road construction in Nigeria.
  2. Highlight and evaluate the effectiveness of different risk management practices available in the construction industry in Nigeria.
  3. Determine the most suitable method of handling road construction risk in Nigeria, for sustainable road delivery and management.
  4. Determine the extent which risk management in road construction business in Nigeria conform to the concept of sustainable development.