The construction industry plays a significant role in economic growth; it is hence necessary to put in place measures and strategies to ensure the growth of this sector. Risk and value management are two approaches that are used to mitigate risk and add substantive value to such projects in an attempt to increase success of construction projects. This proposal calls for research on how the two approaches can be integrated to help promote growth in construction projects. The research seeks to achieve this objective by using both secondary and primary data. Secondary data will be collected from available literature whereas the primary data is to be collected using questionnaires and later analyzed and discussed qualitatively.
CHAPTER 1: BACKGROUND AND FOCUS OF THE RESEARCH
1.1 Introduction
Construction projects have been conventionally founded on a basis of needs and requirements which is in accordance with the adoption of hiring consultants or hiring in-house employees to increase the probability of success for such projects (Norton & McElligot, 1995, p. 142). The construction industry is one filled with dynamism and also has significant relevance in the current economic and social scenarios (Hammersley, 2002); this means that efficiency of construction projects is given utmost regards and all approaches are applied to increase chances of success. Two of the approaches that can be used to increase efficiency are risk and value management in all processes and operations in construction projects (Project Management Institute, 2010).
1.2 Context of the Problem
On a global scale, the environmental problems that are seemingly on the rise due to the impact of depletion of natural resources require immediate attention and addressing. It is therefore evident that the subject of cost and procedural enhancement in terms of used resources in construction projects through the use of value management is essential (Al-Yami, 2008, p. 236). It is a strategic selection that directly impacts on the lives of numerous individuals not only in the construction industry but also outside (Dallas, 2007, p. 23). Risk management on its part helps mitigate the risks and uncertainty involved in the construction projects (Aven, 2008, p. 61); this helps increase success of projects and subsequently investor confidence in the construction industry.
It has been established that in most construction projects there are minimal or no programmed implementation strategies for value and risk management (Sareh, 2003, p. 122). This lack of coordinated efforts subsequently leads to reduced benefits that the projects get from the value and risk management strategies applied (Ward & Chapman, 2003, p. 96).
1.3 Problem Statement
Value management is an approach that is aimed at adding sustainable value to an organization whereas risk management is meant to mitigate risks through monitoring, minimizing and controlling the factors involved. One thing that the two approaches have in common is that they both require a structured implementation strategy (Gronqvist & Male, 2007, p. 104); however, most construction projects fail to consider this and end up implementing both approaches in a way that does not give them maximum output from the inputs made. This research will focus on how coordinated and integrated implementation of value and risk management in construction projects can help increase value addition and risk mitigation in their operations.
1.4 Rationale of the Research
The construction industry is not just about building; it is an important contributor to economic growth through job creation, revenue generation, tax payment and building of infrastructure to be used in other economic activities (Kelly, Male & Graham, 2004, p. 92). It is hence vital to establish ways through which this industry’s effectiveness and productivity can be boosted to increase the role it plays in economic growth.
1.5 Research Objectives
1.6 Research Questions
What value management strategies are applied in construction projects?
What risk management strategies are currently applied in construction projects?
Which are the key issues involved in implementing value management in construction projects?
What are the best practices in risk management implementation in construction projects?
How can value and risk management be integrated to increase the probability of success in construction projects?
1.7 Limitations of the Research
Since the general framework of the research is based on past studies, there is a probability of carrying on errors in this previous literature especially since most of the data available is in the form of statistics, ideologies and facts advanced by the authors.
Also, there is a possibility of bias in the information given by people working in construction projects as some may try to blow certain issues out of proportion.
1.8 Structure of the Research
The research will be divided into five chapters; this first chapter introduces the research topic and also highlights the objectives of the research. The second chapter will review available literature and will also identify gaps in existing knowledge some of which this research will attempt to fill. The third chapter will discuss and critique the research methodology that will be applied in this study. Chapter 4 will give the findings of this research which will then be discussed in accordance with the framework set in the literature review section. The fifth chapter will give a general summary of the findings of the research and also recommendations on future research and also on risk and value management implementation in construction projects.
CHAPTER 2: PRELIMINARY LITERATURE REVIEW
This chapter will introduce the available data and statistics relevant to risk and value management in construction projects. There will be the reference of ideologies and findings of other authors regarding the application modes and practices of risk and value management
Throughout the life cycled of a project, value management plays an essential role in the realization of quality enhancement, durability, and reliability as well as enhancing the overall performance (Fong, 2004, p. 379). Value management also largely aids in the improvement of service related process in relation to the Life Cycle Costing (LCC) and the quality and element of clients’ satisfaction (Abdul Ghani, 2004, p. 45).
The construction industry is considered a high risk sector and hence the need for risk management to share the risks involved. Studies on this area show that there is a relationship between the risk management implementation and the success of construction projects (Chapman & Ward, 2009, p. 28). There are however various limitations to implementation of risk management strategies in construction projects; most of which emanate from the increasing complexity of this industry. These limitations do not impede on the general effectiveness of risk management in increasing success in projects even outside the construction industry (Voetsch, Cioffi & Anbari, 2004); this means that risk management still remains a strategic and advantageous strategy of increasing the success of construction projects.
CHAPTER 3: PROPOSED RESEARCH METHODOLOGY
3.1 Research Design
This research will employ a qualitative approach in collecting and analyzing primary data. This methodology has been proven effective in identifying the interrelationship of two or more dimensions; one of the objectives of this research is to establish the interrelationship between value and risk management- hence the relevance of the qualitative approach. Since this research is keen on explaining phenomenon and not just representing it, qualitative methods are best suited for the research than other empirical based approaches.
3.2 Population and Sample
The research’s population will be construction companies in Saudi Arabia as they have been identified to actively use both risk and management strategies in their projects. The sample will comprise of 100 stakeholders involved in this industry. Non-probability sampling will be applied based on the fact that this is a qualitative research. Also, the purposive approach will be employed to ensure that only those people that are willing and available to participate in the research are given the questionnaires. Lastly, logical representation will be used to avoid gender biasness.
3.3 Data Collection
Questionnaires, which are considered one of the most effective primary data collection tools, will be used. They will be administered both orally and also in writing by the researcher to ensure that the respondents fully understand the questions and subsequently give correct responses. Close ended questions will be used to verify already available information on value and risk management implementation in construction projects; on the other hand, open ended questions will be used in the research instrument to generate new knowledge on the topic.
3.4 Critique
Though the qualitative approach has its advantages, there are various issues that should be noted. One is that the methodology has been accused of lacking validity and reliability in its findings. The qualitative approach is also questioned on its ability to replicate the observations made in the field in acquiring the answers for the research questions. Also, the qualitative approach is criticized on the high likelihood of the researcher to be biased in reporting both primary and secondary data (Kirk & Miller, 1986).
These negative aspects of the qualitative approach have however been factored in and hence why the research proposes to use the purposive approach to increase reliability and also non-probability sampling to increase validity. The framework created from the secondary literature will be used to monitor the primary data which will help ensure that there is no bias by the researcher in reporting the findings.
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