MANAGEMENT OF CONTRACTING RISKS ON PERFORMANCE OF CONSTRUCTION PROJECTS IN KILIFI COUNTY, KENYA
Samuel Mwangi Gitahi - Master of Business Administration (Project Management), Kenyatta University, Kenya
Dr. Joshua Tumuti - Lecturer, Department of Management Science, School of Business, Kenyatta University, Kenya
ABSTRACT
Construction projects in Kenya are facing challenges in performance where there has been loss of funds due to increased construction cost, delayed project completion, compromised health and safety of employees and therefore expected economic growth has not been realized as envisaged. Although there is empirical evidence that construction is not performing to standards, there is absence of consensus in research on management of various contracting risks on performance of construction projects in Kenya. The main objective of this study was therefore to establish the influence management of contracting risks on performance of construction projects in Kenya. Specifically the study aimed to establish the influence of management of financial risks, technical risks, scheduling risks and health & safety risks. The study used four theories in understanding and justifying contracting risks namely; agency theory, theory of constraints contingency theory and prospect theory. The population of the study comprised of seventy three construction projects drawn from KURA, KERRA, KENHA and CGK. Stratified random sampling technique was used to select a sample into strata based on the technical staff from respective organization overseeing construction projects. Primary data was collected using a semi structured questionnaire self-administered to thirty six respondents in respective organizations. Cronbach’s alpha will be used to determine the degree of data reliability with a coefficient of 0.70 and above implying the data was reliable. Quantitative data collected was analysed by use of descriptive statistics and inferential statistics. The study established a positive and significant relationship between management of financial risks, technical risks, scheduling risks and health and safety risks on project performance. According to findings there was a relationship between health & safety risks and performance (4.859, p<0.05). Relationship between scheduling risks and performance was (2.458, p<0.05). Relationship between technical risks and performance was (2.142, p<0.05) while relationship between financial risks and performance was (4.577, p<0.05). The found that financial risks was most significant with value of 82.3% followed by health & safety risks at 79.0% while technical risks rated at 71.1% and scheduling risks rated 62.2%. The study concludes that construction projects are exposed to the financial risks such as inflation, fluctuation of the currency, lack of solvency. The study concluded that technical risks usually come up during the execution phase of the project and early detection was necessary to manage the arising risk. The study concluded that management of scheduling risks was an effective technique to connect the risk information of project activities to the baseline schedule and enhance construction project success. The study concluded that many construction projects did not embrace health and safety and as a consequence performance of the project was affected. Accidents and poor working conditions have continued to affect the productivity of workers leading to poor performance. The study recommends that in order to manage financial risks of construction projects in Kilifi County solutions such as project costing, forecasting applications, expense management, and contract management should be implemented. On the management of technical risks the project owner should discuss the vision for the project deliverable, have a lay out of a day-to-day plan of action make the vision a reality, articulate, revisit and revise the objectives as necessary, openly share project related information and create an environment of trust and openness. On the management of scheduling risks, they should find out the completion time for a particular event and determine chances likely for completing a job and the risk of not completing a job in time. On the management of health and safety risks, they should have a planned and systematic approach to implementing the safety and health policy through an effective safety and health management system.
