Risk Management in Major Construction Joint Venture Projects

by Nikolaos Kalyviotis

Institution: Umeå University
Year: 2015
Keywords: Contracts; Construction projects; Risk Management; Risk Probability; Risk Impact; Expert Panel; Questionnaire; Bias; Social Sciences; Economics and Business; Business Administration; Samhällsvetenskap; Ekonomi och näringsliv; Företagsekonomi
Record ID: 1357897
Full text PDF: http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-99976


The role of risk management in the construction industry is essential due to the complexityand dynamic environment of the projects. To enhance project success, it is important toembed risk management practices in every activity of the project.The research question is “What is the classification of risks of joint ventures projects indeveloping countries and especially in countries that are facing economic crisis?” Theobjective of this thesis work is to assess the risks by creating proper risk probability versusrisk impact matrices and proceed with further analysis and based on the criticality of themand furthermore to allocate the risks and possible bias of the Concession AgreementBased on literature review and the objective of this thesis work, the propositions are thefollowing: “1) All the examined risks have the possibility to exist. 2) Risks, which hugelyimpact joint venture projects, are financial risks. 3) The purpose of the ConstructionContract is to ensure a fair distribution of risks between the parties, determining the parties'rights, duties, responsibilities and obligations in advance. 4) Criticality is an independentvariable from impact and possibility.”Due to the nature of this research and the research objective, the scientific idealimplemented is critical realism. This research is conducted based on quantitative method ofprimary data analysis. A questionnaire was formed in order to be given to the Panel ofExperts from different organizations for the evaluation of the problem.Based on the empirical data and analysis, the author indentified and evaluated the risks ofthe joint venture construction projects in developing countries within the definedenvironment of the consortium, where the state has a specific regal role, based oncriticality, risk probability and risk impact. The analysis of the data was done with the RankReciprocal method (Carr & Zwick, 2007, p.70). In this thesis work, they are identified,individually and also aggregately, the specific risks with high criticality, high probabilityand high impact. The risks of joint venture projects classified with the higher criticality, thehigher probability and the higher impact, aggregately, are: Public Utilities Organizations(P.U.O.) permits delay (due to either Concessionaire's fault, or State's), State defaults (or anExtensive Force Majeure Event creates a State Event of Default), Events of Delay occurduring Design-Construction period affecting that period or the next one (the OperationPeriod), Critical path complications due to Archaeological Surveys revealing antiquities,Delays, inability of State in its obligation to go forth in expropriations. Risk managers canfocus on those risks and ensure the success of risk management and project control.