Assessing the Effects of Risk Management Practice on the Performance of Construction Projects: The Case of Addis Ababa City

Abstract

Construction project risk is un uncertain event that has a positive or adverse effect on the objective of projects and the negative effects of unmanaged risks are the main concern of many projects. Several studies have addressed this issue previously but the amount of investigation reduces significantly when it comes to modeling the relationship between risk management and project performance and no such study that shows the intermediating effect of construction risks between the two is found. Therefore, the study aims to fill this gap by investigating the relationship between risk management and project performance with construction risk as an intermediate factor between the two. To test this relationship, a hypothesis was drawn and a theoretical model was developed based on literature. research questionnaire was used as a data gathering method and was distributed to research participants in large construction projects in Addis Ababa. Primarily, the collected data was prepared for analysis using SPSS analytical software. Then analysis was conducted using structural equation modeling. The results of the study show economic, political, logistics and management risk factors having the highest impact on the performance of a project. And collectively internal risk factors were found to have the highest impact in comparison with external risk factors. when it comes to the risk management process risk monitoring and evaluation and risk identification had a major impact and contribution to the performance of projects. finally, it was found that the hypotheses drawn by the study was supported and there exists a significant relationship between risk management and project performance. From the results, it can be seen that proper management of construction risks through the process of identifying occurring risks, and their timing, analyzing them qualitatively or quantitatively, developing proper risk response plan and appropriate implementation, and conducting continuous monitoring and evaluation has a significant impact on the outcome of a project. Training and workshops about the advantages of risk management methods should be provided to involved parties.