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Risk management practices of contractors: A case study of power station projects in Egypt

Risk management practices of contractors: A case study of power station projects in Egypt This research aimed at identifying the most significant risks relevant to construction contracts of two power station projects in Egypt. These were large scale, fast‐track projects where a multi‐package contracting plan was utilized. Further, the study investigated how risks were perceived and managed by a large sample of Egyptian and international contractors who participated in the execution of these two major projects. A checklist of risk categories was developed to aid contractors in their risk identification effort. The compilation of this checklist identified the following risk categories: 1) owner’s obligations; 2) interface with other contractors; 3) liability risks; 4) financial risks; 5) risks related to changes; 6) technical risks and 7) consortium risks. Research results identified a marked lack of consistency in the contractors’ risk identification effort. Contractors possessing past experience in Egypt were far better able to identify the relevant risks. On the other hand, local Egyptian contractors with vast experience in Egypt but limited project management experience were shown to lack the necessary expertise to properly identify risks and to take the appropriate exceptions. Furthermore, the results revealed that bidders do not include in their proposals their “true” lists of exceptions which represent genuine risks to them. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Management of Property and Construction Emerald Publishing

Risk management practices of contractors: A case study of power station projects in Egypt

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References (8)

Publisher
Emerald Publishing
Copyright
Copyright © 2007 Emerald Group Publishing Limited. All rights reserved.
ISSN
1366-4387
DOI
10.1108/13664380780001102
Publisher site
See Article on Publisher Site

Abstract

This research aimed at identifying the most significant risks relevant to construction contracts of two power station projects in Egypt. These were large scale, fast‐track projects where a multi‐package contracting plan was utilized. Further, the study investigated how risks were perceived and managed by a large sample of Egyptian and international contractors who participated in the execution of these two major projects. A checklist of risk categories was developed to aid contractors in their risk identification effort. The compilation of this checklist identified the following risk categories: 1) owner’s obligations; 2) interface with other contractors; 3) liability risks; 4) financial risks; 5) risks related to changes; 6) technical risks and 7) consortium risks. Research results identified a marked lack of consistency in the contractors’ risk identification effort. Contractors possessing past experience in Egypt were far better able to identify the relevant risks. On the other hand, local Egyptian contractors with vast experience in Egypt but limited project management experience were shown to lack the necessary expertise to properly identify risks and to take the appropriate exceptions. Furthermore, the results revealed that bidders do not include in their proposals their “true” lists of exceptions which represent genuine risks to them.

Journal

Journal of Financial Management of Property and Construction – Emerald Publishing

Published: Dec 1, 2007

Keywords: Risk management; Risk identification; Construction contracts; Risk checklist

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