ABSTRACT

The purpose of study was to understand and assess the risk management practices and their effectiveness using El-Virtues Construction Limited as a case study. The study employed the cross-sectional design and the qualitative approach to gather data from 20 employees through semi-structured interviews and with the aid of a questionnaire. The study found that there was an adequate understanding of risk management among the respondents as including a tool to facilitate the project, a systematic application of management policies, processes and procedures on risks, establishing the context of and identifying risks, the analyzing and assessing risks of risks, the treating and monitoring of risks and the communication of risks. The study secondly found that there was no laid-down procedure for doing risk management, but risk management seemed to be done in an ad hoc manner, that is, as and when they are confronted with risks. The next finding of the study showed that majority of respondents felt risk management was effective to a good extent. However, there was no laid-down procedure to determine that risk management has been effective and they relied heavily on subjective experiences as they work from project to project. Lastly, the study found that a huge majority indicated that major risk management challenges included high level of complexity, size and difficulty on a project, financial constraints and demands, environmental factors (the project‟s surrounding, location and overall regulations), among others. The study recommended that the organisation must endeavour to draw up a comprehensive risk management policy that is all encompassing, taking into consideration the factors and characteristics of the industry and context. This will help guide the workers in managing risks better.

1.0 INTRODUCTION/BACKGROUND TO THE STUDY

In today‟s business, projects are widespread, influential, important, and are found in a large number of business areas. Building and construction industries, engineering, government, IT and telecom, banking and insurance, all use projects as a way to organise, manage and execute many of their activities. Benko and McFarlan (2011) indicate that about US$ 10 trillion is expended globally on projects each year, representing approximately one quarter of the world‟s, yearly gross product. Projects support a variety of change processes in an organisation, ranging from strategic market reorientation or new product development, to the improvement of current production processes (Winter, Smith, Morris, & Cicmil, 2015). Because of this change role, projects contribute to the efficacy of the organisations operation and the organisations long term continuity. Recent years have demonstrated a significant growth in project work, which has led to the current situation where project management is considered the dominant model in many organisations for creating change (Winter et al., 2015).

Each project is different, and involves some degree of unpredictability. Yet, many organizations still tend to assume that all their projects will succeed, and as such fail to consider and analyse their project risks, and prepare, in case something goes untoward (Raz, Shenhar & Dvir, 2002). This attitude of ill preparedness for the unpredictability of projects has led to project failures and unsatisfactory results (Raz et al., 2002). Projects have been defined in many ways by different authors and institutions. For instance, the Project Management Institute (PMI) (2016) defines a project as a temporary endeavour undertaken to create a unique product, service or result. Raz et al. (2002) also define a project as a temporary organization that is needed to produce a unique and pre-defined outcome or result at a pre-specified time using pre-determined resources.

According to Kerzner (2003), even though the importance of properly defining a project cannot be underestimated, it can be seen that a project is fundamentally a vision to realize some future state and that it is how the project is managed that is of real significance.

Projects fail to achieve their objectives due to the occurrence of something unexpected. Hence, risk management guides projects in achieving their objectives. The need for good project risk management is therefore vital (Frigueiredo & Kitson, 2009). Risk management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues, i.e. risk management is a process that addresses uncertainty (Frigueiredo & Kitson, 2009, p. 8). Risk management is considered to be a tool to limit the impact of these unexpected events, or even to prevent these events from happening. Accordingly, it is generally assumed that risk management contributes to the success of the project (Olsson, 2007). There are two broad categories of risks found in projects: strategic risk and operational risk. Strategic risks are not of particular interest to the project team and project managers as these risks are out of the scope of project responsibility. Operational risk, on the other hand, is paid more attention to by project teams and project managers since such risks are within their control. As such, project teams and managers have the ability to tackle operational risks (Krane, Rolstadås & Olsson, 2010, p. 82). According to Chapman and Ward (1997), project risk management positively influences project performance and consequently project success by instrumental effects: through creation of a contingency plan or by influencing project time, budget or design plan, and by social effect: influencing stakeholders and stakeholder motives. Therefore, this research sought to assess the risk management practices and their effectiveness in Ghana, using a case study.