ANALYSIS OF RISK MANAGEMENT PRACTICES OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN THE CONSTRUCTION SECTOR OF GHANA

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ABSTRACT

The importance of assessing the risk management practices by the small and medium scale enterprises (SMEs) in the recent times has been underscored by research. In this study, an analysis of risk management practices of the SMEs in the construction sector of Ghana is assess to determine the level of awareness, the extent of its application and the potential impact on the construction business. This study is a follow up to previous studies risk management practices in the construction industry as the study specifically considers the SME contractor. In the study, data was obtained Owners and Directors of D2/K2 – D4/K4 contractors as certified by the Ministry of Works and Housing (MWH). The data was analyzed using descriptive statistics and frequencies.

The findings suggest that risk management practices application is still at reduced concentrations in SMEs operations. It can also be found that risk management in small and medium-sized enterprises is primarily focused on owners / managers beliefs that seriously hamper sustainable business development. The level of awareness is well documented, however the application of the practices is far less than the awareness level

The finding of the study provide the basis for policy interventions aimed at building the capacity of the SMEs in the construction space and the Continuous Professional Development (CPD) agenda for owners and directors. It again provides for use by training institutions towards the development of training manuals for training of entrepreneurs.

CHAPTER ONE

1  Introduction

The construction industry is engulfed with uncertainty, perhaps even more than most industries (Deviprasad, 2007). Ehsan et al. (2010) had also iterated that it is extremely hazard-inclined, with circumstances of perplexing and dynamic enterprise creating a climate of high vulnerability and risk. The construction firm is powerless against various specific, sociology-political and company hazards. Deviprasad, (2007) further stated that this risk is not managed satisfactorily over and over again and that the company consequently suffered bad execution. As indicated by Pritchard (2001), there are risks in the vast majority of choices, including the simplest ones. The technique of bringing a venture from origin to consummation is a mind boggling that includes tedious planning and procedures of manufacturing (Ahmed and Azhar, 2004).

The main activity in project management is to drive the operations so that the people who settled on the investment, the partners can achieve their aspirations. (Monetti, et al., 2006). Risk management is fundamental to achieving these goals, not only to try to prevent horrible results caused by some unusual occasions or questionable circumstances, but also to act as a guide to enhance the beneficial results. Risk management is fundamental to achieving those goals, not only to try to avoid terrible outcomes caused by some unusual occasions or dubious conditions, but also to act as a guide to enhance the positive outcomes. Despite the reality that risk management is usually considered, irrespective of a sensible and shared definition of the concept, opportunity is often seen as an unwanted, adverse outcome. Such a definition exemplifies two deluding thoughts: first, there is an established consensus among specialists that opportunity should be regarded as having both adverse and positive results. Second, risk is not only recognized with occasions, e.g.