Evaluation of Risk in Water Supply Projects by Relative Importance Index Method

Abstract

AbstractWater supply projects face higher risk due to their nature of complexity, involvement of different engineering disciplines, involvement of different parties, etc. Project risk increases when the project scope gets bigger. All such risks cause negative impacts to project success. Many of large projects implemented by National Water Supply and Drainage Board (NWSDB) in Sri Lanka are ‘Plant and Design-Build’ projects. Thus, aim of the study is to evaluate the project risk in-order to take pro-active risk response measures at the project formulation stage. Fifty (50) risk factors were identified and they were categorized into five (5) groups. A questionnaire survey was done by randomly selected professionals representing both contractors and client who are engaged in water supply projects. Two dimensional Likert scale was adopted in this study to improve the precision of responses, where respondents were allowed to select weightage for both likelihood and impact level for each risk factor from five point Likert scale. Importance level of each risk factor was quantified by Related Importance Index (RII) analysis method and they were ranked accordingly. Responses of Project experts consist of project directors, contract specialists (arbitrators and adjudicators) were collected to validate the results. Results of both survey and experts’ responses revealed that ‘Unavailability of funds on time, delayed contract bill payment, financial failure of the client’ as the most important risk factor having RII value of 0.7629 and 0.8067, respectively. Overall project risk evaluated based on the average of RII values, in survey and validated experts’ responses possessed values of 0.5119 and 0.5168, respectively, showing medium level of importance. Agreement between each respondent group was checked by Spearman’s correlation analysis showed positive agreement, which further validates the findings. Results of this study clearly indicate that the Plant and Design-Build water supply projects implemented by NWSDB have a medium level of risk, thus it requires workable risk response measures at the project formulation stage and throughout the project life cycle, while paying more attention to the most significant risk factors identified in this study.KeywordsPlant and design-buildWater supply projectsProject riskRelative importance indexRisk factorsLikelihood and impact level