Risk assessment modelling for the south african construction industry

Abstract

The construction project environment is fraught with risks of every conceivable nature and high levels of uncertainty. A research project was therefore initiated to define the most important construction risks from the insurance stakeholders' point of view. The risk management functionality in terms of the formal risk culture, risk framework and risk practices within the participating construction organisations were tested through a comprehensive questionnaire. Analysis of the completed questionnaires indicated that the results were consistent and repeatable. It was found that construction companies generally have weak risk management cultures, frameworks and practices, even though risk management awareness was relatively high at the construction project level. This seemed to emanate from the separation of project- and enterprise-related risks. The most important risks in the new proposed model are (1) the loss of key employees and business intelligence, (2) contractual related failure, (3) unfavourable financial market conditions and (4) failures of key contractors and clients.