The selected research designs for this thesis are cross-sectional and case study and as mentioned above Iran has been chosen as the case study of this thesis. Secondary data and contextual data are used for this thesis and are discussed comprehensively in Chapter 2 (Literature Review) and 3 (Methodology). The research strategy is a mixture of qualitative and quantitative strategies leading to selection of suitable methods for collecting the primary data. Questionnaire and interview have been chosen as data collection methods and the participants are three categories of actors in construction projects: client, consultant, and contractor.
Managing Risk of Construction Projects A case study of Iran Mana Ghahramanzadeh A thesis submitted in partial fulfilment of the requirements of the University of East London for degree of Doctor of Philosophy October 2013 Abstract The construction industry is one of the most dynamic, risky, and challenging businesses Due to construction projects’ complexity and uniqueness, the number of risks present invariably goes beyond those found in other industries Therefore, risk management should be applied as an integral part of project management for managing these risks – in particular in developing countries Contingency theory was selected as the theoretical framework of this thesis Since the environment has been considered as one of the important contextual variables being focused on in this theory, the research was situated within a specific environment Considering the unstable social, economic and political conditions in Iran today in comparison with many other countries, it was found to be a suitable case to be evaluated in this thesis A questionnaire was designed and twenty-five risks were identified and categorized in five main categories as follows: Political and Governmental, Managerial and Technical, Economic and Financial, Cultural and Social, and Natural For each of these risks, relevant mitigation strategies were also proposed Criticality of risks along with effectiveness of mitigation strategies were evaluated via 100 questionnaires which were distributed to the three key categories of actors associated with construction projects namely clients, contractors, and consultants Out of 76 valid responses received, interviews were conducted with 24 of the participants in order to extract the knowledge and understand how these groups manage the identified risks Findings of the research revealed that Economic and Financial risks have the greatest influence on construction projects in Iran Moreover, there is a serious lack of risk management knowledge and expertise among all the three key categories of actors The conclusion drawn from the evaluation of risk management strategies was that due to high volatility of the economic and political situation of the country, reactive risk management is practiced more than proactive risk management The results of the case study about the risks and their management strategies have also implications for contingency theory; I modifying the theory from a conceptual theory to a more meaningful theory There is a mixture of proactive and reactive management while utilizing the theory for managing any situation and existence of this mixture needs to be made explicit in the theory Likewise, utilization of contingency plan needs to be made more explicit in the theory Moreover, employment of contingency theory for managing situations has been stated to be unique for each particular situation and therefore the situation should be defined in order to refer to a more specific concept This eventually may lead to a more specific and detailed theory for any situation and hence instead of saying ‘it all depends’, it can be stated that ‘it depends on this and that’ II Table of contents Chapter 1: Introduction 1.1.Risk and construction risk management .1 1.2.Methodology 1.2.1 Theoretical framework .2 1.2.2 Research approach 1.3.Iran .4 1.4.Aim and objectives 1.5.Research questions 1.6.Contribution to knowledge 1.7.The overall research structure for the remainder of the Thesis .9 Chapter 2: Literature Review 11 2.1 Introduction 11 2.2 Project and project management 11 2.3 Construction project .14 2.4 Risk .18 2.5 Risk in construction projects 21 2.6 Risk management 24 2.6.1 Risk management sub-processes 29 2.6.1.1.Risk planning 30 2.6.1.2.Risk identification 31 2.6.1.3.Risk analysis / assessment 31 2.6.1.4.Risk response 31 2.6.1.5.Risk monitoring and control 33 2.7 Factors influencing the risk management process .33 III 2.8 Construction projects’ risk and risk management in various countries .39 2.9 Theories 41 2.10 Contingency theory 44 2.11 Contingency theory in context of construction risk management 46 2.12 Conclusion 50 Chapter 3: Methodology 51 3.1 Introduction 51 3.2 Research methodology 51 3.2.1 Research approach .53 3.2.2 Research design .55 3.2.2.1 Case study design 56 3.2.2.2 Iran: chosen case study .58 3.2.3 Research strategy 66 3.2.4 Data collection methods 66 3.2.4.1 Previous studies and their data collection methods 67 3.2.4.2 Chosen data collection methods 70 3.2.4.3 Sample size 75 3.2.4.4 Data collection process .78 3.2.5 Data analysis methods 80 3.2.6 Material facts 81 3.2.7 Reliability and validity 83 3.2.8 Ethical considerations 84 3.3 Conclusion 84 Chapter 4: Data Analysis - Questionnaire .85 4.1 Introduction 85 4.2 The structure of the questionnaire 85 IV 4.2.1 Personal information .86 4.2.2 Company information 89 4.2.3 Evaluation of the criticality of 25 risks 91 4.2.4 Evaluation of the effectiveness of the mitigation strategies 121 4.2.4.1 Cross-cluster 155 4.2.5 Evaluation of construction related statements .156 4.3 Conclusion 167 Chapter 5: Data Analysis – Interview 170 5.1 Introduction 170 5.2 Question1 .170 5.3 Question 171 5.4 Question 188 5.5 Question and 191 5.6 Question 197 5.7 Question 198 5.8 Question 202 5.9 Question 211 5.10 Question 10 214 5.11 Conclusion 216 Chapter 6: Discussion 217 6.1 Introduction 217 6.2 Research questions .217 6.2.1 Research question .218 6.2.2 Research question .229 6.3 Countries with similar volatile situation to Iran 237 6.4 Evaluation of contingency theory 239 V 6.5 Conclusion 241 Chapter 7: Conclusion and Recommendations .242 7.1 Summary of findings 243 7.2 Contribution to knowledge 245 7.3 Limitations of this research 247 7.4 Future research .249 References 251 Appendices 265 A: Invitation to participant 266 B: Participant information sheet 267 C: Consent form 271 D: Questionnaire 272 E: Risks mentioned by participants for the first table of questionnaire 289 F: Chi-squared test results 290 G: Interview questions 294 H: Correspondence of Iranian and Gregorian calendar 295 VI List of figures Chapter 1: Introduction Figure 1.1 Inflation rate of Iran Figure 1.2 Selling rate of Dollar in Tehran – Annual Figure 1.3 Selling rate of Dollar in Tehran – Monthly .6 Chapter 2: Literature Review 11 Figure 2.1 UAI of Iran – UK and China .20 Figure 2.2 The forecasting process .35 Figure 2.3 Risk attitude spectrum .36 Figure 2.4 Risk management framework 37 Figure 2.5 Risk management process 38 Chapter 3: Methodology 51 Figure 3.1 Research process onion .52 Figure 3.2 A schematic representation of deductive reasoning 54 Figure 3.3 A schematic representation of inductive reasoning 54 Figure 3.4 Map of Iran 58 Figure 3.5 Inflation rate 61 Chapter 4: Data Analysis – Questionnaire 85 Figure 4.1 Number of participants in each group .87 Figure 4.2 Years of experience 88 Figure 4.3 Number of employees 89 Figure 4.4 Average annual turnover 89 Figure 4.5 Number of risk managers 90 Figure 4.6 Interaction between risk managers and employees 90 Figure 4.7 Satisfaction with current risk management strategy 91 VII Figure 4.8 Criticality of 25 risks from the viewpoint of all the participants 97 Figure 4.9 Criticality of 25 risks from clients’ viewpoint 100 Figure 4.10 Criticality of 25 risks from contractors’ viewpoint 101 Figure 4.11 Criticality of 25 risks from consultants’ viewpoint 102 Figure 4.12 Distribution of construction risk 107 Figure 4.13 Evaluation of three groups of participants on construction risk 109 Figure 4.14 Two clusters of participants for evaluating risks .120 Figure 4.15 Two clusters of participants for evaluating the strategies .154 Chapter 5: Data Analysis – Interview 170 Figure 5.1 Political and Governmental category of risk and its sub-codes 171 Figure 5.2 Managerial and Technical category of risk and its sub-codes 172 Figure 5.3 Economic and Financial category of risk and its sub-codes 172 Figure 5.4 Cultural and Social category of risk and its sub-code .173 Figure 5.5 Corruption perceptions index - Iran 183 Figure 5.6 Corruption perceptions index – various countries .184 Figure 5.7 Sub-codes of internal risks of organization .188 Figure 5.8 Consultants’ risk management strategies / contingency plans 193 Figure 5.9 Contractors’ RM strategies (before starting project) 194 Figure 5.10 Contractors’ RM strategies (during project’s execution) 194 Figure 5.11 Sub-codes for existence of learning process at the end of project 199 Figure 5.12 Relationship and risks from clients’ viewpoint .202 Figure 5.13 Relationship and risks from consultants’ viewpoint 204 Figure 5.14 Relationship from contractors’ viewpoint .205 Figure 5.15 Risks from contractors’ viewpoint 206 Figure 5.16 Two important risks of construction projects 211 VIII Chapter 6: Discussion 217 Figure 6.1 The risk hierarchy 225 Figure 6.2 Fluctuations of Iranian currency per US Dollar 226 Figure 6.3 Exchange rate (US Dollar) fluctuations 234 IX ... Flanagan and Norman (1993) have categorized risk management process to risk identification, risk classification, risk analysis and risk response Chapman and Ward (1997) have gone further and have... part of data analysis deals with the quantitative data analysis; illustrates the results of different sections of the questionnaire in tables and diagrams and provides explanations for each; and... January 2011 and January 2012 Since the dates in many of the diagrams extracted from the official websites of Iran are in Persian, which has got a different calendar, correspondence of Iranian