Construction Project Risk Management in Developing Countries

The construction industry is a significant contributor to both the economy and employment in developing countries. However, the industry is criticized for the poor performance of construction projects due to schedule delays, cost overruns, poor quality, and high rates of accidents. In construction projects, the ability to identify, assess, and manage risks directly impacts the achievement of various project objectives. Construction projects are exposed to an uncertain environment and, as a result, require effective risk management throughout the project lifecycle for their successful completion. However, despite several advances in risk management, project risk management in construction projects in developing countries has remained inadequate. Studies about construction risks and risk management frameworks have mainly focused on developed nations with significantly different socio-political, economic, and legal systems. Hence, the suggestions and risk management frameworks need to be revisited and customized to suit the unique context of the developing countries. Although risk management principles and processes apply to various organizations and contexts, this chapter covers project risk management only. Specifically, this chapter first discusses the main risks encountered in construction projects and the risk management strategies and frameworks applied in developing countries. Next, it takes a distinct approach in which a socio-ecological theory is used to develop a holistic risk management framework. Finally, as an example, the framework is applied to analyze occupational health and safety risks in construction projects in developing countries.