Identification Of Risk Sources In Construction Of Residential Tower In Qatar

Description of Project

Discuss about the Identification of Risk Sources.

Aminbakhsh, Gunduz and Sonmez (2013) characterize uncertainty as an absence of data ampleness. Banaitiene and Banaitis (2012) concurred that uncertainty is a circumstance of lacking information and affects project manager’s administration style. Indeed, most tasks are confronting uncertainty with various level of effect on their results and uncertainty in project management is a future occasion could be anticipated or not. Hwang and Ng (2013) proposed to characterize uncertainty by their source (technical aspects, market, individuals, cost, schedule and quality) or by potential effect and contended that every instability sort is unmistakable and a solitary venture regularly may endure blend of each of the four sources.

Kuo and Lu (2013) contended that there are two sorts of uncertainty; the first is quantifiable ‘danger’, and the second, unquantifiable equivocalness, or instability. In undertaking administration, danger can be appointed a likelihood esteem, though uncertainty is totally limitless (Dainty and Loosemore 2013). Danger is the likelihood that something can turn out badly and meddle with the fruition of the work (Harris and McCaffer 2013). It is measured by increasing the likelihood of event by result of the disappointment of accomplishing the concerned objective. Consequently, both the likelihood and outcome must be considered in danger administration (Kelly, Male and Graham 2014). It is similar to note that risk is worried with target probabilities (based an investigation), though instability requires thought of subjective probabilities (individual’s close to home judgment) (Kerzner 2013). It is noticed that risk is a sort of instability that effect the undertaking results with anticipated outcomes (Lingard 2013).

In the other hand issue is a risk that has been happened (Osipova and Eriksson 2013), along these lines there is contrast amongst issues and risk since danger may happen or not.

Description of Project

The proposed project is construction of a residential tower in Qatar, comprising of residential apartments, including parking facilities with high quality, 3 basements, a ground floor and 23 typical floors. The Plot has an approximate area of 4413 sq.m. The total built up area will be a maximum of 25798 sq.m and service areas of 3400 sq.m. and total area 29198 sq.m. The project comprises of three level basements below grade with total area of 7214 sq.m. to serve as parking space.

Budget

The estimated budget to construct the tower is QAR 400 million. The budget includes structural work, electro-mechanical works and finishes.

Details of the Project

Timeline

The project duration is 23 Months, commencement date is 1^stJune 2016 and completion date shall be 30^thApril 2018.

Schedule

2016	2017	2018
6	7	8	9	10	11	12	1	2	3	3	4	5	6	7	8	9	10	11	12	1	2	3	4
Demo																		Project Completion
		Sharing
			Foundations
						Basement Structure		West Structure (Podium to Roof)
													Exterior Structure
														Interior Structure
											East Structure (Podium to Roof)
														East Tower Exterior
															East Tower Interiors

Figure: Estimated timeline divided over the months

(Source: Created by Author)

Strategic Business Context Analysis

Strategic Business Context Analysis in the Residential Tower Project
Departments	Stakeholders	Location	Area of Business
Administration	Company Directors	Headquarters	Administration, Business Strategy Approval, Project Approval, Delegation of Funds
Finance	Accountant, Finance Manager	Finance Office	Expenses and Finances
Project Management	Project Manager	On-site, Project Manager’s Office	Construction, Replication of blueprint in real size, Approval of Funds
Construction	Workers and Team Members	On-site	Construction, Materials used, Use of Project Design for Construction
Investments	Investors and Sponsors	Sponsor’s Office	Availability of funds, Financial backing
City Administration	Corporation, Mayor / City Administrator	Corporation Office, Police Station, Fire Station, Hospital, High Court	Availability of land at a suitable price, Security, Emergency Services, Availability of Sufficient Materials, Legal Issues
Sales	Sales Manager, Customer	Sales Department House	Sale of the rooms or flats in the residential towers
Media	Media Personnel, Marketing Manager	Media Office, Conference Room	Promotion, Marketing

Importance of Business Context Analysis in Risk Management

These analyses are required in project risk appraisal due to the following reasons:

Identifying the type of the Risk – Business context analysis is required to understand the types of risks that may be encountered during the course of the project. Risks come in various types and forms and each risk has different mitigation measures (Walker 2015). Moreover, use of wrong mitigation method may cause the risk to increase further, which is not at all desirable.

In this project, the type of risks include over-expenses, exceeding of the budget, low market demand, low popularity among customers, market incompetency among the business related factors and poor quality materials, natural hazards, poor project management, poor quality of the craftsmen and other workers, legal issues among the administration related factors.

Identification of the Location of the Risk – Another main importance of business context analysis is to identify the exact location of the risk. This is required for understanding the location and the nature of the risks so that suitable actions can be taken properly (Taylan et al. 2014). In addition, the location of risk also enables the assessor to understand where the changes are to be brought in the project or organizational structure.

In this particular project, risks can be located at various levels of the company. There are potential risks in the business, administration, management as well as on-site aspects. If any potential risk is located in any one of these levels, immediate mitigation measures should be provided immediately in order to avoid any further or possible losses.

Identification of Risk Impacts – Business context analysis is also needed to analyze the impact of possible risks that may arise during the course of the project. Mitigation measures are to be taken for those risks first that has massive impacts on the company’s business (Kelly, Male and Graham 2014). There are some risks that do not have much impact on company’s business. These are generally temporary risks. On the other hand, there are some risks that can have massive impact on the company’s business.

In this project, some minor risks include temporary market fall, minor administrative mistakes and others. On the other hand, risks like use of poor quality of materials, poor business planning and others can have massive impact on the business of the company.

Strategic Business

Identification of Responsible Stakeholders – Business Context Analysis also helps to identify the responsible stakeholders in different aspects of the project and hence, in case of potential risks arising in an aspect, the stakeholder can be held directly responsible.

In this project, stakeholders include main developer, consultant, Lusail City administrators, project manager, team members, facilities managers, shareholders, designers, workers, subcontractors, public administration, banks, service suppliers, media, insurance companies, public, neighbouring communities, regional development agencies. They have their own share of responsibilities in the project and they will be responsible for risks arising in their respective departments.

Importance of Risk Identification

Risk identification is necessary to remove all the shortfalls associated with the project and bring out the best quality of work. For this purpose, changes are needed to be brought in all related aspects like stakeholders, area of business, designing and others.

Stakeholders

The stakeholders list includes main developer, consultant, Lusail City, project manager, team members, facilities managers, shareholders, designers, workers, subcontractors, public administration, banks, service suppliers, media, insurance companies, public, neighbouring communities, regional development agencies (Dainty and Loosemore 2013). The influential groups are suppliers, pressure groups, trade associations, regulatory authorities, emergency services, marketing and procurement. These groups relate to each other as they support each other during the entire project (Aminbakhsh, Gunduz and Sonmez 2013).

Area of Business

The project is shall be at Lusail City in Doha, the capital of Qatar. The location offers a range of entertainment venues (Banaitiene and Banaitis 2012). The location considers the most ambitious project.

Risks and Issues

The sources of risks identified with development of residential tower are expenses, finances, consumer happiness, inhabitancy rates and changes that are in demand.

The project risk examination is essential before making a decision is unforeseen to a few choices and options. If the business setting was not considered for undertaking risk evaluation, it might prompt a wrong decision making.

Details of Potential Risks and Relevant Rationale

Risk	Risk Sources	Stakeholders	Rationale for Sources and Stakeholders
Customers	Unmet expectations	Investors, Tenants	The customers are the tenants of the residential tower, there are risks associated with compromised quality with the interiors or exteriors that may not be worth the investment
Market Changes	Change in demand, economic recession	Governmental Regulations, customers	The change in economic regulations and foreign exchange regulations can affect the consumer purchasing power. The people may not choose to buy a residential house or rent it
Technology Changes	Changing technologies	Designers, Architectural technician, Investors	With the changes in technology, the project completion schedule can vary affecting investors to invest early. The designers and technicians can make changes in the structure based on technological changes
Legal or Government	Political forces, legal forces	Regulatory bodies	The regulatory bodies can make political changes and legal changes affecting the construction industry
Fixed Assets	Damage, loss	Project Manager	The project manager is liable for any loss or damage of fixed asset during the construction of the residential tower

Risk Ref. No.	Risk Category	Risk Description	Risk Cause	Impact	Likelihood	Rating
1	Commercial	The customers are the tenants of the residential tower, there are risks associated with compromised quality with the interiors or exteriors that may not be worth the investment	Unmet expectations, Low Customer Satisfaction	4-Major	3-Possible	High
2	Commercial	The change in economic regulations and foreign exchange regulations can affect the consumer purchasing power. The people may not choose to buy a residential house or rent it	Change in demand, economic recession	5-Catastrophic	3-Possible	High
3	Commercial	With the changes in technology, the project completion schedule can vary affecting investors to invest early. The designers and technicians can make changes in the structure based on technological changes	Changing technologies	4-Major	4-Likely	High
4	Legal/Regulatory	The regulatory bodies can make political changes and legal changes affecting the construction industry	Political forces, legal forces	5-Catastrophic	4-Likely	Extreme
5	Finance	The project manager is liable for any loss or damage of fixed asset during the construction of the residential tower	Damage, loss	5-Catastrophic	3-Possible	High

(Refer to Appendix)

References

Aminbakhsh, S., Gunduz, M. and Sonmez, R., 2013. Safety risk assessment using analytic hierarchy process (AHP) during planning and budgeting of construction projects. Journal of safety research, 46, pp.99-105.

Banaitiene, N. and Banaitis, A., 2012. Risk management in construction projects. INTECH Open Access Publisher.

Dainty, A. and Loosemore, M. eds., 2013. Human Resource Management in Construction Projects. Routledge.

Harris, F. and McCaffer, R., 2013. Modern construction management. John Wiley & Sons.

Hwang, B.G. and Ng, W.J., 2013. Project management knowledge and skills for green construction: Overcoming challenges. International Journal of Project Management, 31(2), pp.272-284.

Kelly, J., Male, S. and Graham, D., 2014. Value management of construction projects. John Wiley & Sons.

Kerzner, H.R., 2013. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.

Kuo, Y.C. and Lu, S.T., 2013. Using fuzzy multiple criteria decision making approach to enhance risk assessment for metropolitan construction projects.International Journal of Project Management, 31(4), pp.602-614.

Lingard, H., 2013. Design Risk Management: Contribution to Health and Safety. Construction Management and Economics, 31(6), pp.704-706.

Osipova, E. and Eriksson, P.E., 2013. Balancing control and flexibility in joint risk management: Lessons learned from two construction projects.International Journal of Project Management, 31(3), pp.391-399.

Taylan, O., Bafail, A.O., Abdulaal, R.M. and Kabli, M.R., 2014. Construction projects selection and risk assessment by fuzzy AHP and fuzzy TOPSIS methodologies. Applied Soft Computing, 17, pp.105-116.

Walker, A., 2015. Project management in construction. John Wiley & Sons.