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Research Title
Deriving Value for Money by “Managing Risks through Effective Public
Procurement of Road Construction works in Sri Lanka by “Road
Development Authority” (RDA)”
CHAPTER 1. INTRODUCTION
1.1 SRI LANKA TRANSPORT SECTOR
Sri Lanka’s strategic location at the crossroads of Asian trading routes has contributed to
its growth as a regional trading hub. In 2003, the transport sector contributed 10 percent to
the country’s GDP and generated about 4 percent of employment. Nonetheless, potential
exists to further develop this island nation’s transport system.
Roads: Roads are the backbone of the transport sector in the country. They are vital for
the movement of people and goods and play an important role in integrating the country,
facilitating economic growth, and ultimately reducing poverty. National roads carry
over 70 percent of the traffic in Sri Lanka. However, uncontrolled roadside
development, as well as years of neglect and poor road maintenance has resulted in low
travel speeds and poor service. This has discouraged long distance traffic and hindered the
spread of economic activities and development in regions other than the Colombo
Metropolitan Area (CMA).
Roads are extremely important for the large majority of Sri Lanka’s people who live in the
villages - some 65 percent of the country’s population. They are often the only way for
most rural people to reach essential services such as hospitals, schools, markets, and
banks, which are mostly situated far from their villages.
Although Sri Lanka enjoys a higher road density than in many developing countries, the
conditions and standards of the roads are inadequate to meet rapidly growing freight and
passenger traffic. More than 50% of the national roads have poor or very poor surface
condition and many are seriously congested. In spite of the substantial increase in traffic
volume there have been insufficient investments for construction of new highways or
widening and improving existing roads. Over the past decade the investment in the road
sector has been mainly concentrated on the rehabilitation of the existing road network.
1.1.1 Challenges
To place the country on a path of economic growth, the Government of Sri Lanka (GOSL)
needs to address several serious weaknesses in the country’s transport infrastructure.
These are: weak institutional capacity at all levels; the inability of transport agencies to
mobilize resources; and an underdeveloped private sector. These weaknesses result in the
inadequate upgrading, development, and maintenance of assets, which
adversely affects the quality of transport services. As a result, the sector
experiences the following bottlenecks: Low capacity of highways and lack
of expressways to connect major growth centers. National highways,
which are mostly two-lane, are unable to carry the current volume of
mixed traffic (pedestrians, bikes, bullock-pulled-vehicles and motor
vehicles). This, together with the lack of side lanes and paved shoulders,
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leads to uncontrolled development of roadsides and causes low travel speeds, poor level of
service, and less long-distance traffic. Severe deterioration of provincial and local roads.
Neglected maintenance, as well as the lack of official capacity and resources, has led to
the severe deterioration of roads. This adversely affects farmers taking produce to markets
and villagers traveling to cities to reach social services.
1.1.2 Key Government Initiatives
In its election manifesto, the Government of Sri Lanka
recognizes an urgent need to invest in the improvement of its
transport infrastructure to meet the country’s economic and
social needs and “foster pro-poor growth and reduce regional
disparities”. Priority actions are as follows:
Infrastructure development is of paramount importance to meet the Government’s target
of economic growth at 6 to 8 percent each year for the next five years. To this end, the
medium term target is to substantially increase expenditure on transport infrastructure
from 7 percent in 2007 to 16 percent of Gross Domestic Production (GDP) by 2012.
1.1.3 RDA’s Role
Since, it was mentioned above that National roads carry over 70 percent of the traffic in
Sri Lanka From the late 1960s to the mid-1990s,the the foreign funding agencies and
national funds are provided through loans, credits, aids, grants etc, to improve Sri Lanka’s
roads and assisted in the development of sector policy through Road Development
Authority(RDA) to finance the maintenance, rehabilitation and upgrading of the country’s
national highways and support the government’s reform initiatives for financing
sustainable road maintenance through RDA
1.2 ROAD DEVELOPMENT AUTHORITY (RDA)
RDA is a statutory body incorporated under the RDA Act. NO.73 of 1981 under the
Ministry of Highways & Road Development and is the premiere highway authority in the
country. RDA is entrusted with the responsibility of maintaining and developing the
National Highway network, which comes under purview of Central Government. The
National Highway Network consists of 3,727 km of “A” Class Road and 7,375 km of “B”
Class Roads and 4,400 bridges. The functions performed by the RDA include planning,
design and construction of new highway and bridges in addition to maintaining and
carrying out improvement to the existing national highway network. A Board of
management appointed by the Hon. Minister of Highways & Road Development effects
the management of the RDA. The board of management is responsible to the Hon.
Minister for the implementation of government policy, for the development of the
Network. Also Road Development Authority, is having following it’s strategically
components. RDA’s organization chart is annexed in Appendix-A
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1.3STRATEGIC DIRECT COMPONENTS--RDA
 Vision of Road Development Authority
“To achieve a safer and adequate National Highway Network to meet the expectations of
all stakeholders for the speedy Socio-Economic development of the country and to make
the Road Development Authority an institution of multi disciplinary excellence in
Highway Engineering.”
 Mission of Road Development Authority
“As the premier National Organization of the road sector, to provide an adequate and
efficient network of National Highways, to ensure mobility and accessibility at an
acceptable level of safety and comfort, in an environment-friendly manner for the
movement of people and goods for the socio-economic development of the nation”
 Goals and Objectives of Road Development Authority
1. Achieve an adequate National Highway Network.
2. Achieve an acceptable level of mobility in the National Highway Network.
3. Provide a high mobility expressway network.
4. Maintain the National Highway Network at an acceptable condition.
5. Reduce road user cost.
6. Improve road safety in the National Highway Network.
7. Ensure efficient utilization of assets and investments.
8. Ensure protection of the environment in all activities.
9. Promote organizational development.
10. Assist in the development of the local road construction industry
1.4 Overview of the Study
To achieve the above goals and objectives, RDA is implementing more than 1000 Projects
Island wide funded by various foreign funding agencies and foreign banks as well as
through local national budget from the treasury. Though the projects, which are
implemented through public funds, which are accountable and all of us are answerable
when utilizing public funds, disbursement rates are not very satisfactorily up to the
expected target in accordance with the funding agency indicators. Progresses of most of
the Projects are very slow and cost overrun due to the delays, failures, massive cost
escalation claims & variation claims in implementing stage. One of the ongoing failures
Road Project, which is presently implemented to rehabilitate roads in North & East areas,
identified as Conflicts Area Affected Project (CAARP) funded by Asian Development
Bank (ADB). When analyzing the causes of the failures of the each project, it is decided
to analyze and to do a study research to find out the causes of the failure in one of the
maligned area identified as Managing Risks in Procurement of Road Construction in
works contracts.
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1.5 Statement of the Problem
By the way of implementing following Asian Development Bank funded Conflict
Affected Area Rehabilitation Project (CAARP), the following Main Problem was
identified for this study;
• What are Risks involved in achieving the Goals & Objectives of CAARP Project?
SUMMARY OF CAARP PROJECT
 Name of the Project : Conflict – Affected Area Rehabilitation Project
(CAARP)
 Effectiveness : Loan Agreement was signed on 14th January 2004
 Loan Expiry : 30/06/2008 and Extended to up 31/12/2009
 Loan Amount : US$ 56.5 Million
 Scope of Work : Rehabilitation of 240km National Highways in North –
East Province
1.6 Objectives of the Study :
The overall objective of the study will brief how risks are going to identified and studied
and how are going to be Managed be to the achievement of the project objectives will be
managed on the Design and Construction of the Specific Conflict Affected Area Projects
(CAARP) in Sri Lanka. Specifically, the following study to be taken place to identify
risks and to find-out the appropriate techniques to recommend and eliminating such
risks or to be well Managed in the future Roads Projects under taken by Sri Lanka
by this Dissertation in order to ensure that high quality construction is achieved in time,
within budget, and that all work is carried out in full compliance with the approved
engineering designs, technical specifications, agreed work schedule, the terms and
conditions of the Contract documents and as per sound engineering practices inline with
the Goals & Objectives of the Employer (RDA). Also this study will involve the
development of frameworks and strategies aimed at enhancing the transparency,
efficiency and accountability with which the public sector resources (financial and human)
are used, making the financing, provision and delivery of basic public services more
efficient and effective, and improving the accountability and performance of the public
service and its personnel.
Also this study has the following Objectives;
(a) Achieve sustainable maintenance, rehabilitation and construction of economically
justifiable roads in the strategic road network within the Priority Investment Plan
framework;
(b) Improve the access to district headquarters not currently served by road, and
reduce vehicle transport costs and delays in project areas;
(c) Promote more sustainable funding and more efficient public sector management
of road maintenance;
(d) Adopt and disseminate environmentally sustainable road construction and
maintenance practices; and
(e) Generate rural-employment through adoption of labor-based technologies
and long-term employment for the additional generated economic activity.
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1.7 Outline of the Study:
 An outline of the risk management activities that will take place on this project for
the full Life cycle of the project, from the identification of the project
requirements up to and including the operation of the facility
 Details on the roles, responsibilities, processes and procedures, standards, tools
and documentation to be utilized during the course of the project in relation to the
Management of risk.
 Details on the context in which risks are to be managed, how they will be
identified, analyzed, evaluated, treated, monitored, reviewed, reported, and
associated communication and consultation activities related to the risk
management process.
 The plan is consistent with current RDA policies and procedures, and has been
developed by this study on behalf of the RDA and Ministry of Highways & Road
Development.
The CAARP projects, which are implemented in North and East part of Sri Lanka,
involves the provision of a road sections the mainline, access to access to the main cities
of North & East part of Sri Lanka. In outline the project was proposed to include the
construction and with rehabilitation of roads in the past in conflicts affected area.
The proposed works include:
 Rehabilitation and reconstruction of National highways and bridge works, road
furniture and geotechnical works
 widening of the sections where necessary involving the construction of new
carriageway (partly on elevated structures) and reconstruction of existing
carriageway; re-alignment of the Road at its junctions of the Road involving the
replacement of the existing carriageway with new carriageway (partly on elevated
structures).
The paper is organized as follows. In Chapter 2, I overview relevant Literature. In
Chapter 3 the Research management methodology of the study is described. Chapter
4 presents the result of the questionnaire survey and analyses risk management
process in the projects’ different phases. Concluding remarks and Recommendations
for future work are presented in Chapter 5.
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CHAPTER 2. LITERATURE REVIEW
The following literature will provide to the research dissertation to verify some specific
terms and some existing facts and also the following theories and related information
provide good understanding regarding the selected research problem.
2.1 Purpose of Literature Review
Purpose of LR is to familiarize the study with any relevant information pertaining to my
topic being studied and to give ideas to improve the study and enhance the dissertation
report. LR is necessary in conducting this research in the sense that only through the
knowledge available and accessible documents can determine in how so-called secondary
data available to facilitate this study.
2.2 Introduction
Every contract has risks that must be reviewed from the perspective of protecting the
state’s assets and interests. Risks management tools to help to manage those risks when
the contract on behalf of the state. An inherent part of contract management is to:
11. Evaluate the risks involved;
22. Decide whether to avoid, transfer, or accept the risks; and
33. Implement appropriate risk transfer and/or risk financing mechanisms.
To read the contract thoroughly will help and anticipate events or situations that could
happen within the scope of work outlined. Ask each actor, who involved in contract from:
11. Who are all the parties involved?
22. What kind of work is being done?
33. What type of accidents or losses could occur?
44. What is the worst-case scenario in terms of financial loss and/or injury to persons
or property?
55. Are the responsibilities for the risks appropriately placed with those in the best
position to control them?
66. What is each party’s ability to manage the risks and absorb the losses?
77. Is the contract legal and enforceable?
Within the contract, risk transfer is accomplished through a combination of
indemnification, hold harmless, and waivers of subrogation clauses. Insurance is
commonly required as a means of providing the financial support to back the indemnitor’s
obligation to hold the indemnitee harmless.
The state’s goal is to establish contract guidelines for insurance coverage that can be
consistently applied with few exceptions. To insure the continued success of the state’s
contract review program, once insurance requirements have been set, they must be
communicated in all bid proposals prior to awarding the contract. The program will not be
successful if the insurance is negotiated after the contractor has been selected. Note that a
change in bidding requirements, such as changing the insurance requirements, could result
in a protest of the award by the unsuccessful bidders
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2.3 DEFINITION OF RISK
The following definitions of terms are usually used in Risk Management: Hazard a
particular event which has the potential if it occurs of an adverse effect.
• Risk the probability of occurrence of a defined hazard and the magnitude
of the consequences.
• Risk Assessment the estimation and evaluation of the risk; the magnitude
of the consequences together with the probability of the consequences.
• Risk Identification an awareness of those risks which could adversely
affect the outcome of the venture or project.
• Risk Management the identification, measurement and economic control
of risks.
2.4. Risk Policy
The risk management methodology that will be adopted on this project, and outlined in
this plan, will be consistent with the policy requirements and guidelines set out under the
following Environment,
2.5 Overview of Risk Management
Risk is often ignored or dealt with simply by adding contingencies to estimated costs, time
and performance. The development of non-traditional contract and funding arrangements,
such as BOT, PPP and Target Cost Reimbursable arrangements has meant that a
structured and logical approach has been necessary to deal with the new types of risk to
the new types of project objectives. The Risk Management framework is as follows:
Figure 2.5 Overview of Risk Management
The methodology used for the management of risk on this project will be consistent with
the risk management process described in the as summarized in the flowchart below:
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FIGURE 2.5.1THE RISK MANAGEMENT PROCESS
2.6. Risk and risk management in construction
Within project management context, this research defines the terms ‘risk’ and
‘uncertainty’ as follows. ‘Risk’ means the event/condition that its occurrence is
identifiable and provides negative effect to project objective, probability distribution of
outcome is quantifiable, and it is controllable by one party. ‘Uncertainty’ means the
event/condition that its occurrence is unidentifiable and may provide positive or negative
effect to project objective, probability distribution of outcome is unquantifiable, or it is
uncontrollable by one party. In infrastructure projects, political and economical
uncertainties are common ones in the external category. Unreasonable project objectives
(e.g., time and cost), delay in awarding and contracting, unfair contract conditions,
incapable executing agency, late land acquisition, delay in contractor’s mobilization,
incapable and inexperienced contractor, financial problem of contractor, adversarial
attitude, inefficient communication, cooperation and coordination, poor project and risk
management, claim, conflict and dispute are those common source and consequential risks
and uncertainties in the internal category. To cope with these risks, several Risk
Management Processes (RMP) have been developed by many researchers (Al-Bahar and
Crandall 1990; Wideman 1992; Flanagan and Norman 1993; Duncan 1996; Kahkonen and
Huovila 1996; Chapman and Ward 1997; ICE 1998; PMI 2000, and Pipattanapiwong and
Watanabe 2000).
Generally, conventional Risk Management Processes consist of three main processes i.e.,
risk identification, risk assessing and analysis, and risk response. There are several
definitions of the project risk in the literature. A formal definition is given in the
international standard as a combination of the probability of an event occurring and its
consequences for project objectives. The concept of risk in greater detail and suggest
using the more general concept of uncertainty. A questionnaire survey conducted by this
study shows that the majority of project actors perceive risk as a negative event. Project
risk management is a formal process directed to identification, assessment and response to
project risks. The process is defined differently in research literatures. However, all
definitions agree that the aim of project risk management is to maximize opportunities and
minimize the consequences of a risk event in the construction project.
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To obtain ‘reference’ is just the first step to manage risk in a project. To complete risk
management, it is necessary to go through following processes: problem awareness from
knowing what is different as reference, problem identification through communication
among parties, and problem solving by integration of multiple parties’ views. The
communication function is also an important step stipulated in problem solving process
available in risk management manual proposed by FIDIC (FIDIC 1997); nevertheless, its
explanation is very limited to only statements of importance in keeping communication. It
does not provide how to communicate among parties and does not tell what information
necessary in commutation.
It is indispensable for all involved project parties to timely be aware of risks and
uncertainties and efficiently communicate those perceived exposure of risks and
uncertainties among all parties. Then, all parties’ views should be integrated, and they
should cooperatively prepare both proactive and reactive measures in responding those
prospective risks and uncertainties. In order to accomplish these tasks, tool, which can
facilitate and assist all project parties in logically, systematically and efficiently managing
risks and uncertainties by encouraging efficient communication, cooperation, and
coordination among all parties throughout project implementation in a multi-party
environment, is necessary.
The Guide to the Project Management Body of Knowledge identifies five main steps in
the risk management process:
• Risk identification,
• Risk assessment,
• Development of risk
• Response and
• Management of risk response.
Some authors develop more detailed models the model of seven steps:
• Risk management planning,
• Risk assessment,
• Risk analysis,
• Risk response,
• Risk monitoring and
• Risk communication.
Chapman and Ward (2003) introduce the SHAMPU model, which
Consists of nine phases. Del Cano and de la Cruz (2002) present a generic project
risk management process of eleven phases, which can be used in large and complex
Projects.
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For the purpose of this research, I use a simplified risk management
Process of three main steps:
• Risk assessment and
• Risk response.
The reason for the simplification is that this model is well-known for the project actors
and frequently used in practice. The goal of the risk identification process is to decide on
potential risks that may affect the project. There are several approaches for classifying
project risks and risk sources (Leung et al., 1998; Tah and Carr, 2000; Baloi and Price,
2003; Li et al., 2005).
The main categories are financial, economic, managerial, legal, construction, design and
environmental risks. During the risk assessment the identified risks are evaluated and
ranked. The goal is to prioritize risks for management. The risk response process is
directed to identifying a way of dealing with the project risks. Several surveys conducted
among the construction industry actors show that Checklists and brainstorming are the
most usable techniques in risk identification; subjective judgment, intuition and
experience are used mostly in risk assessment; and transfer, reduction and avoidance are
the most applied methods for risk response.
2.7 The roles of the project’s different phases in risk management
Traditionally, a construction process is divided into four main phases:
• Programme,
• Planning,
• Procurement and
• Construction.
In the programme phase the client has an idea about the project and analyses conditions
for its execution. During the planning phase the architects produce construction drawings
according to the client’s requirements. In the procurement phase the parties sign the
contract. Finally, the contractor executes the job in the construction phase. Since it is
impossible to foresee all project risks in the programme phase and due to the
tendency of the identified risks to change during project implementation, joint and
consistent risk management is required throughout all project’s phases.
The results showed that risk management in the planning and construction phases
was higher than in the programme phase. Risk identification and risk assessment
were more often performed in the risk management processes than risk response.
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Research Frame work for Risk Management.
Traditional Contracting Procedure
Project Bid Construction Construction
realization advertisement Awarding Signing commencement completion
Planning Bidding Contracting Construction
Focused Application Period
Figure 2.7 Research Frame work for Risk Management.
(Rahman and Kumaraswamy, 2004). Motawa et al. (2006) propose a model, which helps
in determining potential changes in the project based on available information in the early
stages of the project. Baccarini and Archer (2001) introduce a methodology for a risk
rating process in the procurement phase, which allows the effective and efficient
allocation of resources for project risk management. Several authors highlighted the
importance of the early phases in project risk management since the decisions taken in
these phases often have a significant impact on the final result (Kähkönen, 2001).
However, according to Uher and Toakley (1999), the actual usage of risk management
techniques in the early phase is very low. Lyons and Skitmore (2004) conducted a survey
where one of the aspects was the use of risk management in each of the project phases.
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Application
Early
stage
of
constru
ction
Pre-
const
ructio
n
Durin
g
const
ructio
n
Execut
ing
agency
&
consul
tant
Execut
ing
agency
,
consul
tant &
bidder
s
Execut
ing
agency
,
consul
tant &
contra
ctor

CHAPTER 3 RISK MANAGEMENT METHODOLOGY
3.1 Risk Identification
Risk Identification requires the establishment of the risk profile and the frequency and
severity of hazard together with the impact on the project operation and project
finance. A hazard has the potential to have an adverse effect but the degree of risk
from the hazard also depends upon the circumstances. These circumstances comprise
not only the Existing Location Environment as generally understood, but also the
Created Project Environment. The risk from the hazard is controlled by risk
management which is intended to improve performance to an acceptable level. The
assessment of the risk is the means of achieving this objective. The basic intent in this
stage is to generate a comprehensive list of possible events and consider scenarios and
causes.
Preliminary risk identification will be undertaken at an initial Risk Management to be
attended with the representative by cross-examination and filling Questionnaires
From:
• The client team,
• Consultant project team and
• Team of contractors
Involved in CAARP project. In this regard, please note that it was in accordance
with the activity schedule was proposed to hold these initial interviews in first
week of January 2009. Within the briefing pack will be a feedback questionnaire,
which will request targeted responses regarding their views on the objectives and
concerns for the project - in their own words.
The feedback from the questionnaires were collated and selectively summarized for
use at this study. For this initial study, I adopted a facilitated brainstorming approach
for the identification of risks. This “brain storming” session will draw out the key
potential risk exposure areas. All risks were recorded; no matter how trivial or
seemingly irrelevant they might first appear. This documentation of all risks is a
necessary part of the process of agreeing a set of the most important risk areas to be
addressed in the next stage of the process. Highlighting and documenting learnt will
go some way to managing their potential re-occurrence on this project. The essential
technique is to obtain a detailed understanding of the project process and the
environment in which it is to be constructed and in which it will operate. This requires
all three processes to be adopted. The check list provides a starting point. Interviews
allows past corporate experience to be used. Brain storming allows the new types of
risk to be identified.
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3.2 Risk Categories (Heads of Risk)
The following categories of risk area are proposed, and will be confirmed by the staff of
the Project.
 Project identification
 Funds source Identification
 Project Appraisal
 Pre-feasibility studies
 Feasibility study
 Planning, Design, preparation of Bidding Documents, Program, Deliverables
 Project Initiation
 Environment & Sustainability
 Community & Social
 Health & Safety
 Political
 Financial & Economic
 Procurement in bidding Stage
 Contractual
 Construction & Contract Administration
 Operation
 Maintenance
 Human Factors
 Natural Events
3.3 Risk Analysis
Risks will be analyzed against the identified risk analysis criteria using qualitative and
quantitative techniques.
Proposed Risk Analysis Matrix
Figure 3.3 Risk Analysis Matrix
This form of risk analysis involves assessing the probability and consequences of each
risk occurring to determine the relative level of risk. Where present, existing controls will
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be identified and their strengths and weaknesses taken account of in the analysis. The
Project Objectives are always solely financial, timeliness, quality, Quantity and Value for
Money.
The most serious consequences to project objectives may include:
• Construction cost overrun;
• Price Escalations
• Variations;
• Claims
• Construction time overrun; EOT
• Non-performance/Defective performance
• Inadequate performance (through-put or quality);
• Operating cost overrun. Administration Costs
Whether such consequences are acceptable depends upon the attitude to the risk and the
importance to the project objective. The essential technique is to obtain a detailed
understanding of the project process and the environment in which it is to be constructed
and in which it will operate. This requires all three processes to be adopted. The check list
provides a starting point. Interviews allows past corporate experience to be used. Brain
storming allows the new types of risk to be identified. The main techniques for identifying
risk are:
• Risk register or check list;
• Interview of project experts and participants;
• Brain storming by Risk Team.
The essential technique is to obtain a detailed understanding of the project process and the
environment in which it is to be constructed and in which it will operate. This requires all
three processes to be adopted. The check list provides a starting point. Interviews allows
past corporate experience to be used. Brain storming allows the new types of risk to be
identified.
The following are simple examples of hazards which should be part of any checklist:
1. Client Team
• Political or economic changes
• Revenue changes (market)
• Variations
• Non/poor performance of consultants
• Delays in Instructions
• Improper Consultant instruction
• Operability
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• Claims
• Maintainability
• Reliability
• Health and Safety
• Environment
2. Project/Consultant/Engineer Team
• Delays in Possession of Sites
• Delays in Designs from Client
• Inadequate Design information
• Delays in relocation of Utility Facilities
• Cost increase
• Variations
• Contractors Non/Poor -performance
• Not compliant orders
• Time over-run
• Quality not compliant
• Contractor’s Material source improper Identification
• Weather
• Build ability
• Environment
3. Team of Contractors
• Client performance
• Consultants performance
• Delays in Instructions
• Variations
• Change of Scope
• Delays in obtaining approvals
• Delays in Payments
• Order of Instructions
• Political Interferences
• Security measures
• Inadequate project definition
• Inadequate project organization
• Inadequate estimate
• Subcontractor performance
• Inflation
• Exchange rates
• Environment
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3.4 Risk Evaluation
The purpose of the risk analysis phase is to gain an understanding of level of risk to make
decisions about future actions and define priorities. The following risk evaluation criteria
are proposed to provide a means by which decisions can be made, and resources allocated
Figure 3.4 Risk Treatment
For this project the following treatment hierarchy will be adopted for those risks that
require treatment:
• Avoiding the risk
• Reducing the likelihood of occurrence
• Reducing the consequences
• Transferring or sharing the risk and
• Retaining the risk.
Selection of preferred risk treatments will typically be a cost-benefit decision, with
preference given to treatments that provide the best all round benefit to the project. In the
majority of cases, the identification of which treatment provides the greatest benefit will
be straightforward and will not require an in-depth analysis. Additionally, options for risk
treatment will be assessed on the basis of the extent of any additional benefits or
opportunities created. For any particular risk, a number of treatment options may be
considered, and applied either individually or in combination.
3.6 Monitoring and Review
Risk management is a dynamic process. The importance of identified risks will change,
and new risks will emerge, as the project proceeds. Therefore, although the Risk Register
that will be produced as a key outcome of the initial risk management workshop will
represent an understanding of the significant risks associated with the project at this time;
it should not be viewed as a ‘one-off’ exercise. It is essential to project success that the
risk management process is kept relevant and alive throughout the duration of the project.
Risks (consequence and likelihood) and the effectiveness of control measures need to be
monitored, as they will change with time. Additionally, as the project proceeds through
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planning, design, procurement and construction phases, new (or previously overlooked)
risks will emerge. As such, ongoing review of the process and monitoring is essential to
ensure that risk and the controls/treatments for the management of them remains relevant
and effective. It is therefore proposed to undertake regular risk reviews at key milestones
during the course of the project. As a minimum it is suggested that risk reviews be
undertaken to coincide with the following delivery milestones:
• At the start of preliminary feasibility study
• At the start of detailed investigations & Detailed feasibility study
• At the start of preparation of Project time schedule
• At the start of detailed design
• During finalization of tender documentation
• At commencement of construction
Additionally, the Risk Register and the effectiveness of Risk Treatment Action Plans
should be reviewed as an agenda item in monthly Project Steering Committee meetings,
and included in the monthly progress reporting to Ministry of Highways Department.
3.7 Communication and Consultation
Communication and consultation are important considerations at each step of the risk
management process. Internal stakeholders are involved in the risk management process
either through direct involvement in the risk management workshops, or via information
distribution by standard project communication protocols (such as meetings, minutes,
progress reports etc). All internal stakeholders not directly involved in risk management
workshops are encouraged to contribute to the risk management process, by proposing
risks through their supervisor or direct to the Risk Manager. External stakeholders are also
indirectly involved in the risk management process through consultation with Consultants
and Clients. The Risk Management Plan, Risk Register and Risk Treatment Action Plans
will be circulated to the Project Steering Committee, leaders within the project team and
sub-consultants for the project team.
3.7.1 Project Steering Committee Meetings
Project Steering Committee meetings will be held monthly. Risk management will
feature as a regular agenda item during these meetings. The meetings provide a
regular opportunity to ensure that the risk management process is being
implemented, reviewed and controlled. The meetings serve as a forum for
reviewing risk management activity and determining what action is necessary.
Newly identified risks, their treatment and the progress of risk issues will be
discussed, as should any higher-level decisions that require action. This includes
decisions on issues such as the adequacy of current risk activity, performance of
stakeholders and problems being encountered. The Risk Manager should chair this
section of the Project Steering Committee meeting.
3.8 Risk Management Documentation
For this project three forms of risk management documentation will be utilized, being:
• Risk Management Plan – this document will be updated to coincide with the key
risk review key risk review milestones identified in Section 3.8
17

• Risk Register – this will be the primary repository for all risk information, and
will be updated monthly during the life of the project. The template for the Risk
Register that we will use on this project is the same as that contained in the Risk
Management User Manual
• Risk Treatment Action Plans - the template for the Risk register that we will use
on this project is the same as that contained in the Risk Management User Manual
3.9 Risk Management Responsibilities
3.9.1 Strategic Management
The strategic management of risk is the responsibility includes:
• Ensuring that a risk management process is implemented on the project
to comply with Risk management policy.
• Ensuring that there are sufficient resources to undertake risk
management activities.
• Ensuring that business risks are identified assessed, treated and
communicated to other levels of management where appropriate.
• Making decisions on project risk issues that are escalated from tactical
levels of management
3.9.2 Tactical Management
Tactical risk management is the responsibility includes:
• Preparation of the risk management plan
• Ensuring that the risk management plan is implemented in accordance with the
Risk Management User Manual
• The assignment of operational level responsibilities
• The co-ordination of all risk related project activity.
• Making risk based decisions that are passed up from operational levels
• Ensuring that project and operational risks are identified, assessed, treated and
• communicated to other levels of management
• Referring strategic level decisions to strategic management.
3.9.3 Operational Management
The Risk Manager is responsible for ensuring that risk management activity is properly
facilitated and administered. Responsibilities include:
• Ensuring that all those involved understand the risk management process that is to
be undertaken and their responsibilities to it.
• Chairing risk management sessions
• Compliance with the risk management plan and the Risk Management User
Manual
• The assignment of risk management activity where appropriate.
• Making risk based decisions where appropriate
18

• Consultation with project team members, strategic and tactical management on
risk issues.
• Recording and updating risk information on the risk register
• Monitoring, control and review of risk management activity
• Communication of risk management issues
• Preparing and updating all risk management documentation
3.10. Research Design
I give briefly the research design, how I am going to carryout research on the above title
and will explain under this research proposal. It includes sampling, data collection
methods & techniques and method of data analysis. The method adopted in a research to
study as explained the above problem. Under this section it is important to clarify the
following.
I intended to adopt a questionnaire based survey method, based on draft questionnaire
including all relevant questions with respect to problems experienced by the each teams. It
is also desirable to pre-test the questionnaire before the survey is carried out. To identify
and assess the risks involved with Project/Consultant/Engineer, Client and
Contractors to find out the possibilities of identifying the Risks suggestions and
opinions to counter measures to eliminate such risks, which are to well managed in each
and every process of the Public Procurement in Road Construction Works in order to
Manage Risks by achieving the RDA’s goals and objectives by deriving the Value for
Money concept.
I have also decided to collect data through questionnaires and I propose to design a
Questionnaire to suit the different type of people, to collect data in order to do research
study and do detailed analysis in the area of
• Programme,
• Planning,
• Procurement and
• Construction.
To suit the
a. Contractors who involved in CAARP project to answer the questions.
b. Consultants/Engineer/Project Manager who involved in CAARP project to
answer the questions.
19

c. RDA/PMU staff, who are involving CAARP project in Programming Planning,
Procurement and Monitoring Unit and the Project Management unit.
As the objective of the study is to get a picture of the risk management process from
different actors’ perspectives, a questionnaire survey was chosen as the most appropriate
research method. The survey sample comprised clients, contractors and consultants.
Within each group, I identified those persons who worked with risk management in a
particular project. The respondents from the client’s side are the representative signing the
contract and project manager. From the contractor’s side the respondents are the
representative signing the contract, site manager and estimator. Finally, the respondent
from the consultant’s side is the resident engineers and the team leader and the manager.
3.11 Questionnaire
A draft questionnaire was developed consisting of
• General questions about the respondent
• The aspects of the risk management process through the different phases of the
project were covered.
• Investigated relationships between the actors in the project.
• Focused on software management systems, which the company uses in the risk
management process.
• Concluding one for miscellaneous comments regarding the risk management
process in the project.
Stipulated Questionnaire is annexed in Appendix -B
I organized personnel interviews where I met prospective respondents and presented the
research project and the objectives of the survey. The participants were given an
opportunity to answer the draft questionnaire and give their comments on the content.
3.12 Activity Plan for study
I give briefly the implementation programme, which is for my research problem, drawn –
up in the Bar-Chart format in accordance with the time frame given to me and annexed in
Appendix -C.
20

Chapter 4. DATA PRESENTATION & DATA ANALYSIS.
The results from a questionnaire survey of risk management in the different phases of a
construction CAARP project are presented. The participants of the study were clients,
contractors and consultants working in CAARP project. I analyzed the involvement of
these actors in the project phases, their roles in the risk management process in particular
and their influence on risk management. I show that the planning and construction phases
of a construction project are the most important for risk management, wherein risk
identification, assessment and response take place. Moreover, collaboration in terms of
risk management between the actors is most intensive in these phases. Contractors
participate more actively in the risk management process in comparison with other actors
and have the largest influence on project risk management. Despite the recognized
importance of the early phases in the project, my study shows a very low degree of risk
management activity in the programme phase.
Construction projects are usually characterized by many varying risks. Being able
to manage risks throughout the construction process is an important and central element
preventing unwanted consequences. Risk management is also decisive for achieving a
good final result with secure economy and Value for Money. Many different actors are
involved in a construction project and often they have no or limited experience of earlier
collaboration with each other. In many projects there is an attempt by actors to try to avoid
risks as far as possible and let somebody else in the value chain deal with them.
Considering the effects that risk management and risk sharing have on project goals in the
form of both quality and economy, these processes ought to take place in an open and
conscious way. In each phase of a construction project, namely programme, planning,
procurement and Construction, the management of a specific risk should be allocated to
the party that has the best corresponding qualifications. One of the problems identified in
the reports of CAARP project Construction Cost is that many actors are involved only in
some of the project’s phases. They often focus on short-term economic results and protect
their own interests rather than the project overall. This leads to a less effective risk
management process. Little attention in the research community so far is paid to
identifying the roles of individual actors in risk management through the project’s
different phases. The objective of the paper is to analyze the risk management process in a
construction project from the perspective of the client, the contractor and the consultant.
In particular, I examine the ways and extent to which the actors are involved in risk
management through the different phases of the project. The study is based on a literature
21

review and the results of a questionnaire survey of construction project actors. Following
the final version of the questionnaire was developed and sent in the electronic form to the
respondents (Tested Questionnaire annexed in Annex-B). After the questionnaires were
completed, the answers were analyzed using the statistical processing software, and
Microsoft Excel.
4.1 Project Characteristics Summary
The study involves nine construction projects recently performed in North and Eastern
part of Srilanka (Table No.4.1)
In order to obtain an accurate picture, the projects included in the study satisfy the
following requirements:
• The projects are located in large and small cities;
• They use different forms of contract and collaboration, i.e. performance-based
Contracts, design-build contracts and C0nstruction Contracts;
• The different types of the road building projects
• All projects are medium-sized (between 5 and 15 million US$).
No
.
Project &
Location
Length of
Project/km
Type of the
Project
Contract
Type
Contract
Amount
in million
(US$)
1 Paranthan-
Poonakary- (Small
City- Kilinochchi)
26 km Stabilized Base
with SBST
Performan
ce based
3.0
2 Kandy-Jaffna –
(Large City-
Vavunia)
35 km ABC Based with
Asphalt Overlay
Constructi
on Type
8.0
3 Vavuniya –
Horowapothana –
(Large City-
Vavunia)
DBST
Constructi
on Type
1.4
4 Vavuniya –
Horowapothana –
(Small City-
Horowapothana)
DBST
Constructi
on Type
1.9
5 Madawachchiya –
Thalaimannar
(Small City-
Cheddikulam)
DBST
Constructi
on Type
1.2
6 Puttalam-Trinco–
(Small City-
Horowapothana)
70 ABC Based with
Asphalt Overlay
Constructi
on Type
24.6
7 Boghawatta-
Pulmoddai–(Small
City-Pulmoddai)
14 Stabilized Base
with DBST
Constructi
on Type
2.3
22

8 Trinco-Pulmoddai –
(Large City-Trinco)
56 Stabilized Base
with DBST
Design
-Build
11.5
9 Murunkan-
Chilawathurai –
(Small City-
Murunkan)
16 Stabilized Base
with DBST
Constructi
on Type
2.6
Total 248 56.50
Table 4.1. Characteristics of construction projects included in the study
Figure 4.1.1 Showing National Roads Network in Sri Lanka
23

Figure 4.1.2 Showing Road Projects in North –East Part of Sri Lanka including
CAARP Project Roads taken for study
4.2 RESULTS OF THE SURVEY
In total, from the received responses, 36 were completed Questionnaires. A response rate
of 100% was for those people who attended the interviews. This shows that the
respondents who were aware of the survey objectives were more interested in taking part
in the project. The sample composition aggregated according to actors’ roles in the project
is shown in Figure 4.2.
24

contractors Client consultants
contractors, 18,
50%
Client, 10, 28%
consultants, 8,
22%
contractors
Client
consultants
Figure 4.2: Sample Collection.
4.3 Respondents
Analysis of gender distribution confirms that the Srilankan construction industry is
traditionally male-dominated sector. 34 survey participants are men and two participants
are women. The age distribution shows that 89% are over 41 years old. Most of the
respondents (92%) have more than ten years experience in construction industry, and 64%
have more than 20 years of experience. 44% of survey respondents have a university
degree in construction, 53% finished upper secondary school, and only one person has
vocational training only. 33% respondents participated in risk management or project
management courses within their organizations or during the period of university studies.
Despite a relatively high education level and large experience, the majority of the
respondents (75%) estimate their knowledge of risk management as fair.
Role Of the Project
Client contractor Consultant Total
Low 1 5 1 7
Fair 6 10 4 20
Advanced 3 3 3 9
Table 4.3 summarizes the risk management knowledge within each group of actors.
4.4 Risk management in the different phases of the project
Figure 4.4 shows that the majority of the respondents (24) participated in the construction
phase. For the contractors it is quite natural because they are always involved in the
construction phase and very seldom in the programme phase. Therefore contractors’
participation increases as the project goes forward: 2 contractors participated in the
programme phase and 16 in the construction phase. It was quite unexpected that only two
clients participated in the programme and planning phase compared to 4 clients in the
production phase and 4 participated in procurement phase. This may be partially explained
by the types of the projects. All eight consultants participated in the planning phase and
construction phase.
25

2 0 0
16
2 2
4 4
2 2
4 4
6
4
8
24
0
5
10
15
20
25
30
P
ro
g
ra
m
m
e
P
la
n
n
in
g
P
ro
cu
re
m
e
n
t
C
on
stru
ctio
n
Type of Process
NoofAnswers
contractor
Consultant
client
Total
Figure 4.4.1 Participation in the project phases
When the respondents were asked to estimate the importance of risk management in every
phase of the construction project (figure 3), the estimates were similar in both the client
and contractor groups. The construction and planning phases were identified as the most
important for the management of risks. Then the procurement and programme phases
follow. Consultants’ estimates differ from those of clients Overall; I observe that they
underestimate the importance of all phases compared with the other actors. However, the
planning and construction phases are identified by consultants as the most important.
From this distribution I can conclude that many actors link risks to the construction phase.
3.143.12 3
3.643.72
3.25 3.29
3.56
2.75
3.643.76
3.25
0
0.5
1
1.5
2
2.5
3
3.5
4
Programme Planning Procurement Construction
contractor
Consultant
client
Figure 4.4.2. Importance of risk management in the different phases
Figure 4 illustrates how many actors carried out risk management processes systematically
in their projects. The most active group is contractors, where all respondents identified
and assessed project risks and 94% performed risk response systematically. In the client
group 86% identified risks, 71% assessed them and only 57% systematically responded to
project risks. The explanation of low risk response rate may be that the clients let other
actors in the value chain deal with identified risks. Consultants are the most passive actors
when it comes to project risk Scale is between 1 and 4, where 1 is unimportant, 2 – not so
important, 3 – fairly important, 4 – very Important management. Among consultants only
33% identified risks and responded systematically, and none assessed project risks.
26

100%
33%
86%
100%
0%
71%
94%
33%
57%
0%
20%
40%
60%
80%
100%
Risk
Identification
Risk
Assessment
Risk
Response
Risk Management
The Risk Management Process systematically
performed in the Project
contractor
Consultant
client
Figure 4.4.3 The risk management processes systematically performed in the project
4.4.1 Risk identification process
Risk identification (Figure 4.1.1) was mostly performed in the planning and construction
phases. The earlier risks are identified, the less is the probability that they occur. Despite
this only seven respondents answered that risk identification was performed in the
programme phase. Most of the clients indicate that risk identification was carried out in
the planning phase, whereas contractors mostly identify risks in the production phase.
2
1
4
7 8
3
11
22
12
0
5
17
15
0
8
23
0
5
10
15
20
25
Different Phase
Risk Identification in the Different Phases
contractor
Consultant
client
Total
Figure 4.4.1.1. Risk identification in the different phases
In the programme phase 75% of the respondents answered that risks were identified by the
client. In the planning phase 39% responded that risks identification was performed jointly
by all actors and 25% responded it was performed by the client and the consultant. In the
procurement phase the contractor plays the most important role in risk identification
(52%). In the production phase risks were identified by the contractor (39%) or jointly by
all actors (39%).
4.4.2 Risk assessment process
27

Figure 4.4.2.1 shows that risk assessment has a similar tendency as the risk identification
process: the majority of the respondents perform it in the production phase. However, the
procurement phase is more important for the risk assessment process than for risk
identification and risk response. This is because the risk premium is calculated in the
procurement phase and therefore it is important to assess earlier identified risks.
1 1
2
4
8
2
7
17
13
1
5
19
15
1
9
25
0
5
10
15
20
25
Different Procurement Phases
Risks Assesments in the Differenmt Phases
contractor
Consultant
client
Total
Figure4.4.2.1 Risk assessment in the different phases
Similarly to the risk identification process, the risk assessment in the programme phase is
performed mostly by the client, in the planning phase jointly by all actors or by the client
and consultant. However, the contractor’s involvement in the risk assessment in the
planning phase was higher than in the risk identification. The procurement and
construction phases do not differ much from the risk identification process: in both phases
the contractor plays the most important role.
4.4.3 Risk response process
Risk response (Figure 4.4.3.1) is also associated with the construction phase. Both the
clients and the contractors mostly manage risks in this phase. This is due to the
traditional approach in the construction industry: contractors do not put enough
effort into preventing problems and solve them as they appear in the project.
28

1
7 8
17
0
3
0 0
2
6
3
9
3
16
11
26
0
5
10
15
20
25
30
P
rogram
m
e
P
lanning
P
rocurem
ent
C
onstruction
Type of Process
NoofAnswers
contractor
Consultant
client
Total
Figure 4.4.3.1. Risk response in the different phases
In the programme phase, similarly to the risk identification and assessment processes, risk
response is performed by the client. In the planning phase the client together with the
consultant responded to the project risks. In the procurement phase risk response is
performed mainly by the contractor. In the construction phase the role of the contractor is
large and the degree of joint risk management is high.
4.4 Collaboration in managing risk and actors’ influence on the risk management
process
In the questionnaire, I define the term collaboration as joint work in risk management
process. Almost all respondents had collaboration in risk management with other actors in
the project: 07 clients, 15 contractors and 07 consultants. Seven respondents (three clients,
three contractors and one consultant) answered that no collaboration in risk management
existed in the project. Evaluations of collaboration (Table 4.4.1) vary from “fairly good”
to “very good”. Scale is between 1 and 4, where 1 – very bad, 2 – fairly bad, 3 – fairly
good, 4 – very good.
Table 4.4.1 Evaluation of collaboration in risk management
Role in project Evaluation
Client 3.55
Contractor 3.38
Consultant 3.33
The degrees of communication of known risks and opportunities between actors in the
procurement phase are presented in Table 4.4.2
Overall evaluations are not high and vary between “little detailed” and “fairly detailed”.
The contractors answered that the client communicated known risks moderately (2.06).
On the contrary, the clients state that their communication of known risks is higher (2.73).
29

Table 4.4.2. Degree of communication of known risks and opportunities between
actors in the procurement phase
Clients’ communication Contractors’
communication
Client 2.73 2.69
Contractor 2.06 2.39
Consultant 3.00 3.00
Total 2.36 2.53
Figure 4.4.3.1presents the respondents’ judgment of their own and other actors influence
on risk management in the project. The results show that the contractor has the largest
influence on risk management from the perspective of all actors. It is interesting that even
the clients estimate the contractors’ influence to be larger than their own. This can be
linked to the Figure 4.4.2, where the actors connect risk management to the construction
phase. The influence of the consultant is surprisingly low despite the fact that the planning
phase is considered to be very important by all actors.
3.43
3.28
2.67
3.57
3.35 3.33
2.69
2.94
2.5
0
0.5
1
1.5
2
2.5
3
3.5
4
Influence of the
Client
Influence of the
Contractor
Influence of the
Consultant
contractor
Consultant
client
Figure 4.4.3.1. Influence of the actors on the risk management process in the project
The existence of collaboration in risk identification, risk assessment and risk response is
shown in Figure 4.4.3.2. Risk identification (RI) is the process where collaboration existed
according to most of the actors: 82% of clients, 92% of contractors and 67% of
consultants answered that they collaborated identifying the project’s risks. During the risk
assessment process (RA) both the clients and the contractors collaborated with each other,
while only 33% of consultants answered
that collaboration existed. The risk response process (RR) has a lower degree of
collaboration according to the contractors: 62% of them had collaborated in taking care of
risks.
30

Scale is between 1 and 4, where 1 – not at all, 2 – little detailed, 3 – fairly detailed, 4 –
very detailed.
Scale is between 1 and 4, where 1 – very small, 2 – fairly small, 3 – fairly large, 4 – very
large
62%
67%
82%
92%
33%
82%
92%
67%
82%
0% 20% 40% 60% 80% 100%
RR
RA
RI
client
Consultant
contractor
Figure 4.4.3.2. Existence of collaboration in risk management processes
The existence of collaboration in the projects’ different phases is presented in Figure
4.4.3.3. It shows that in the programme phase there was minimum collaboration in risk
management. Only 14% of clients, the most active participants of the programme phase,
answered that collaboration existed in the phase. In the planning phase 70% of clients,
75% of contractors and 100% of consultants collaborated in risk
management. This result can be linked to the importance of risk management in that
phase, which was ranked high by the actors. In the procurement phase the collaboration
between the clients and the contractors in risk management existed in half of the projects.
In the production phase the collaboration between the actors is the most intensive because
many risks appear in this phase and should be eliminated to achieve a good final result.
85%
56%
75%
50%
50%
100%
100%
50%
100%
55%
70%
14%
0% 20% 40% 60% 80% 100% 120%
Construction
Procurement
Planning
Programme
client
Consultant
contractor
Figure 4.4.3.3. Existence of collaboration in risk management in the project’s phases
31

4.5 Data Presentation of Real Problems during construction stage.
I present here the real problems and analysis in implementation of road construction
contracts in Sri Lanka such as time delays, quality of works, delays, variations, liabilities
etc.
The following Roads have been taken for the Rehabilitation under CAARP project
by RDA
No
.
Name of Roads Length of
Project/km
No of
Packages
Total
Contract
Amount
in million
(US$)
1 Paranthan-Poonakary
0.00 -26.0 km
26 km 10 3.0
2 Kandy-Jaffna
158.00 -193.00 km
35 km 4 8.0
3 Vavuniya –Horowapothana
0.00- 10.00 km
& 35.00- 46.00 km
21 km 2 3.4
4 Madawachchiya –
Thalaimannar 14-24.0
10 km 1 1.2
5 Puttalam-Trinco–
108.00-178.00 km
70 1 24.6
6 Boghawatta-Pulmoddai
13.00 – 27.00 km
14 1 2.3
32

7 Trinco-Pulmoddai
0.00 -56.00
56 3 11.5
8 Murunkan-Chilawathurai
0.00 – 16.00km
16 2 2.5
Total 248 24 56.50
Figure 4.5 Summary of Roads taken for CAARP project
4.5.1 Paranthan –Poonakary Road
Out of total 10 packages, 4 packages completed in 100% of total length of 12 km and 3
packages of total length 8km was in progress and suspended due to the internal war
situation in northern part of Sri Lanka in later part of 2008 and balance 3 packages of total
length 10 km section of road, unable to award to the successive substantially lowest
responsive bidders due to the internal war situation in north part of Sri Lanka. The details
are given in Table No.4.5.1
Table 4.5.1 Details of Paranthan-Poonakary Road
ADB FUNDED CONFLICT AFFECTED AREA REHABILITATION PROJECT
Component A - Road Rehabilitation Consulting Services for Construction Supervision
Paranthan-Poonakary Road
No
Contr
act No
Contra
ctor
Name
Section
(Km)
Road
Lengt
h
(Km)
Lett
er
Acce
ptan
ce
date
Contract period
Extension of
Time
Con
tract
Pric
e
Value of
Variation Orders
Amend
ed
Contra
ct Sum
Rema
rksFro
m
To
Perio
d
(mont
h)
Co
mm
ence
men
t
Dat
e
Com
pleti
on
Date
App
rove
d
(day
s)
Comp
letion
Date
No.
01
No.
02
No.
03
1
C 12
A
Sudar
Constru
ction.
14.0
16.
0
2.0
01.0
7.20
05
15
17.0
9.20
05
16.12
.
2006
183
17.06 .
2006 0.41 0.02 0.43
Comp
leted
2
C 12
B
K.T.Co
nstructi
on.
16.0
18.
0
2.0
22.0
5.20
07
15
11.0
3.20
08
10.05
.
2009
0.76 0.76
Work
Suspe
nded
3
C 12
C
SMS
Engine
ers.
18.0
20.
0
2.0
01.0
7.20
05
15
20.1
0.20
05
19.01
.
2007
182
19.07.
2007 0.67
(0.1
3)
0.54
Comp
leted
4
C 12
D
Kavitha
Buildin
g
Contrac
tors
20.0
22.
0
2.0
01.0
7.20
05
15
09.0
9.20
05
08.12
.
2006
182
08..06.
2007 0.48 0.11
(0.1
8)
0.41
Comp
leted
33

5
C 13
A
Leadin
g
Crusher
Works.
22.0
24.
0
2.0
01.0
7.20
05
15
26.0
9.20
05
25.12
.
2006
182
25.06.
2007 0.35 0.05 0.40
Comp
leted
6
C 13
B
J.J
Civil
Constru
ction.
24.0
26.
0
2.0
14.0
5.20
07
15
24.1
0.20
07
23.01
.
2009
0.47 0.47
Work
Suspe
nded
7
C 14
A
Road
Engine
ering
(Pvt)
Ltd.
0.0 4.0 4.0
03.0
7.20
06
18
30.1
0.20
06
29.04
.
2008
1.18 0.02
(0.0
5)
(0.1
5)
1.00
Work
Suspe
nded
8 C14 B
Road
Engine
ering
(Pvt)
Ltd.
4.0 8.0 4.0 12
0.16
Work
Aban
doned
9 C15
Sudar
Constru
ction.
8.0
12.
0
4.0 12
0.13
Work
Aban
doned
10 C16
Leadin
g
Crusher
Works.
12.0
14.
0
2.0 12
0.15
Work
Aban
doned
4.5.2 Kandy –Jaffna Road
Out of total 4 packages, 1 package nearing completion total length of 09 km and 2
packages of total length 18km is in progress and 1 package of total length 8 km was given
-up due to the internal war situation in northern part of Sri Lanka in later part of 2008. The
details are given in Table No.4.5.2
Contra
ct No
Contract
or Name
Section (Km)
RoadLength(Km)
LetterAcceptancedate
Contract period Extension of Time Contra
ct
Price
ValueofVariationOrders
AmendedContractSum
Remarks
From To
Period(month)
CommencementDate
CompletionDate
Recommended(days)
Approved(days)
CompletionDate
Kandy-Jaffna Road
34

No. 01
No.
02
No
.
03
C 03
A
Consulting
Engineers
&
Contractors
176.0
185.
0
9.0
06.07
.2006
18
20.08.
2006
19.02.
2008
186 31
20.03.20
09 2.46 1.16 3.62
works
Nearin
g
Compl
etion
C 03
B
CML
Edwards
185.0
193.
0
8.0
06.07
.2006
18
20.08 .
2006
19.02.
2008 2.12 2.12
Work
in
Progr
essC 01
Consulting
Engineers
&
Contractors
.
158.0
167.
0
9.0
23.10
.2008
15
22.11.
2008
21.02.
2010 4.06 4.06
C 02
K.D.A
Weerasigh
e & Co.
(pvt) Ltd.
167.0
176.
0
9.0
23.10
.2008
15
22.11.
2008
21.02.
2010 4.64 4.64
Work
in
Progr
ess
Table : 4.5.2 Details Kandy Jaffna Road
Vavuniya –Horowopothan Road
35

Table 4.5.3 Details Vavuniya –Horowapothan Road
4.5.3 Vavuniya –Horowapothan Road
Out of total 2 packages, both packages total length of 21 km is in progress.
ContractNo
ContractorName
Section
(Km)
RoadLength(Km)
Contract period Extention of Time
ContractPrice
AmendedContractSum
Remarks
From
To
Period(month)
CommencementDate
CompletionDate
Recommended(days)
Approved(days)
CompletionDate
No.
01
No.
02
No.
03
C04A
SierraConstructionLtd.
0.0 10.0 10.0
23.10.2008
15
22.11.2008
21.02.2010
- - -
3.82
3.82
WorkinProgress
C04B
KDAWeerasinghe
35.0 46.0 11.0
23.10.2008
15
06.10.2008
06.10.2009
-
3.95
3.95
WorkinProgress
36

Madawachchiya –Thalaimannar Road
ContractNo
ContractorName
Section (Km)
RoadLength(Km)
ContractPrice
AmendedContractSum
Remarks
From
To
Period(month)
CommencementDate
CompletionDate
Recommended(days)
Approved(days)
CompletionDate
No.
01
No.
02
No.
03
C05A
ConsultingEngineers
&Contractors.
14.0 25.0 11.0
23.10.2008
15
22.11.2008
21.02.2010
- - -
3.58 3.58
WorkinProgress
Table 4.5.4 Details Madawachchiya –Thalaimannar Road
4.5.4 Madawachchiya –Thalaimannar Road
Out of one single one package total length of 11 km is in progress. The details are given in
Table No.4.5.4
4.5.5 Puttalam –Trinco Road
This is a ICB Package of total 70 km length of total Estimated cost 14.6 Million Us$
could not bid for implementation due to the shortage of funds from the Loan due to
delays, price escalations and cost and time overruns in the overall project concerned .
4.5.6 Bogahawatte –Pulmoddai Road
Out of one single one package total length of 14 km is in progress. The details are given in
Table No.4.5.6 Details of Bogahawatte –Pulmoddai Road
37

Bogahawatte –Pulmoddai Road
ContractNo
ContractorName
Section (Km) RoadLength(Km)
Contract period Extension of Time
ContractPrice
AmendedContractSum
Remarks
From
To
Period(month)
CommencementDate
CompletionDate
Recommended(days)
Approved(days)
CompletionDate
No. 01
No.
02
No.
03
C06
ConsultingEngineers
&Contractors.
13.0 27.0 14.0
10.12.2007
18
15.01.2008
14.09.2009
90 90
14.12.2009
4.89 0.13 5.02
WorkinProgress
4.5.7 Trinomalee -Pulmoddai Road
Out of four packages two packages of total length of 16 km have been completed and
balance two packages of total length 40 km is in progress. The details are given in Table
No.4.5.7
Table 4.5.7 Details of Trinomalee -Pulmoddai Road
Trinomalee -Pulmoddai Road
Co
Co
Section (Km)
Roa
d
Lett
er
Co
Val
ue
of
Ame
Re
38

ntractNo
ntractorName
Length(Km)
Acceptancedate
ntractPrice
VariationOrders
ndedContractSum
marks
From
To
Period(month)
CommencementDate
CompletionDate
Recommended(days)
Approved(days)
CompletionDate
No. 01 No. 02
No.
03
C24
WakachikuConstruction&Co.Ltd.
0.0 7.0 7.0
01.07.2005
18
01.08.2005
31.03.2007
375
35
7
23.03.2008
1.01 0.54 0.20 0.40 2.15
Completed
C30
WakachikuConstruction&Co.Ltd.
47.0 56.0 9.0
01.07.2005
18
01.08.2005
31.03.2007
455
42
7
3.06.2008
1.0
2
0.3
0
0.4
5
0.0
2
1.7
9
Completed
C25
ChinaAutoCAIEC
7.0 27.0 20.0
10.02.2008
20
10.03.2008
9.011.2009
0 -
9.011.2009
6.65
- - - 6.65
WorkinProgress
C26
ChinaAutoCAIEC
27.0 47.0 20.0
10.02.2008
20
10.03.2008
9.011.2009
0 -
9.011.2009
6.5
4
- - -
6.5
4
WorkinProgress
39

4.5.8 Murunkan –Silawathurai Road
Out of two packages one package of total length of 6 km in progress and balance one
package of total length 10 km is to be awarded. The details are given in Table No.4.5.8
Murunkan –Silawathurai Road
ContractNo
ContractorName
Section (Km)
RoadLength(Km)
ContractPrice
AmendedContractSum
Remarks
From
To
Period(month)
CommencementDate
CompletionDate
Recommended(days)
Approved(days)
CompletionDate No. 01 No. 02
No.
03
C19
ConsultingEngineers
&Contractors.
0.0 6.0 6.0
08.09.2008
12
06.10.2008
06.10.2009
--- ---
06.10.2009
4.05
4.05
Worksareinprogress
C19A
V.VKarunaratneCo.Ltd
6.0 16.0 10.0 12
3.8
5
3.8
5
ContractistobeAwarded
verysoon
Table 4.5.8 Details of Murunkan –Silawathurai Road
40

4.6 Final Summary
Loan No SF 2043 & 2044
Final Summary Sheet
No Name of Project
Programmed
For
Rehabilitation /
km
Actual
Rehabilitation /
km
Percentage /
%
Programmed For
Rehabilitation/Million
Us$
Actual
Rehabilitation/
Million Us$
Percentage /
%
1 Paranthan-
Poonakary
26.0 12.0 46.15% 3.0 2.78 92.67%
2 Kandy-
Jaffna
35.0 27.0 77.14% 8.0 12.32 154.00
%
3 Vavuniya –
Horowapothana
21.0 21.0 100.00% 3.4 7.77 228.53
%
4 Madawachchiya
–Thalaimannar
10.0 10.0 100.00% 1.2 3.58 298.33
%
5 Puttalam-
Trinco–
70.0 0.0 0.00% 24.6 0.00 0.00%
6 Boghawatta-
Pulmoddai
14.0 14.0 100.00% 2.3 5.02 218.26
%
7 Trinco-
Pulmoddai
56.0 56.0 100.00% 11.5 17.13 148.96
%
8 Murunkan-
Chilawathurai
16.0 16.0 100.00% 2.5 7.90 316.00
%
TOTAL CAARP
Project
248.0
156.0
62.90% 56.5 56.50 100.00
%
Table No.4.6 Final Summary of CAARP Project
4.7 Final Summary of Data Presentation
Under CAARP project, with the allocated loan funds to RDA could be able to
perform only 156 km length of Road rehabilitation works against the programmed
248.0 km length of road rehabilitation works in the Conflicts affected areas of
Northern and Eastern parts in Sri Lanka.
41

Comparison of Actual and Programmed
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Paranthan-Poonakary
Kandy-
Jaffna
Vavuniya
–H
orow
apothana
M
adaw
achchiya
–Thalaim
annar
Puttalam
-
Trinco–
Boghawatta-Pulm
oddai
Trinco-
Pulm
oddai
M
urunkan-C
hilaw
athuraiName of Road Project
LengthofRoad/km
Programmed For Rehabilitation /km km
Actual Rehabilitation /km km
Figure 4.6.1 Comparison of actual length of Road works performed road wise
against work planned for CAARP
Comparison of Actual and Programmed
248.0
156.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
CAARP Project
TotalLengthofCAARPProject
Programmed For
Rehabilitation /km km
Actual Rehabilitation
/km km
Figure 4.6.2 Comparison of overall actual length of Road works performed against
work planned for CAARP.
42

3.0
8.0
3.4
1.2
24.6
2.3
11.5
2.52.78
12.32
7.77
3.58
0.00
5.02
17.13
7.90
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Paranthan-Poonakary
Kandy-
Jaffna
Vavuniya
–Horow
apothana
M
adaw
achchiya
–Thalaim
annar
Puttalam
-
Trinco–
Boghawatta-Pulm
oddai
Trinco-
Pulm
oddai
M
urunkan-Chilaw
athurai
Programmed For Rehabilitation/Million Us$
Million Us$
Actual Rehabilitation/ Million Us$ Million Us$
Figure 4.6.3. Summary of Comparison in Road wise
0.0
10.0
20.0
30.0
40.0
50.0
60.0
TOTAL CAARP Project
Programmed For
Rehabilitation/Million
Us$ Million Us$
Actual Rehabilitation/
Million Us$ Million Us$
Figure 4.6.4 Summary of Total CAARP Project
43

Chapter 5: Conclusions & Recommendation
5.1 Conclusions
From this time forth, development of infrastructure projects is expected to play more
significant role in economic development and advancement in developing countries. Many
large projects are being implemented and in plan to be launched in near future. It is
desirable for all parties directly involved in a project, i.e., policy maker, lender, executing
agency, consultant and contractor, to effectively and efficiently implement the project.
Since failure to achieve project goals and failure to efficiently execute the project
probably affect not only parties directly involved in the project but also other stakeholders
such as tax payers.
Problematically, many infrastructure projects in Southeast Asian countries still could not
have achieved good project goals sufficiently. One of the most frequent failures is severe
project delay. One of its major reasons is existence of common external and internal risks
and uncertainties that are inherent in all stages of project i.e., from programming,
planning, procurement and contracting to construction stage.
A hazard has the potential to have an adverse effect but the degree of risk from the hazard
also depends upon the circumstances. These circumstances comprise not only the Existing
Location Environment as generally understood, but also the Created Project Environment.
The risk from the hazard is controlled by risk management which is intended to
improve performance to an acceptable level. The assessment of the risk is the means
of achieving this objective.
The probability of an event is usually expressed as the number of events expected in a
year. This is not the only means, so for instance the probability of defects in materials is
measured in terms of the production quantity. Events which have a low probability of
occurrence may have such potentially serious consequences that they are unacceptable.
These events must therefore be avoided. Within project management context, this
research defines the terms ‘risk’ and ‘uncertainty’ as follows. ‘Risk’ means the
event/condition that its occurrence is identifiable and provides negative effect to project
objective, probability distribution of outcome is quantifiable, and it is controllable by one
party. ‘Uncertainty’ means the event/condition that its occurrence is unidentifiable and
may provide positive or negative effect to project objective, probability distribution of
outcome is unquantifiable, or it is uncontrollable by one party.
In infrastructure projects like my CAARP project, political and economical uncertainties
are common ones in the external category. Unreasonable project objectives (e.g., time and
cost), delay in awarding and contracting, unfair contract conditions, incapable executing
agency, late land acquisition, delay in contractor’s mobilization, incapable and
44

inexperienced contractor, financial problem of contractor, adversarial attitude, inefficient
communication, cooperation and coordination, poor project and risk management, claim,
conflict and dispute are those common source and consequential risks and uncertainties in
the internal category.
The scope of risk and uncertainty management discussed in this research is bounded to
construction project environment with traditional contracting. To discuss the scope of
application clearly, this research divides project implementation of this type of project into
three main stages i.e., pre-construction stage (planning, biding, and contracting), early
construction stage (during construction preparation and during starting project after
project commencement), and during construction stage. In this application study, the
application is scoped to early and during construction stages.
.In the previous section I presented the results of the questionnaire survey from three main
parties involved in the project including executing agency, contractor, and consultant were
focused as main players in the application study.
Possible risks that are involved in construction environment include external risk such as
economic risk, political risk, legal risk, weather risk, public risk, etc. and internal risk such
as financial risk, contractual risk, construction design risk, technical risk, personal risk etc.
The typical losses of these risks are generally relevant to project delay, project cost
overrun, poor quality, loss of revenue, physical damage to project, physical harm to
personnel, loss of reputation and business and so on. Thus, there is a considerable need to
incorporate the risk management concepts into infrastructure construction practice in
order to mitigate or eliminate risk consequence and enhance the performance of project.
Here, the risk management is examined in the context of project management. Initially,
the clarification of terms of risk, uncertainty, and opportunity, definition of risk in various
fields and characteristics and measurement of risk are described. The risk identification,
risk analysis and risk response in the risk management process are then explained,
respectively.
This research characterizes risk and uncertainty into three components i.e.
1) Risk/uncertainty event,
2) Probability of occurrence, and
3) Outcome: potential loss/gain.
Practically, the definition of risk and uncertainty are basically different based on ‘position’
of parties in project. Since this research considers the importance of integration of
multiple parties’ views in the scope, we also consider this issue in defining definition of
risk and uncertainty here.
Based on risk components and ‘position’ of parties, this research grounds on three
characteristics of event/condition including;
1) Identifiable/unidentifiable,
2) Quantifiable /unquantifiable and
3) Controllable/uncontrollable in defining the terms ‘risk’ and ‘uncertainty.’
45

In particular I focused on the following issues: the actors’ participation in the project
phases, importance of risk management in different phases, risk identification, analysis
and response through the phases, collaboration in managing risks and influence of the
actors on the risk management process. This section aims at discussing the results and
developing directions for future research. I found that participation in the different phases
of a project was governed by the actors’ roles in the construction process. In particular all
contractors participated in the construction phase and all consultants participated in the
planning phase. Construction was the phase where the majority of respondents
participated, while the participation in the programme phase was very low. Neither
contractors nor clients were sufficiently involved in the programme phase. The planning
and construction phases were identified by all actors as the most important for risk
management. In these phases risk identification, risk assessment and risk response were
mostly performed. An important question to investigate further is: what the actors can
gain by participating in all phases of the project. I foresee that participation of the actor in
all phases of the construction process leads to more effective risk management through
more intensive information and knowledge exchange and earlier identification and
assessment of potential project risks. The results of the survey show that the roles of the
actors in risk management processes are strongly connected to their participation in the
project’s phases. Thus risk identification, risk assessment and risk response were mostly
performed: in the programme phase by the client; in the planning phase jointly by the
client and the consultant; in the procurement and construction phases mostly by the
contractor. The planning and construction phases are those where joint risk management
was mainly used by the actors.
For this purpose I conducted a questionnaire survey of clients, contractors and consultants.
The overall conclusion is that, according to project actors, risk management is strongly
linked to the construction phase. Most of risk processes are performed in that phase and
contractors tend to be the most active group with a large influence on the risk management
process. These findings confirm some results of previously conducted surveys. Despite of
the recognized importance of the programme phase, this study showed that this phase does
not play an important role in the risk management process.
5.2 Recommendations
• I suggest that the procurement phase should play a more important role in joint
risk management. The risk management in the project should be based on the
actors shared view of what the risks are and who should carry them. One model
might be that the client prepares its view on the risk aspects of the project and the
tendering contractor responds with its respective risk analysis. The total picture of
the client’s and the contractor’s risk analyses and a shared insight will then form
the basis of a conscious risk management process and risk allocation in the
contract. There is a clear indication that collaboration through all phases of the
project increases the probability that a specific risk is managed by the actor who
has the best corresponding qualification.
46

• Collaboration in risk management was evaluated high by all actors and was most
intensive in the construction phase. On the contrary, evaluations of actors’
communication of known risks in the procurement phase are low. In particular the
contractors state that the client communicates the risks on a low level.
Collaboration between actors was very strong in the risk identification and risk
assessment processes. In the risk response process the degree of collaboration
decreases significantly according to the contractors’ opinion.
• This indicates that the project’s actors protect own interests and try to transfer the
identified risks to other actors. According to our studies contractors were most
active in performing risk identification, assessment and response systematically in
the project. Moreover, they had the largest influence on risk management in the
project from the perspective of all actors.
• Consultants had very low influence on project risk management. They were not
familiar with risk identification, risk assessment and risk response. However, it is
difficult to generalize the results because the consultant group is very small in the
sample.
• I suggest that the consultants should be involved more in risk management
because design is a very significant risk source in a construction Project. The goal
of the interviews is to investigate deeper the possible changes in a traditional
construction process, where risk management is performed in late phases.
• Finally, it is important to understand the factors, which determine whether or not
the actors consider an open discussion on risk management and risk sharing as
beneficial. quality and cost, it should be an open and conscious process through
all phases of the project. The aim of the paper was to examine the ways and extent
to which the actors are involved in risk management through the different phases
of the project.

47

End
6 EFERENCES
The following references have referred in order to prepare this Research Dissertation
report.
1. ADB guidelines on the use of Consultants by Asian Development Bank and its
Borrowers -April 2006.(pp 01-48)
2. Agreement for Consultancy Services in between RDA and PCI in associated with
RDC for CAARP Project - August 2005 (pp01-48).
3. Appendix –A Term of Reference for Construction Supervision Consultants
Assignment, CAARP -Nov 2003 (pp01-14)
4. General Condition of Contract /Particular Condition of Contract for Time based &
lump sum based for Consultants. (FIDIC-IV) International Federation of Consulting
Engineers Box 311 - CH-1215 Geneva 15 – Switzerland, SKYPE fidic. Secretariat -
Tele +41-22-799 49 00 - Fax +41-22-799 49 01 - fidic@fidic.org - FIDIC.org.
5. Project Performance Audit Report on the Second road improvement Project (Loan
864-SRI [SF]) in Sri Lanka -June 2000(pp 01-34).
6. Akintoye, A. S. & Macleod, M. J. (1997), Risk analysis and management in
construction. International Journal of Project Management, 15(1), 31-38.
7. Baccarini, D. & Archer, R. (2001), The risk ranking of projects: a methodology.
International Journal of Project Management, 19(3), 139-145.
8. Baloi, D. & Price, A. D. F. (2003), Modelling global risk factors affecting construction
cost performance. International Journal of Project Management, 21(4), 261-
269.
9. Barber, R. B. (2005), Understanding internally generated risks in projects.
International Journal of Project Management, 23(8), 584-590.
10. Del Cano, A. & De La Cruz, M. (2002), Integrated methodology for project risk
management. Journal of Construction Engineering and Management, 128(6),
473-485.
11. Flanagan, R. & Norman, G. (1993), Risk management and construction. Oxford:
48

Blackwell Scientific Publications. IEC 62198:2001 (2001), Project risk management –
Application guidelines, International Standard. Genéve: IEC.
12. Kähkönen, K. (2001), Integration of risk and opportunity thinking in projects. 4th
European Project Management Conference, PMI Europe 2001. London, UK.
13. Leung, H.M., Chuah, K.B. & Rao Tummala, V.M. (1998), A knowledge-based system
for identifying potential project risks. Omega, 26, 623-638.
14. Li, B., Akintoye, A., Edwards, P. J. and Hardcastle, C. (2005), The allocation of risk
in PPP/PFI construction projects in the UK. International Journal of Project
Management, 23(1), 25-35.
15. Lyons, T. & Skitmore, M. (2004), Project risk management in the Queensland
engineering construction industry: a survey. International Journal of Project
Management, 22(1), 51-61
16. Interchange Junction at Pok Fu Lam Road and Sassoon Road Risk Management Plan
P (1-16),
17. RISK MANAGEMENT IN THE DIFFERENT PHASES OF A CONSTRUCTION
PROJECT – A STUDY OF ACTORS’ INVOLVEMENT Ekaterina Osipova1
Department of Civil, Mining and Environmental Engineering
Luleå University of Technology, Luleå, Sweden pp (1-13)
18. Development of Multi-party Risk and Uncertainty Management Process for an
Infrastructure Project by Jirapong Pipattanapiwong P(1-261)
7. Appendices
The following annexure are attached accordingly
1. Appendix –A RDA’s Organization Chart
2. Appendix- B Stipulated Questionnaire
3. Appendix-C Activity Plan for Study in Bar Chart
49

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