ADDIS ABABA UNVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

SCHOOL OF COMMERCE
Assessment of Project Risk Management Practices in Construction
of Electro-Mechanical Projects:

The Case of Jehoiachin Techno Plc

By

Michael Hailu

Advisor: Bahran Asrat (Dr.)

A Research Proposal Submitted to Addis Ababa University School of

Commerce in Partial Fulfillment of the Requirements for the Award of
Master of Arts Degree in Project Management

Addis Ababa, Ethiopia

December, 2020

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 Table of contents

Contents
List of tables and list of figures....................................................................................................................3
Acronyms/abbreviations.............................................................................................................................3
ABSTRACT....................................................................................................................................................3
CHAPTER 1: INTRODUCTION........................................................................................................................4
1.1 Background of the study....................................................................................................................4
1.2 Statement of the problem.................................................................................................................8
1.3 Research questions..........................................................................................................................11
1.4 Research objectives – general and specific......................................................................................11
1.4.1 General Objective.....................................................................................................................11
1.4.2 Specific Objectives....................................................................................................................11
1.5 Significance of the study..................................................................................................................11
1.7 Potential limitations of the study....................................................................................................12
1.8 Organization of the study................................................................................................................13
1.9 Definition of key terms....................................................................................................................13
CHAPTER 2: REVIEW OF RELATED LITERATURE..........................................................................................14
2.1. Meaning and nature/characteristics of Project Risk Management.................................................14
2.1.1 Project Risk...............................................................................................................................14
2.1.2 Project Risk Management.........................................................................................................14
2.2 Importance of Risk management.....................................................................................................15
2.3 Project Risk Management Process...................................................................................................16
2.3.1 Plan Risk Management.............................................................................................................16
2.3.2 Identify Risks.............................................................................................................................17
2.3.3 Risk Analysis (Qualitative and Quantitative).............................................................................18
2.3.4 Plan Risk Responses..................................................................................................................19
2.3.5 Control Risks.............................................................................................................................19
2.4 Impact of risk management on construction projects success........................................................20
2.5 Review of Empirical Studies.............................................................................................................21
2.6 Conceptual Framework of the Study...............................................................................................22
CHAPTER 3: RESEARCH METHODOLOGIES.................................................................................................23

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 3.1 Research design...............................................................................................................................23
3.2 Description of study variables.........................................................................................................23
3.3 Description of study area and target population.............................................................................24
3.4 Sampling technique and sample size...............................................................................................25
3.5 Data collection – source, types, instruments, etc............................................................................25
3.6 Data analysis – model, techniques, software, etc............................................................................25
3.7 Reliability and validity analysis........................................................................................................26
References.................................................................................................................................................26
Research schedule.....................................................................................................................................28
Research Budget........................................................................................................................................29

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List of tables and list of figures
Figure 1: organizational Chart of Jehoiachin techno plc--------------------------------------------7
Figure 2.1 Project risk events/conditions across knowledge areas---------------------------------15
Figure 2.2 Plan Risk Management: Inputs, tools & techniques, and outputs---------------------16
Figure 2.3 Identify Risks: Inputs, tools & techniques, and outputs--------------------------------17
Figure 2.4 Qualitative risk Analysis: Inputs, tools & techniques, and outputs-------------------18
Figure 2.5 Quantitative risk Analysis: Inputs, tools & techniques, and outputs-----------------18
Figure 2.6 Plan Risk Responses: Inputs, tools & techniques, and outputs------------------------19
Figure 2.7 Control Risks: Inputs, tools & techniques, and outputs--------------------------------19
Figure 2.8 Conceptual frame works on project risk management---------------------------------22
Table 1: Tentative Research Schedule----------------------------------------------------------------28
Table 2: research budge---------------------------------------------------------------------------------29

Acronyms/abbreviations
RM: Risk Management
PRM: project Risk management
PM: project management
EM: Electro-Mechanical
GERD: Grand Ethiopian Renaissance Dam
BOP: Balance of Plant
METEC: Metals and Engineering Corporation
JTP: Jehoiachin Techno Plc

ABSTRACT

Risk management is a critical component to any successful engineering project. Understanding,

evaluating, and planning for risk properly, enables a project to stay on schedule and avoid
potential disaster. The main purpose of this study is to assess the practice of project risk
management in Jehoiachin techno plc during construction of electro-mechanical projects.
The study will be a descriptive type, which will make use of both qualitative and quantitative
approaches as methodology to address the research objective. Data will be collected through

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closed ended questionnaire; semi structured interview and document analysis. The respondents
will be comprises of project managers, Project teams, procurement team and the project steering
committee. The quantitative data will be analyzed statistically using Statistical Package for
Social Sciences and the qualitative data will be analyzed by relating the results with literatures.
In addition, reliability and validity will also be taken in to consideration. The main findings will
be expected to reveal the practice of risk identification, qualitative risk analysis, monitoring and
control as well as the practice of risk planning, risk response and quantitative risk analysis.
Finally recommendations will be suggested based on the result of the research for necessary
changes in the organization to handle the project risk issues in different levels with higher
performance.
Key words: Risk, Risk Management, Electro-mechanical projects, Project Risk Management

CHAPTER 1: INTRODUCTION

1.1 Background of the study

The construction products (roads, railways, airport, schools, hospitals, offices, shops, factories, water
supply, power systems, irrigation and agriculture systems; telecommunications and the like) provide the
necessary public infrastructure and private physical structures for many productive activities such as
services, commerce, utilities and other industries. Thus construction activities can be considered as major
source of economic growth, development and economic activities.

Electro mechanical projects are an important part of construction engineering, and the industries
involved in it cover the whole daily life of people including the installation of various equipment,
electrical, water supply and drainage, heating, ventilation, fire protection, communication and
automation control systems in industrial, civil and public works. The construction activities of
EM project cover all stages of equipment procurement, installation, commissioning, trial
operation and completion acceptance (Zichuan, 2020).

All projects are inherently risky because they are unique, constrained, complex, based on
assumptions, and performed by people (APM, 2006). The word ‘risk’ has become a common and
widely used part of today’s vocabulary, considering personal circumstances (health, pensions,
insurance, investments, etc.), society (terrorism, economic performance, food safety, etc.) and
also business (corporate governance, strategy, business continuity, etc.). Many of the institutions
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that humanity has built as well, could be viewed as a way to address uncertainty, including
politics, religion, philosophy, technology, laws, ethics and morality (Hillson, 2006). Therefore, it
seems that the human wisdom has been capable of identifying patterns for uncertainty and
develops heuristics to comfort it. As a result, not only is risk everywhere, but so is risk
management. As stated by Hillson, (2006), just as the presence of risk is recognized and accepted
as inevitable and unavoidable in every field of human endeavor, so there is a matching drive to
address risk as far as possible.

Project risk is an uncertain event or condition that, if it occurs, has a positive or negative effect
on one or more project objectives such as scope, schedule, cost, and quality. A risk may have one
or more causes and, if it occurs, it may have one or more impacts. A cause may be a given or
potential requirement, assumption, constraint, or condition that creates the possibility of negative
or positive outcomes (PMI, 2013). Project risk is an uncertain event or set of circumstances that,
should it occur, will have an effect on the achievement of the project’s objectives (APM, 2006).
Risk management is the process of identifying, assessing and controlling threats to an
organization's capital and earnings. These threats, or risks, could stem from a wide variety of
sources, including financial uncertainty, legal liabilities, strategic management errors, accidents
and natural disasters.
PRM includes the processes of conducting risk management planning, identification, analysis,
response planning, and controlling risk on a project. The objectives of project risk management
are to increase the likelihood and impact of positive events, and decrease the likelihood and
impact of negative events in the project (PMI, 2013).
There are uncountable EM projects, which have been transforming our world economically, from
time to time. EM engineering brings groundbreaking innovations year after year. Projects like
hydropower plant and Sugar development electrometrical projects are Mega projects that
increase long term competitiveness and stimulate economy especially in a country like Ethiopia.
The world has been constructing uncountable EM projects like Cement and sugar factories, Food
and Beverage, Textile, Mining and other so many types of electrometrical projects.

Literature shows that RM in engineering projects is full of deficiencies that affect its
effectiveness as a project management function and in the end, projects’ performance. For many
years, risk management in engineering construction projects has been approached using a

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reductionist approach that produces poor results and limits the quality of project management
(Alfredo F, S. et al. / Procedia – S&B Sciences 119 (2014) 653 – 662). For example, most of the
times risk is handled through the application of contingencies (money) or floats (time) that are
not determined based on a comprehensive analysis of the risks that can affect a particular project,
and that in many cases are clearly insufficient to cover the consequences of risks that do occur
during the project realization. Then, in most of the cases projects end with costs overrun and late.

Preliminary recent research results in Chile have shown that companies that hire construction
services on a recurring basis do not systematically apply risk management practices in projects,
which has resulted in negative consequences for the performance of projects (Wolbers, 2011;
Howard and Serpell, 2012). Additionally, a research work by Palma (2007) on claims and
contract disputes in a number of construction projects, had reflected the occurrence of a number
of risks that were not well analyzed or integrated by either parties, customers or contractors, and
that were one of the main causes of some of those claims and disputes.

When we come to a developing country like Ethiopia, there are so many EM projects which are
completed with cost overrun, lately finished with poor quality and even there are suspended
projects that are not yet finished due to lack or poor project risk management system.

Omo-Kuraz sugar development project is the showcase project of the state-owned Ethiopian
Sugar Corporation under the country’s first five-year growth and transformation plan launched
nearly a decade ago. One of its central objectives was to meet increasing local demand for sugar.
It also aimed to become a net exporter of sweeteners, and to create hundreds of thousands of
jobs. This was to be achieved through the development of large-scale irrigated sugarcane estates.
But today, Kuraz is just one example of the disappointing results of a decade of state-led sugar
industrialization (Benedikt.K,2019).

Jehoiachin Techno Pvt. Ltd. Co. is a young and energetic company established according to the
Ethiopian laws governing the establishment of private companies. It has emerged as a
consummate high-tech solution provider in the areas of electrical, electromechanical, industrial
automation and instrumentation. The company has been involving in supplying, installation,
testing, and commissioning of EM projects. The company has been engaging as sub-contractor in
design and installation of the mega projects like GERD Hydro power project and Sugar factories.

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JTP has been facing several obstacles on its way to participating in constructing different EM
projects due to different factors. And this has been causing Cost overrun, and time delay in those
projects which forced the company for extra cost. Therefore, evaluating the project risk
management methodology which is used by Jehoiachin techno plc is indispensable for
identifying the weak side of risk management practices and to generate the effective risk
management system for the successful completion of future projects.

The technical staffs of the company are proven to be well experienced in their respective areas
and have worked under different capacities in various governmental and non-governmental
organizations and industries. As they have been rendering industrial and engineering support
services for the last 15+ years, it has got savvy collection in the group. As shown in the
organizational chart of figure 1, the management Team of the company is composed of a
Managing Director and division managers all of whom are qualified Engineers, Technologists
and IT professionals themselves. This has created conducive environment to render high quality
and prompt services for its customers, past present and future.

Figure 1: organizational Char of Jehoiachin techno plc.

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1.2 Statement of the problem
The Ministry of Industry of the Federal Democratic Republic of Ethiopia mission is to promote
and expand the development of industry by creating conducive enabling environment for the
development of investment and technological capacity of the industry sector by rendering
efficient support and services to the development investor. Based on that promotion, there has
been increased investment in the development and expansion of various infrastructure projects
(Mo UDC, 2012), During the first Growth and Transportation Plan (2010/11-2014/15) There was
significant investment in housing, transportation, dam construction, accompanied by industry
development, such as the construction of Industry Park, sugar factory construction, etc., in
different parts of the country, however, several projects failing either before completion and
delivery or after, and exposed to delay, poor quality and cost overrun (Bacha et al., 2020).
The concept of risk management emerged as a continuous process followed by any project to
address the risks associated with its activities and implementations. It is concerned with the
investigation of the risks involved in the project in order to enable project management to deal
with future risks and difficulties that could hamper its track. In addition, it contributes to the
efficient use of resources that affect the success of the project (Hani, 2017).
According to European Journal of Business and Management (vol.9, 2017) Previous studies in
the project management in information technology and construction have shown that the
application of risk management has affected project performance in terms of efficiency,
performance improvement and productivity enhancement. Moreover, the lack of project risk
management is one of the reasons for failure of projects such as failure to comply with the
deadlines of the project, increasing cost and poor quality performance.

Project risk management aims to implement projects according to the approved budget, on time
and within the required specifications. Risk management has been closely associated with project
management as one of the potential threats to the project, which may lead to disparities in
achieving the pre-defined objectives and the success of the project (Holt, 2004). The traditional
view of project risk management emphasizes the importance of planning as one of its main
processes and linked to project activities in an integrated way throughout its life cycle (Dvir et
al., 2002). Several models and frameworks for risk management and managing project
uncertainties have appeared as an attempt to better regulate and apply risk and uncertainty

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management (Mills, Donald, 2001). Olsson (2008) argued that risk management is critical to the
success of the project as the organization is able to deal with various risks and threats.

Roque Rabechini and Marly Monteiro (2013) made a survey of 415 projects at different levels of
complexity in different industrial sectors in several states of Brazil; the result of their study
demonstrates that adopting risk management practices has a significant positive impact on
project success. They also show a positive impact from the presence of a risk manager on project
success.
According Emmanuel Rwagasana (2019) the construction Industry of Rwanda is facing critical
risk management practices in construction projects due to the identification of the risk factors
with high impact and high chance for occurrence which fall under the criteria of logistics,
physical, construction, subcontractors and design related factors. A major portion of construction
companies in Rwanda deal mostly with expert systems which includes software package,
decision support system and computer-based analyses techniques, direct judgement using
experience and personal skills, transfer or sharing risk to/with other parts and comparing analysis
which means comparing similar projects with similar conditions(Emmanuel,2019). However,
Project risk monitors should seek more Risk analysis techniques that may change the project
teams.
Peter Mwangi (2015) reveal on his study that construction industry in Kenya is prone to several
risks with contractors lacking knowledge about them and thus there isn’t any risk management
procedure in place and where responded to it is in a haphazard way, in which its consequence
created over cost, time delay and poor quality of projects.
Researches like Fertuna (2019) Imran (2017) and Yehualashet (2019) shows that many
construction and other project organizations in Ethiopia doesn’t practice formal risk management
standards or doesn’t practice proper risk management system, most of risks are responded by
their knowledge and experience, this has been its own impact on the cost and schedule of the
projects.
Jehoiachin techno plc has been facing a problem of completing projects with cost overrun and
overschedule and even there were times the company terminated the project without completed
or after finished 80 to 90 percent.

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This research will investigate whether risk management is included in the project management
process of electromechanical projects. It examines also if formal risk management standards are
applied and also identifies which steps of risk management procedures are included in the
informal risk management processes. Further, it identifies major risk factors that Jehoiachin
techno plc is facing during electro mechanical projects construction.
Organizations can practice risk management by applying available formal models or they could
define their own ad-hoc risk management process by conducting the risk management steps as it
fits in their project management. This research will explore the impact of employment of formal
risk management techniques on success of projects.
With this, the study looks into success rate of projects employing formal risk management
models compared to those which do not, even if they may practice ad-hoc risk management.
Finally, the study investigates the relationship between success rate of projects in organizations
practicing either formal or ad-hoc risk management compared to those which do not practice any
form of risk management at all.
1.3 Research questions
More specifically the study will try to answer the following basic questions, to address the
purpose and objectives of the study.
What is the extent to which project risk management is practiced in the EM projects?
What techniques are used for assessing the level of occurrence and impact of risks in the
EM projects?
How is the risk management processes risk planning, risk identification, risk analysis,
response and risk monitoring and control applied in practice at EM projects?
What are the common risk response planning and monitoring strategies in your
organization?
What are the challenges encountered in implementing the risk management process
practice?

1.4 Research objectives – general and specific

1.4.1 General Objective
The general objective of this research work is to assess the practice of project risk
management throughout the project life cycle of Jehoiachin Techno plc EM projects and
develop conceptual risk management framework for the organization.

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1.4.2 Specific Objectives
The study intends to achieve the following specific objectives:

 To identify the extent to which project risk management is practiced in the EM project of
the Organization.
 To realize the effectiveness of the risk management methods and techniques used in EM
project by the organization.
 To assess how risk management process is applied in the EM Projects.
 To assess the common risk response planning and monitoring strategies used.
 To identify challenges in implementation of risk management in the EM projects.
1.5 Significance of the study
The hugeness and complexity of EM projects leaves a lot of scope for various environmental,
socio-political and other unforeseen problems during conceptual phase, design, procurement,
execution, turnover and startup which, leads to time and cost overruns in projects and
compromise in quality (Nadeem et’ al, 2010: 16). In order to tackle this challenge and
achieve the project objectives in terms of time, cost, quality, safety and environmental
sustainability, there must be an effective and formal risk management system (Zou, Zhang
and Wang, 2005: 1).
In Ethiopia a lot of EM Projects have been constructed in recent years and some are under
construction by local companies as contractor and sub-contractor, like Sigma, Mesfin,
Jehoiachin and METEC etc. However, these projects have been facing different challenges in
distinct phases of their project life cycle. Scope change, design problem, right of way
problem, delay, and quality problems are some of the challenges that will lead to additional
cost and loss of value, specially Mega projects like Sugar sectors, GERD and other EM
projects have not been completed within the time schedule and allocated budget (MoUDC,
2012). The study is expected to provide a conceptual RM framework and practical
suggestions and recommendations for upgrading the risk management practice in the EM
projects which can lead to high performance execution of the projects. Therefore, this study
will be mainly significance for Jehoiachin Techno plc and other electro mechanical
contractors.
1.6 Scope of the study

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 Investigating and reaching on all project risk management practice of the EM projects has
been constructed under JTP requires extensive research, much more time, detail information,
and energy. Hence, the scope of the research will be limited to extent of assessing,
evaluating, analyzing, describing and identifying project risk management practices in EM
projects of GERD and OMO-Kuraz Sugar development, and will be realized through
questionnaire, desk studies, case studies, document analysis and development of risk
management framework.

1.7 Potential limitations of the study

The expected potential limitations that can affect the conducting of the study are: Unavailability
of sufficient practical and empirical analysis on the project risk management practice of JTP;
lack of clear and well-handled information; and findings may not be as accurate as they should
be because of methodological, conceptual and instrumental issues, responses from respondents
may not be accurate enough as it depends on their willingness, level of awareness, personal
conditions and others having a direct effect on the preciseness of the findings.
1.8 Organization of the study
The research paper will be organized in five chapters. Chapter one is an introductory part which
contains background of the study, statement of the problem, research questions, objectives of the
study, significance of the study, definition of key terms, scope, Potential limitations and
organization of the study. Review of related literature which includes both empirical and
theoretical literature will be discussed in chapter two. The third chapter will cover research
design and methodology for achieving the objectives of the study. The fourth chapter will focus
on the analysis of findings and discussion part. The last chapter will deal the conclusions and
recommendations, which forwards based on the major findings of the study.

1.9 Definition of key terms

Project—According to Turner (1992), Project is an endeavor in which human, material and
financial resources are organized in a novel way, to undertake a unique scope of work of given
specification, within constraints of cost, time and quality, so as to achieve unitary and beneficial
change through the delivery of quantified and qualitative objectives.

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Project Management—the application of knowledge, skills, tools, and techniques
to project activities to meet the project requirements

Project life cycle— the series of phases that a project passes through from its initiation to its
closure

Risk: The likelihood that a project will fail to meet its objectives

Plan risk Management—the process of defining how to conduct risk management activities for
a project.
Identify risks—the process of determining which risks may affect the project and documenting
their characteristics.
Perform Qualitative risk Analysis—the process of prioritizing risks for further analysis or
action by assessing and combining their probability of occurrence and impact.
Perform Quantitative risk Analysis—the process of numerically analyzing the effect of
identified risks on overall project objectives.
Plan risk responses—the process of developing options and actions to enhance opportunities
and to reduce threats to project objectives
Control risks—the process of implementing risk response plans, tracking identified risks,
monitoring residual risks, identifying new risks, and evaluating risk process effectiveness
throughout the project.

CHAPTER 2: REVIEW OF RELATED LITERATURE

2.1. Meaning and nature/characteristics of Project Risk Management
2.1.1 Project Risk
Project risk is the combination of probability of an event occurring and its consequences for
project objectives, other times positive and others negative (Chapman, Ward, 2003). Risk is not
only related to a specific point of actions, but it also relates to future project conditions.
Conditions can change during project life cycle and may turn out to be favorable or unfavorable.
In addition, it is very difficult to guess any change in the future conditions of a project, and so to
estimate all the potential risks in the early stages of the project life cycle. Risk should consider
both the positive and negative effects of a project objective (PMI, 2013). This is a broad view of
risk that includes the terms of threats and opportunities, but is something that can work in theory

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and fail in practice. Risks and uncertainty could be addressed either as random or epistemic.
Random risk means that we can estimate it using probabilities but it still has random outcomes,
not predictable. This type of risk can occur because of natural unpredictable. The knowledge of
experts cannot be expected to reduce random uncertainty although their knowledge may be
useful in quantifying the uncertainty (Pitz et al, 2000).
2.1.2 Project Risk Management
The term project risk management can be defined differently by different scholars. PMBOK
(2013) states that project risk management “includes the processes of conducting risk
management planning, identification, analysis, response planning, and controlling risk on a
project.” This indicates that project risk management is not a onetime activity. Rather it is a
continuous activity that takes place throughout the project life cycle. The objectives of project
risk management are to amplify the chances and impact of positive situations, and reduce the
chances and impact of negative results in the project.
Kerzner (2003:655) also have similar definition with PMBOK that “risk management is the act
or practice of dealing with risk. It includes planning for risk, assessing (identifying and
analyzing) risk issues, developing risk handling strategies, and monitoring risks to determine
how they have changed. Proper risk management is proactive rather than reactive.” What can be
understood from this idea is that project risk management is not what is immediately thought of
when the risk happens. Rather it needs thorough planning and should be practiced throughout the
project. According to Kerzner (2003:655) risk management is not a separate project office
activity assigned to a risk management department, but rather is one aspect of sound project
management.” It must be “closely coupled with key project processes, including but not limited
to: overall project management, systems engineering, cost, scope, quality, and schedule.
2.2 Importance of Risk management
According to Dieter (2013) Project risk management plays a key role in achieving the project's
objectives by identifying, analyzing and responding to risks that impact on them throughout the
life of a project. It plays a key role in selecting good projects, determining project scope and
developing realistic estimates, thereby contributing to a successful project outcome. Through
project risk identification and analysis, information is made available about the viability of the
project and to support project planning. Project risk management identifies, and keeps
stakeholders fully informed about, possible risk events and conditions. The major outcome of

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project risk management is an improved probability that project value realization will be optimal
and the project will be a success.

Unsatisfactory performance of project risk management can have negative outcomes. An

unrealistic belief can be generated that all risks have been accounted for and that there are no
further concerns. It may also cause the project to be shut down unnecessarily, thereby not
realizing the positive risks that may have been on offer. To avoid failure, the organization needs
to be well aware that risk management is not free; it often adds substantial costs and time to the
completion of the project (Dieter.2013).

Project risk management is regarded as the least mature of all project management knowledge
areas (Schwalbe 2007). The reason is the high degree of interaction with all the other project
knowledge areas. It is impossible to identify every possible project risk within these project areas
because of the dynamic nature of projects. To demonstrate the diversity of possible project risk
events, Figure 2.1 is provided. It gives examples of possible negative risk conditions that can be
encountered in each of the project knowledge areas.

Figure 2.1 Project risk events/conditions across knowledge areas (source: Dieter, 2013)

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2.3 Project Risk Management Process
Risk management is a procedure to handle the risks in a project and try to mitigate their effects,
(Toakley, 1989). According to Kerzner (2003), a risk management strategy must be established
early in a project and that risk is continually addressed throughout the project life cycle.
According to the Project Management Body of Knowledge (2013), Risk management contains
the following processes:
o Plan Risk Management
o Identify Risks
o Risk Analysis (Qualitative and Quantitative)
o Plan Risk Responses
o Control Risks

2.3.1 Plan Risk Management

Plan Risk Management is the process of defining how to conduct risk management activities for
a project. The key benefit of this process is to ensure that the degree, type, and visibility of risk
management are commensurate with both the risks and the importance of the project to the
organization. The risk management plan is vital to communicate with and obtain agreement and
support from all stakeholders to ensure the risk management process is supported and performed
effectively over the project life cycle (PMI, 2013). The inputs, tools and techniques, and outputs
of this process are depicted in Figure2.1.

Fi
gure 2.2 Plan Risk Management: Inputs, tools & techniques, and outputs. (Source: PMI, 2013)

Planning is the detailed formulation of a program of action for the management of risk. It is the
process to develop and document an organized, comprehensive, and interactive risk management

16
strategy, to determine the methods to be used to execute a program‘s risk management strategy,
to plan for adequate resources (Kerzner, 2009)
2.3.2 Identify Risks
Identify Risks is the process of determining which risks may affect the project and documenting
their characteristics. The key benefit of this process is the documentation of existing risks and the
knowledge and ability it provides to the project team to anticipate events (PMI, 2013). The
inputs, tools and techniques, and outputs of this process are depicted in Figure2.2.

F
igure 2.3 Identify Risks: Inputs, tools & techniques, and outputs. (Source: MI, 2013)

Purpose of the risk identification is to identify all significant sources of risk in a project and the
causes of them (Bing, et al, 1999). The process by which risk identification is accomplished is
varied between organizations but usually include one or more of the followings: interviews,
brainstorming sessions into risk teams, site visits and a large volume of data from previous
experience (Akintola., et al, 1997). Risk identification must continue through all project phases
(Kerzner, 2009).
2.3.3 Risk Analysis (Qualitative and Quantitative)
2.3.3.1 Perform Qualitative Risk Analysis
Perform Qualitative Risk Analysis is the process of prioritizing risks for further analysis or
action by assessing and combining their probability of occurrence and impact. The key benefit of
this process is that it enables project managers to reduce the level of uncertainty and to focus on

17
high priority risks (PMI, 2013). The inputs, tools and techniques, and outputs of this process are
depicted in Figure 2.3

Fi
gure 2.4 Qualitative risk Analysis: Inputs, tools & techniques, and outputs (Source: PMI, 2013)

2.3.3.2 Perform Quantitative Risk Analysis

Perform Quantitative Risk Analysis is the process of numerically analyzing the effect of
identified risks on overall project objectives. The key benefit of this process is that it produces
quantitative risk information to support decision making in order to reduce project uncertainty
(PMI, 2013). The inputs, tools and techniques, and outputs of this process are depicted in Figure
2.4

Figure 2.5 Quantitative risk Analysis: Inputs, tools & techniques, and outputs (Source: PMI,
2013)
2.3.4 Plan Risk Responses
Plan Risk Responses is the process of developing options and actions to enhance opportunities
and to reduce threats to project objectives. The key benefit of this process is that it addresses the
risks by their priority, inserting resources and activities into the budget, schedule and project
management plan as needed (PMI, 2013). The inputs, tools and techniques, and outputs of this
process are depicted in Figure2.5
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 F
igure 2.6 Plan Risk Responses: Inputs, tools & techniques, and outputs (Source: PMI, 2013)
According to Kerzner (2009), risk handling includes specific methods and techniques to deal
with known risks and opportunities, identifies who is responsible for the risk or opportunity, and
provides an estimate of the resources associated with handling the risk or opportunity, if any. It
involves planning and execution with the objective of reducing risks to an acceptable level and
exploiting potential opportunities.
2.3.5 Control Risks
Control Risks is the process of implementing risk response plans, tracking identified risks,
monitoring residual risks, identifying new risks, and evaluating risk process effectiveness
throughout the project. The key benefit of this process is that it improves efficiency of the risk
approach throughout the project life cycle to continuously optimize risk responses (PMI,
2013).The inputs, tools and techniques, and outputs of this process are depicted in Figure 2.6

Fig
ure 2.7 Control Risks: Inputs, tools & techniques, and outputs (Source: PMI, 2013)
According to Kerzner (2009), the monitoring and control process systematically tracks and
evaluates the effectiveness of risk response actions against established metrics. Monitoring
results may also provide a basis for developing additional risk response strategies, or updating
existing risk response strategies, and reanalyzing known risks. In some cases, monitoring results
may also be used to identify new risks and revise some aspects of risk planning. The key to the

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risk monitoring and control process is to establish a cost, technical performance, and schedule
management indicator system over the program that the program manager and other key
personnel use to evaluate the status of the program. The indicator system should be designed to
provide early warning of potential problems to allow management actions. Risk monitoring and
control is not a problem-solving technique but, rather a proactive technique to obtain objective
information on the progress to date in reducing risks to acceptable levels.
2.4 Impact of risk management on construction projects success
According to Al-Balqa (2013) the construction industry has changed rapidly over the past 20
years; companies are faced with more risk and uncertainty than ever before. Clients expect more,
most importantly, they do not want surprises, and are more likely to engage in litigation when
things go wrong, these things make the project managers in Jordan and worldwide to think more
about the relationship between these new risks and uncertainties and the success of the project
they are managing and forced them to ask ―Does risk management contribute to project
success?
Risk management has become an important part of the management process for any project. In
fact, Risk management came into the foreground of business literature during the last two
decades of the 20th century (Loose more et al., 2006). Actually, (Akintoye et al,2003) believes
that the circumstances within the construction industry had led to adopting risk management and
analysis into practice. Risk is one of key factors that can positively affect working effectively
inside the firm if it was practiced in the proper way. By doing such organization can achieve
capital value of rareness and capital value of limitability via which the firm can build stronger
competitive advantage by developing, maintaining and retaining core competencies; which can
in its turn maximize the organization’s market share, reputation maximize shareholder equity and
stake holder goals and maintaining the maturity stage of the firm’s life cycle in which it can
maintain the peak stage for all of its activities by recognizing, encouraging and retaining the peak
performance.
An effective use of project management techniques such as risk and value management are
considered as key supporting processes and to add to them quality, cost, time and change control
(Fewings, 2005); all together generate an integrated approach to the project success.

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2.5 Review of Empirical Studies
There are some local studies which conducted research on the area of project risk management in
which, most of them focused on construction, information technology and banking projects. this
section will cover the review of some of them.
Mesfin (2014) studied the construction contract risk management practices in Ethiopian building
construction projects. The objectives of the research were to identify the level of use of
construction contract risk management techniques in Ethiopian building projects, to test the level
of awareness of different contractual parties involved in Ethiopian building construction projects
and to study the effect of different areas and causes of risk in meeting project objectives. The
research finding indicated that most of the parties involved in the Ethiopian building construction
projects have heard of the concept of risk management but lack adequate knowledge about the
principles of the risk management.

Frezewd (2016) studied the practice of project risk management in Batu and Dukem Town water
supply projects. Descriptive research method was employed in this study. Some of the
conclusions of this study was there is no policy or guideline that is designed on how to manage
risks in the projects, the risk management is not implemented properly in which the project does
not have a carefully prepared plan for risk management. A standard risk management process
also does not exist within the projects. Even though, relevant stakeholders are involved in the
planning process of the projects, thorough planning is not performed.
According to Andenet (2018) who conducted a study on project risk management of bank of
Abyssinia ISAP project reveal that, project teams didn’t have deep experience in risk
management. In addition, there was no documented risk register from previous projects that
support the project team in risk identification and analysis. Moreover, the organization policy
and procedure was inadequate to guide the project team to go through a disciplined risk
management process. As a result, the project teams were unable to link business analysis of
threats and opportunities and analysis of project risk strongly. In general, as per the study, the
bank doesn’t follow a standard project risk management practice in the project.
2.6 Conceptual Framework of the Study
The study will assess project risk management practice in construction of EM projects. Hence
the conceptual framework for this study will be derived from different literature reviews related
to project risk management. Since the objectives of project risk management are to increase the

21
likelihood and impact of positive events, and decrease the likelihood and impact of negative
events in the project, literatures reviewed from PMBOK (2013) and Kerzner (2003) is a better
source of idea. Project risk management includes the processes of conducting risk management
planning, identification, analysis, response planning, and controlling risk on a project as it is
shown in figure 2.8 which is the conceptual frame work of the study

Plan Risk Management

Identify Risks

Perform Qualitative Risk Analysis

Monitor and control
Risks

Perform Quantitative Risk Analysis

Plan Risk Response

Figure 2.8 Conceptual frame works on project risk management

CHAPTER 3: RESEARCH METHODOLOGIES

3.1 Research design
The purpose of the study is assessing of project risk management practice in construction of EM
projects by the company called JTP. In order to achieve the objective of the study, an appropriate
choice of research design is required. Since the study requires to accurately and systematically
describing the existing practices of project risk management of EM projects, descriptive method
will be applied. In this method, both quantitative and qualitative data will be used. The
quantitative data will be obtained through questionnaire (closed-ended questions) and the

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qualitative data will be gathered through open-ended questions, interview and document
analysis.
3.2 Description of study variables
There are so many variables in research that it could be impossible or extremely difficult to
account for all of them due to the fact that what can be considered a variable in one study may
not necessarily be a variable in another study, A variable is an object, event, idea, feeling, time
period, or any other type of category we are trying to measure (Sitwe, 2011). There are two
major types of variables-independent and dependent. The descriptive independent variables
applies in this study are project risk management, Risk Management Plan, Risk Identification,
Risk Analysis, Risk Response and Monitoring & Control Risks.
Project risk management is one of the ten (10) knowledge areas of project management. And it
includes the processes of conducting risk management planning, identification, analysis,
response planning, and controlling risk on a project. The objectives of project risk management
are to increase the likelihood and impact of positive events, and decrease the likelihood and
impact of negative events in the project (PMI, 2013).
Risk Management Plan is the process of defining how to conduct risk management activities
for a project. The key benefit of this process is it ensures that the degree, type, and visibility of
risk management are commensurate with both the risks and the importance of the project to the
organization.
Risk Identification is the process of determining which risks may affect the project and
documenting their characteristics. The key benefit of this process is the documentation of
existing risks and the knowledge and ability it provides to the project team to anticipate events
(PMI, 2013).
Risk Analysis is Performing of Qualitative and Quantitative Risk Analysis in which Qualitative
Risk Analysis is the process of prioritizing risks for further analysis or action by assessing and
combining their probability of occurrence and impact. The key benefit of this process is that it
enables project managers to reduce the level of uncertainty and to focus on high-priority risks,
and Quantitative Risk Analysis is the process of numerically analyzing the effect of identified
risks on overall project objectives. The key benefit of this process is that it produces quantitative
risk information to support decision making in order to reduce project uncertainty (PMI, 2013).

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Risk Response is the process of developing options and actions to enhance opportunities and to
reduce threats to project objectives. The key benefit of this process is that it addresses the risks
by their priority, inserting resources and activities into the budget, schedule and project
management plan as needed (PMI, 2013).
Monitoring & Control Risks is the process of implementing risk response plans, tracking
identified risks, monitoring residual risks, identifying new risks, and evaluating risk process
effectiveness throughout the project. The key benefit of this process is that it improves efficiency
of the risk approach throughout the project life cycle to continuously optimize risk responses
(PMI, 2013).
3.3 Description of study area and target population
The study of project risk management practice will be conducted on the construction of EM
projects which have been constructed by JTP. JTP has been participating in Design, supplying,
installation, testing and commissioning of different EM and Automation projects including mega
projects Like GERD and Sugar factory project as contractor and sub-contractor for the last 15
years. The study will be limited to the assessment of risk management practice used by JTP
when participating on the construction of EM part of the GERD and instrumentation installation
of OMO-Kuraz-sugar factory as sub-contractor from the main contractor of METEC. GERD is
the Hydropower plant in which the main contractor of EM part of the project is METEC and the
main contractor of the dam which is the civil work is SALINI IMPREGILO S.P.A.
The target population of the study will be all professionals including project managers, senior
project engineers, designers, marketing manager and supporting staffs that have been responsible
in planning, design, procurement, executing, managing and supporting the overall project’s
implementation of the organization, and the target population are expected to be total of 28 in
number.
3.4 Sampling technique and sample size
The general objective of the study is to assess the project risk management practices in
construction EM projects by JTP. As non-probability sampling techniques are often appropriate
for exploratory and research, and since in these types of research, the aim is not to test
a hypothesis about a broad population, but to develop an initial understanding of a small
population, it will be suitable for this study as the population of this study will be small. And this
sampling also provides us with an information-rich case study in which it enables to explore the

24
research question and gain theoretical insight (Saunders, Lewis &Thornhil 2009). All of the 27
population will be selected to fill a questionnaire since the number is manageable for data
collection through questionnaire. Out of 27 questionnaire distributed to the sample it is expected
95% will be received back. And 3 project Managers,1 marketing manager and 1 operations
manager will be selected no-randomly for interview.
3.5 Data collection – source, types, instruments, etc.
For achieving the purpose of the study both primary and secondary data will be collected
Primary sources of the data will be collected through questionnaire and interview whereas the
source of secondary data will be from existing research papers, journals and publication, books
and websites. The questionnaire will be distributed in person and by email. After data collection
through questionnaire is completed, the researcher will conduct an interview with the selected
sample and analysis of the available document
A questionnaire will be designed from related researches and literature. And it will be used as the
main data collection instrument for this study and interview will be used to triangulate the data
obtained through the questionnaire. The researcher will give drafts of the questionnaire and
interview questions to his research advisor and colleagues.
3.6 Data analysis – model, techniques, software, etc.
In order to assess the practices of PRM in construction of EM projects in GERD particularly by
JTP, the study will be used both qualitative & quantitative approach of data analysis to get the
advantage of both. The data to be collected through interview will be analyzed by using
qualitative analysis and the data to be collected through questionnaire will be analyzed through
quantitative techniques. Hence, the researcher will be used primary source of data in addition to
reviewing of related literatures such as books, Articles, journals and magazines. Therefore, the
data to be gathered through questionnaires will be analyzed and presented using descriptive
statistics by the help of Statistical Package for Social Sciences (SPSS) version 23. Frequency,
percentages and mean will be applied for tabular presentations.
3.7 Reliability and validity analysis
To ensure the validity and reliability of the data to be used in this study, the researcher will try to
design the instruments from reliable sources such as published books, articles and previously
done researches in the area of the study. Besides, the researcher will get feedback for the
questionnaire and interview questions from the research advisor to minimize errors in the
instruments that can affect the reliability and validity of the study. The questionnaire will be also
25
pilot tested on individuals who will be involved in other projects before being distributed to the
participants of the study.

References
Akintola, SA, Malcolm, J. (1997). Risk analysis and management in construction, international
of management in engineering

Bufaied, A. (1987). Risks in the Construction Industry: their Causes and their Effects at the
Project Level Ph.D. Thesis, Manchester: University of Manchester, UMIST.

Flanagan, R. &Norman., G. (1995). Risk management and construction (365rded.), Oxford:

Black well Scientific

Frezewd, A. (2016). Practice of project risk management in Batu and Dukem town water supply
projects. Addis Ababa: MSc thesis Addis Ababa University

Getachew, Y. (2017). Analysis of risk management practices in construction companies:

focusing on yotek construction, Flintstone engineering and akir construction. Addis Ababa.

Getnet, A. (2019), Assessment of Project Risk Management Practices: The case of Commercial
Bank of Ethiopia Information Technology Infrastructure Library (ITIL) Project

Hani, J. (2017), Impact of Risk Management on Project Success: An Empirical Investigation in

Jordanian Ministry of Environment.

Hillson, D. and Murray-Webster, R. (2005), Understanding and managing risk attitude, 2nd ed.
Gower: Publishing Ltd., Burlington, VT.

Lewis, J. P. (2011). Project Planning, Scheduling and Control, (5th edn)., . McGraw-Hill
companies Inc.

Mnkandla, E. (2012) Assessing a Methodology‘s Project Risk Management Competence.

26
Journal of Contemporary Management

Peter, M. (2015), Assessment of effects of construction risks on project delivery among

contractors in Kenya.

Project Management Institute. (2013). Project Management Body of Knowledge (PMBOK

Guide): project risk management – fifth edition.

Roque, R., Marly, M. (2013), Understanding the Impact of Project Risk Management on Project
Performance: an Empirical Study.

Public Administration in Ethiopia (2020), Case Studies and Lessons for Sustainable
Development: Key Factors Contributing to Time and Cost Overrun in Mega Sugar
Construction Projects in Ethiopia

Yehualashet, L. (2019), Project Risk Management Practice in Ministry of Communication and

Information Technology: The case of Online Content Regulatory Legal Framework
Development Project (OCRLFDP).

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Research schedule
Table 1: Tentative Research Schedule (can be changed based on the advisor’s comment)
Research phase Objectives Duration
1. Background  Meet with Advisor for initial discussion 11th
research and November
 Conduct a more extensive review of relevant literature
literature review
 Refine the research questions

 Develop a theoretical framework

2. Research  Design questionnaires 23th
design planning December
 Identify online and offline channels for recruiting
participants

 Finalize sampling methods and data analysis methods

3. Data collection  Recruit participants and send out questionnaires 10th January
and preparation
 Conduct semi-structured interviews with selected
participants

 Transcribe and code interviews and clean survey data

4. Data analysis  Statistically analyze survey data 5th
February
 Conduct thematic analysis of interview transcripts

 Draft the results and discussion chapters

5. Writing  Complete a full thesis draft 25th
February
 Meet with Advisor to discuss feedback and revisions
6. Revision  Redraft based on feedback 10th
March
 Get Advisor approval for final draft

 Proof read

 Print, bind and submit

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Research Budget
Table 2: budget needed for the project work
Project activity Description Cost in Birr
Internet Expense for browsing website 1000 ETB
studies, learning in videos etc.
Data Collection & Analysis Printing questionnaire paper, 2000ETB
assistant payment in
distribution and some tea
coffee costs during interview
and other process.
Printing cost Printing and binding the final 700 ETB
paper
Equipment/IT/Software For editing, all equipment, IT 1300 ETB
costs, graphs etc. And for data
analysis
Total expected cost 5000 ETB

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