My Course Work 2

CHAPTER ONE
Introduction
1.1 Background to the Study
Risk is inherent in all human endeavours, including construction activities, and the risk
elements involved are diverse and varied (Ede, 2016). The scope of building activities
extends to risk management in planning, arranging and controlling activities and resources in
order to minimise the impact of uncertain events. Risk in construction has been the object of
attention because of time and cost associated with construction projects (Akintoye &
MacLeod, 2017). The collapse of building has been an issue of great concern to all and
sundry in Nigeria and yet these buildings are major contributors to the development of any
nation. Therefore, when a building collapses, it fails to render the functions which it should
perform to the people and the government. A building is regarded as collapsed if the whole
structure or part thereof has fallen down and therefore cannot serve the purpose for which it
was intended (John, 2017). When building collapses, it generates deep emotional reactions
from every segment of the population constituting great losses to the country in terms of
physical, human and material resources.in recent past there has been a lot of building collapse
and most of them are not insured (Obodoh, 2019). Mustafa and Al-Bahar (2015) have
identified some risk sources central to construction activities. These are physical,
environmental, design, logistics, financial, legal, political, construction and operation risks.
Carruth (2017) also identified some risk elements inherent in construction works. These
include site security and health and welfare requirements. However, the prudent contractor
will make sure that he has effectively managed his risk to the maximum extent possible,
including the use of insurance (Hansen, 2014; Charles, 2012). Also, the Nigerian construction
industry of today has been identified as an avenue for human tragedies and losses. Successful
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project deliveries are sometimes difficult to achieve, because of the various challenges
encountered, which result in failure of the building structure, total collapse, loss of lives and
property as well as unsustainability of our built environment (Kawu, 2013). Guiding against
these, Insurance Act Number 37 of 2003 was passed into law. Section 64(1) of the Insurance
Act 2003 stipulated that any building under construction above two floors should be insured
with a registered insurer in order to cover the owner/contractor’s liability in respect of
construction risks caused by his negligence or the negligence of his servants, agents or
consultants which may result in bodily injury or loss of life to or damage to property of any
workman on the site or of any member of the public (Insurance Act, 2015).
Furthermore, Charles (20013) observed that insurance coverage is needed during
construction to cover the value of the building itself, should the building being constructed be
damaged since buildings under construction present several special problems from a property
insurance standpoint. The problem is dynamic as the work progresses and the value of the
property changes virtually on a day-to-day basis. Ensuring effective compliance with rules
and regulations is an important factor in creating a well-functioning society and trust in
government. It is a key element in safeguarding health and safety, protecting the
environment, securing stable state revenue and delivering other essential public goals. This is
important from a social perspective and as a foundation of economic growth (Organization
for Economic Co-operation and Development OECD, 2013). Enforcement of regulations is
very vital in ensuring the effectiveness of regulations (Nnedinma, Umeokafor, David &
Boniface, 2014). The challenge for governments is to develop and apply enforcement
strategies that achieve the best possible outcomes by achieving the highest possible levels of
compliance, while keeping the costs and burden as low as possible (OECD, 2013). Some of
the challenges in the area of compulsory insurance of buildings under construction revolve
around poor compliance structure, ineffective implementation strategy by the insurance
2
regulator and lack of awareness on the part of the Nigerian public (Nigerian Business News,
2011). However, in spite of these laudable provisions of the law, majority of the buildings
under construction in the country that need to be insured according to the Insurance Act 2015,
do not have insurance cover and this trend has to be reversed in the interest of all
stakeholders (Adeusi, n.d.).
1.2 Statement of the Problem
The incidence of buildings failure and collapses in Nigeria has reached an alarming level and
the stakeholders need to wake up and stop treating these continuous occurrences with levity
(Akinyemi, 2016). On several occasions, it led to unnecessary loss of lives and destruction of
peoples’ properties, thus becoming an issue of major concern since it poses threat to the
national development of our great nation. The Nigerian Institute of Building (NIOB) has said
that Lagos State accounts for 60 per cent of reported cases of building collapse in Nigeria.
Because, on such every occasion, affected individuals are rendered homeless while
businesses are lost. Building collapse, though a common phenomenon all over the world is
more rampant and devastating in developing countries. It is a major problem in Nigeria and
mostly occurred in Lagos, which has the largest population of residents in the country. In
fact, it has now become a familiar occurrence, even to laymen on the streets in Nigeria. It is
established that in every stage of the building construction process, from initial investment
appraisal through to construction and use, the building construction is subjected to risks for
the parties involved. In recent times, there has been a lot of building collapse and most of
them are not insured as confirmed by the commissioner for insurance in the recent collapse of
21-story building at Gerard Road, Ikoyi which necessitated the call for enforcement of
compulsory insurance by the federal government. It seems there is apathy for risk financing
strategy by most building contractors either by transferring or retaining the risk to ensure
3
safety and completion of building projects. Therefore the study seeks to investigate risk
financing strategy and project success among building contractors in Lagos state.
1.3. Aim and Objectives of the Study
The aim of the study is to evaluate the significant effect of risk financing strategy among
building contractors in Nigeria in Lagos State. The specific objectives are to:
i. Examine the effect of risk transfer strategy on project success among building
contractors in Lagos State, Nigeria.
ii. Examine the effect of risk retention strategy on project success among building
contractors in Lagos state, Nigeria.
1.4. Research Questions
In line with the research objectives, the followings are the research questions of the study:
i. What is the significant influence of risk transfer strategy on project success among
building contractors in Lagos state?
ii. How does risk retention strategy influence project success among building contractors
in Lagos State?
1.5. Research Hypotheses
In line with the research objectives, the following null hypotheses were formulated for the
study:
H01: Risk transfer strategy does not have significant effect on project success among
building contractors in Lagos State, Nigeria.
H02: Risk retention strategy does not have significant effect on project success among
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1.6 Significance of the Study
The risks in building construction site today in Nigeria calls for a great concern upon
insurance companies which protection against damages to buildings while they are under
construction or renovation. This paper work intends to assist the clients and contractors on
the necessary precaution to follow during design and construction stage of a building project
to minimize the cost of risk that does occur in building projects since it constitute huge
amount of capitals. The study will also help the government ensure strategies to put in place
to ensure drastic reduction in building collapse by enforcing compulsory building
construction insurance and quality assurance test by relevant regulatory bodies before any
contractor can go ahead with any construction. The study will also help building contractors
to have a keen understanding of the likely risk that building construction is exposed to and
how they can be mitigated either through risk retention or risk transfer mechanism. The study
will help insurance companies to design an holistic and appropriate comprehensive cover for
builders and building contractors so that building collapse can be minimized.
1.7 Scope and Delimitations of the Study
The scope of the study is limited to the examining risk financing and project success in
building construction in Lagos State, Nigeria. The specific variables of interest are risk
retention and risk transfer strategies. The study covers 3 major clustered areas where there are
heavy construction sites frequently which are Ikoyi, Victoria Island and Lekki Phase 1 in
Lagos State. The study is also limited to the influence of risk transfer strategy and risk
retention strategy on project success among building contractors in Lagos State, Nigeria.
1.8 Definition of Terms
Client – a part that carries out or assigns others to carry out construction, demolition or land
work
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Contract – a mutually binding agreement that obligates the seller to provide the specified
product and obligates the buyer to pay for it.
Contractor – a performing organisation whose employees are most directly involved in
doing the work on the project.
Design-bid-build – a traditional procurement option where the client contracts separately
with a designer and a constructor.
Design-build – a procurement option where the contractor is responsible for construction and
the full design.
Effective risk management - doing the right things in a way to ensure that the project is risk
efficient and project objectives are achieved.
Partnering – a structured management approach to facilitate team working across
contractual boundaries.
Project – a unique process, consisting of a set of coordinated and controlled activities with
start and finish dates, undertaken to achieve an objective conforming to specific
requirements, including the constrains of time, cost and resources.
Project life cycle – a collection of generally sequential project phases whose name and
number are determined by the control needs of the organisation or organisations involved in
the project.
Risk – an implication of significant uncertainty, which may be upside and downside.
Risk management – a systematic process of identifying, analysing and responding to project
risks.
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Risk identification – a process of determining which risks might affect the project and
documenting their characteristics (PMI 2000).
Risk assessment – a process of assessing the impact and likelihood of identified risks (PMI
2000).
Risk response – a process of selection and implementation of measures to modify risk (IEC
2001). Uncertainty – a lack of certainty, involving variability and
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CHAPTER TWO
Literature Review
2.1 Preamble
This chapter presents relevant theoretical and empirical literature from similar earlier findings
in order to give necessary support and solid foundation to the study.
2.2 Conceptual Framework
2.2.1 Risk Management and Building Construction
The scope of building activities requires risk management as all the stages of building
construction has inherent risk (Drakes, 2016).The risk management in building construction
involves planning, arranging and controlling activities and resources in order to minimise the
impact of uncertain events. Risk in construction has been the object of attention because of
time and cost associated with construction projects (Akintoye & MacLeod, 2017). McKim
(2012), Healey (2012) and Perry and Hayes (2015) expressed risk as an exposure to
economic loss or gain arising from involvement in the construction process, but Mason
(2013) Moavenzadeh and Rossow (2016) regarded it as an exposure to loss only. According
to McKim (2012), it is necessary to understand the nature of risk before any knowledgeable
management of risk can occur.
Risk comes in many forms, and often the nature of risk depends on the situation. For
example, health risks cannot generally be managed in the same manner as the risks associated
with the transportation of toxic materials, and the risks associated with a space mission
cannot be managed the same as construction risks. Akintoye and Macleod (2017), Raftery
(2014), Williams and Heims (2019) and Toakley and Ling (2016) identified the current usage
or risk management techniques in the construction industry. These include risk premium, risk
adjusted discount rate, subjective probability, decision analysis, sensitivity analysis, Monte
Carlo simulation, stochastic dominance, Casper and intuition. However, in a study conducted
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by Odeyinka (2017) it was found that one of the major methods of managing construction
risks in the Nigerian construction industry is through transfer to insurance companies. Until
now the effectiveness of this method in managing construction risks in Nigeria has not been
investigated.
2.2.2 Risk in Building Construction Projects
According to Hamza et al., (2015), Construction projects are very complex and can pose
various internal and external risks. Construction risk is defined as any exposure to possible
loss (Surety, 2014). A strict set of codes, laws, and regulations must be followed during the
construction process to best avoid these risks. Unfortunately, there is no way to completely
avoid risks as there are bound to be unknown factors that arise over the course of a project.
One of the best ways to manage risks is to know the various types and how you can manage
them. If you can identify and categorize risks before you start a project, you can optimize
your risk management and avoid any possible losses. Renuka (2014), in their study pointed
some type of risks in the construction projects which include technical risks, environmental
risks, financial risks, logistical risks, socio-political risks and management related risks.
i. Technical Risks: Technical risks include anything that restricts you from creating the
product that your client wants. This can include uncertainty of resources and availability of
materials, inadequate site investigation, or incomplete design. These risks can commonly
occur when there are changes in project scope and requirements, and if there are design errors
or omissions.
ii. Environmental Risks: Environmental risks include natural disasters, weather, and
seasonal implications (Rausand, 2015). These risks are commonly overlooked when people
are unfamiliar with local conditions. If you are going to be working on a project in a new city,
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you need to become familiar with that region’s weather patterns. If you prepare for possible
weather risks, you are much more likely to avoid potential delays and losses.
iii. Financial Risks: Inflation, local taxes, and availability and fluctuation in foreign
exchange are a few of the possible financial risks you might incur during a construction
project. If you are working on a project internationally, it is important that you understand
how the foreign currency will be exchanged. Different countries have drastically different
taxes as well, so you need to take this into account before starting a project. Your finances are
going to look a lot different if you are working in a tax-free city versus a high-tax city.
iv. Logistical Risks: According to Rausand (2014), there are various logistical risks that need
to be addressed before starting a project. These risks include the availability of transportation
facilities and availability of equipment such as spare parts, fuel, and labour. Without
addressing these logistical issues, you risk huge project delays and losses.
v. Socio- Political Risks: Customs and import restrictions and difficulties disposing of
equipment are a few of the socio-political risks you may face during a construction project
(Rasand , 2011). Depending on where your project is, there are going to be different
regulations and codes that you must abide by. If you assume that each project is going to have
the same codes and regulations, you will be in for a rude awakening.
vi. Management Related Risks: The most common management related risk is uncertain
productivity of resources. Before you begin a project you need to be sure that you have
sufficient skilled staff and that you have adequately defined their roles and responsibilities.
Failing to do this can lead to disastrous losses. According to (Hair, 2013) As per Abrahamson
principles owner of the project is known as principal party. In this context, some critical risks
bore by principal party of the construction contract can be elaborated as below:
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i. Land Acquisition Risk: This is the prime risk for the principal of the project. The owner
of the project needs to have proper and legal; acquisition of the land for his construction
project, in the absence of proper acquisition of land, the entire project can be hindered due to
different legal obligations.
ii. Insufficient resources: Insufficiency of some crucial resources like land, finance, human
power can also be proved critical risk for a construction project. As construction project are
commenced for a longer period of time, sufficient amount of resources for contingent
situation is quite necessary for the owner.
iii. Delay in the project completion: The completion of project on time is one of the major
factors of the success of a construction project. Delay in the overall completion of the project
due to natural or manmade reasons, can cost quite heavily for owner of the project as he has
to invest a significant amount of money and time in such types of projects.
iv. Increased cost of the project: As generally construction projects are carried out for
longer period of time, fluctuations in the overall cost and prices of raw material and labor
over such a long period of time are quite natural phenomena. These fluctuations may lead to
increase the projected cost of the entire project. Although principals generally undertake
contingency reserves for such type of fluctuations, yet still these increments in cost of the
project can be probed quite critical risk for the project owner.
v. Deficiencies in infrastructure or services: There are a number of different other
infrastructural services that can affect the successful completion of the project. for insurance,
for a residential or commercial construction project, there is need of better electricity and
water facilities and better access of road. Deficiencies in infrastructure or services can lead to
make the project unsuccessful.
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vi. Design and construction defects: Defects in designing and constructing of the project
can lead to efficiency of the internal operations and quality of the output of the project. In this
direction, the project owner needs to have proper monitoring and effective evaluation of
outcome of the project.
vii. Political risk: Different types of political risks such as rules and regulation of
government regarding construction activities, frequent changes in the government and its
priorities, and incentives can hamper the success of construction projects in the most aversive
manner
viii. Market risk: In addition to other risks, risk related with market characteristics as well as
trends can also be considered some of the critical risks availed by the owner of the project.
Different types of market risks such as advertising of the project, Switching of potential
customers of the project towards other alternative projects and competitive rivalry within the
construction industry are some of the prominent market risk which decreases the profitability
of the construction project for its owner. According to Akinbola, (2015) a contractor is
required to face some critical risks throughout the entire stage of a construction project i.e
negotiation over contract terms and conditions deigning and construction of the building and
proper and careful maintenance and follow up the contract in the most effective manner.
Some of these risks can be listed as below:
i. Condition of Site: The existing working conditions of the construction site leads to present
risks in front of the contractors to finish the entire project on time. Different natural or
manmade problems can lead to delay the project delivery, which is quite problematic aspect
for a contractor.
ii. Social conditions: Lack of acceptance of the construction project by the society is the
factor that can lead to put question mark over successful accomplishment of the project and
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viability of project deliverable. There can be some unexpected incidents like labour strike,
religious and social belief of local people, and so on which are to be handled by the
contractor only.
iii. Defects in the construction and engineering: There can be some of critical defect in the
project which can only be identified in the finished project. The detection of such types of
defect becomes quite difficult for the contract during the construction process. These defects
can be proved quite critical
2.2.3 Concept of Builders Risk Insurance Policy
This is a policy designed to provide coverage for buildings while under construction in
Nigeria Construction Industry. It covers the contractor’s interest in materials in transit
intended for the job and the value of the property being constructed until it is completed and
accepted by the owner. The policy may be written to cover the whole structure for new
construction or the cost of remodelling or renovation projects. It can be used to cover specific
projects such as a new room addition, a deck or a remodelled kitchen (Odeyinka, 2015).
Builders risk insurance also known as “course of construction”, “construction all risk” and “
contractors all risk insurance”, is a specialized form of insurance designed to insure buildings
or project against repair or replacement cost while they are under construction and in some
cases, for a specific period afterwards. This insurance will usually also cover build materials,
fixtures and appliances all of which are intended to become an integral part of the structure
under construction Boswall and Clark (2015).
2.2.4 Compulsory Builders Risk Insurance Policy in Nigeria, benefits/Claims
The National Insurance Commission “NAICOM” said that in the pursuance of the provision
of the Nigeria Insurance Act (2003), and in a renewed attempt to negotiate insurance use,
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practice and regulations. Fixed the end of March 2011 as the cut-off date from when all
compulsory insurance policies under various Nigeria statutes will be fully enforced and
penalties applied to this legal alert. Builders’ liability insurance as required by section 64 of
the insurance act. All builders of real property that have more than two floors must
compulsorily register and insure such a building against all construction risks resulting from
the builders negligence or the builders servants, agents or consultants which negligence may
result in bodily injury or loss of life or damage to the property. Soladoye (2012) a consultant
of NAICOM, also said that all the owners and contractors of building under construction that
are more than two floors were mandated to have the policy, according to him he said if
covered construction risk resulting from death or injury to site workers or members of the
public and property damage. In case of death or permanent disability, claims could be up to
two million naira, property damage claims could be up to five million to fifty million naira,
while reimbursement for defense cost to the contractor if the case goes to court could reach
one million naira, under the policy compensation is to be paid to any user of such buildings
who dies or injured as a result of fire, flood, storm, and earth quake of collapse buildings in
the occurrence of death or permanent disability, the claimant could be settled to the tune of
two million naira while damage to public utility or third party property could be between ten
million naira and thirty five million naira when coverage ceases.
2.2.5 Coverage of Builders Risk Insurance
The builders risk policy typically lists the owner/developer and general contractor by name as
the insured parties. Because they are identified by their own names, they are known as
“Named insured” in addition, the builders risk policy often covers most others and person
involved with the projects. This is either because the policy identifies them in a generic
category of insured parties (e.g. all “sub-contractors” or persons for whom the named insured
has contracted to obtain builders risk insurance). Clark and Boswall (2005) The coverage is
14
further extended to the building supplies and materials and the property including the
building or structure on the site. The materials are covered while they are in transits or at
temporary location. If the project is a sizable venture you could pursue additional coverage in
case the earth should move as a result of exaction. Other all-risk policies cover all risks
unless they fall outside of the meaning of “occurrence” in the insuring agreements or are
otherwise removed from coverage by the exclusions. Examples of typical risks covered by a
builder’s risks policy include: - Fire - Lighting - Explosion - Impact by air craft or vehicles -
Riot, Vandalism - Windstorm, hail and rain - Burglary and theft - Collapse of the structure -
subsidence
2.2.6 Excluded Builders Risk Policy
According to Clark and Boswall (2015), the major risk usually excluded under “all risk”
policies are: - Faulty design, material or workmanship - Latent defect - Inherent vice -
Breakdown or derangement, and Wear and tear. A Builders risk policy often covers a number
of parties. As such, the standard policy can usually be obtained by any of the owner,
contractor, architect, engineer or project manager. Generally the industry expectation is that
the general contractor or owner will obtain the policy. Whether this expectation is followed
or not, there are a number of point that need to be considered by all parties involved in the
project in order to properly determine exactly who should obtain the policy for the project in
question Clark and Boswall (2015). The owner may be required to provide or maintain the
policy if the contractor fails to do so. However, if such is the case, the owner is then allowed
to demand the cost of obtaining and maintaining the policy from the contractor or
alternatively can deduct such amount from its payment to the contractor (per condition GC
11.1.4). The party that obtains the insurance is in the best position to ensure that the policy
provides for the precise coverage that it wants. Thus includes what risks to include or
exclude. According to Nicon (2018) construction insurance is usually a percentage of the
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total construction budget. The size of the percentage is wholly dependent to the scope of the
project at hand. You may find that a small house may be around 1% of the total cover
whereas a high rise building may be over 5%. The exact percentage is then determined by the
level of coverage required and the insurer you chose to go with. The amount of coverage
should adequately cover the full value of the project in its finished state. Indeed most policy
wording often require coverage of the “full value” may differ depending on the view of each
of the insured parties. Unlike other property policies, the builders risk policies is intended to
terminate when the work has been completed and the property is ready for use or occupancy.
Even though some minor finishing work might remain. Because a precise completion date is
often difficult to predict insurers will generally extend coverage until such a time can be
determined. Typical provisions in the policy that terminate coverage are when any of the
following firs occur. -The policy expires or is cancelled -The project is accepted by its owner
or purchaser -The named insured insurable interest is the covered property ends. Some
policies also provide that coverage ends ninety (90) days after construction is completed sixty
(60) days after the project has been occupied in whole or in part or when the property is put
to its intended use Clark (2015). Collapse of building either total or partial collapse of some
of its components leads to the failure of building to perform its intended function of
protection, safety or stability (Olagunyi, 2017) According to Ikpo, (2018), the degree of
building failure can be related to the degree of deviation of the building from its “as built”
state which in most cases represents the acceptable standard within the neighbourhood,
locality, state or country.
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Some of the recent collapsed buildings and their insurance status
S/N Structure Date Location Cause of collapse Fatality Insurance

policy
status
1 Residential under June 2010 Oniru Estate, Substandard 1 Not
construction Victoria Island materials, insured
haphazard works.
2 4-storey building September, 28 Tinubu Structural 3 Not

2010 street VI Lagos defect/overloading insured
3 Five-storey June 2011 11 Aderibigbe No geotechnical None -

street investigation
Maryland,Lagos
4 3-storey building July 2011 Oloto street off Non-adherence to 10 Not
cement road, building standards insured
Ebute & regulations
Metta,Lagos
5 3-storey building August Orosanye Wrong supervision None Not
2011 street Lagos insured
6 Building in use November Jakande estate Structural failure 3 Not
20, 2012 oke afa, Isolo and occupants insured
Lagos ignored the
government’s
safety warning
7 A twin four storey duplex November Victoria unknown 4 -
3, 2013 island,Lagos
8 Synagogue Church of September Ikotun-Egbe Structural failure 116 Not
All Nations (SCOAN) 12,2014 area of Lagos insured
state
9 Synagogue Warehouse September Ikotun-Egbe Demolition 4 Not

Church, Lagos. 12,2014 area of Lagos process insured
state
10 Four storey building March 13, 6 Mogaji Unknown 1 -

2015 Street Idumota
Lagos island
11 3 storey building July 15, Ebute Metta Structural defect None Not
2015 Lagos insured
12 3 storey building October Swamp street Structural defect None Not

21,2015 Odunfa Lagos insured
island.
13 A five-story building March Lekki Lagos Addition to the 34 Not

under construction 9,2016 approved number insured
of floors.
14 Two storey building March 19, Mile 12,Lagos Structural defect 1 -

2016
17
15 Residential building April 2016 Horizon 1, Structural defect 18 -
Lekki Garden,
Ikate.
16 3 storey building February Lagos island Not reported 2 -

3, 2019
17 Three storey building March Ita Faaji area The change of use 20 -
13,2019 of Lagos state, of the building
Nigeria from the intended
purpose
Source: Lagos State Building Control Agency 2020
2.3 Theoretical Framework
The theoretical framework outlines the main areas considered in developing the research
hypothesis. The major theory that this research work is thrusting on is Catastrophe Risk
(CAT Risk) model.
2.3.1 Catastrophe Risk (CAT Risk) Model
This model has proved valuable to international insurance markets. They develop a view of
risk beyond the historical occurrence of catastrophes, for calculation of potential future
impacts. Their strength is that they consider an extensive range of possible event scenarios
well beyond the historical record. To date, CAT risk model has been primarily developed to
output risk in financial terms. However, the potential to use it to support disaster risk
management more broadly have been recognized in schemes such as Risk Information
System and Africa Risk View platform. The relevance of this model to this study is the fact
that most building construction in the area of study is always high-rise which makes any
collapse to be catastrophic any time it happens.
2.4 Empirical Framework
Oloyede, (2015) attributed causes of building collapse as due to man’s negligence in some
vital areas in construction such as soil investigation, incorporating design for extra loads,
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stress from winds, earthquakes, uneven terrain, use of substandard building materials, poor
monitoring and overall poor workmanship.
Madu, (2015), identified causes of building failure as due to natural occurrences such as
earthquakes, tornadoes, flood, etc. Other causes according to him include factors such as
omission, carelessness, leading to use of deficient structural drawings, absence of proper
supervision of projects, alteration of approved drawings, use of substandard materials,
corruption in the Nigerian system, building without approved drawings and translocation of
building plans to different sites.
Adebayo, (2016), opined that efficiency in skill and experience is important in creating
valuable workmanship in building construction. Ayinuola, (2014), pointed accusing finger to
all parties in the building industry, clients, architects, engineers, town planners in the local
authorities and contractors stating that they have contributed to building failures in various
dimensions.
Tyagler, (2017) traced the causes of building failures to defects or deficiencies at designand
construction stages. Ukpata, (2016), opined that the spate of building collapse in the country
can always be traced to unsafe actions of parties involved in building process starting from
clients to building consultants, contractors and users.
Adebayo, (2016), opined that building collapse incidences can be controlled or minimized if
the client is ready to pay for high quality materials and for expert professional services.
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CHAPTER THREE
Research Methodology
3.1 Preamble
This chapter is essentially designed to examine the various methods and procedure adopted at
various stages of this project work. This chapter dealt with Research Design, Population of
the study, Sample and sampling technique, Instrument and Procedure for data collection.
3.2 Research Design
This study employed a descriptive survey research design. The choice of descriptive survey
research design is due to the fact surveys are useful in describing the characteristics of a large
population (Osula, 2014). Surveys provide a high level of general capability in representing a
large population, low costs, and convenient data gathering, good statistical significance, little
or no observer subjectivity and precise results. The study adopts descriptive survey research
design because the complexity of identifying the risk financing strategy of most building
construction is better examined through the use of proper and well planned research
instrument capable of eliciting necessary information that is needed in the research.
3.3 Population of the Study
The population of the

study comprises all forty-
one (41) licensed non-life
insurance
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companies operating in
Nigeria as at 1st of January
2019 (National Insurance
Commission,
2019
insurance
Commission,
2019
21
insurance
Commission,
2019
The population of the study comprises all registered builders in Lagos State which are 2,422
builders (CORBON, 2020) validated by the study of (Babatunde, 2020). Lagos state was a
choice of the selected building contractors because it is the state with highest number of
registered builders in Nigeria and is the commercial nerve of Nigeria. It is assumed that
responses obtained from the sample respondents would be representative of the opinion of all
the registered building construction companies in Nigeria.
3.4 Sampling, Procedure and Sampling Size
The study adopted a convenience sampling method of selection and to be able to draw the
right sample for the purpose of this study. The choice of convenience sampling is because it
helps to meet with registered building contractors in the selected areas which show the
readiness and availability to respond to the questionnaire in the clustered location. 942 of the
registered builders are fully functional and 281 building contractors are operative on island
area of Lagos state where the study is conducted, the areas include Ikoyi, Victoria Island and
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Lekki phase 1. The Taro Yamani formula was used to determine the sample size. The
formula is given below as:
N
n=
1+ N ( e ) 2
Where n = sample size, N = population size e = error limit
N = 281 e = 0.05
Therefore n = 165 approximately. 5 group head of property insurance department of the big 5
insurance companies were also selected for the study (Axa Mansard Insurance,
NEM insurance plc, Custodians & Alliance insurance, Mutual Benefits plc and Leadway
Assurance).Therefore the total sample used for the study is 170 respondents.
3.5 Data Collection Instrument and Validation
This study employed a structured questionnaire as its instrument for data collection. This
instrument is relevant in collecting feedbacks from respondents based on their perceptions
and opinions. Furthermore, it is suitable for collecting data from respondents within a
relatively short period.
In line with extant literature, the response options provided in this study's questionnaire
follow the 5-point Likert-type scale, consistent with (Binuyo, 2019). This scale, being an
ordinal interval scale, is numbered from 5 to 1. The response options in the questionnaire
follow strongly agree (SA) = 5, Agree (A) = 4, Undecided (U) = 3, Disagree (D) = 2, strongly
disagree (SD) = 1. The questionnaire will have two sections: Section A will cover the
23
demographic information with five (5) items. Section B covered questions which were
tailored to flow from the research questions of this study.
3.6 Method of Data Analysis
Data collected will be analysed using Statistical package for social science students (SPSS)
which expresses the data in tables, frequencies and percentages while regression analysis will
be used to test the hypotheses formulated in order to evaluate the significant effect of risk
financing strategy among building contractors in Lagos State, Nigeria. The regression
equation will be
Y = a + bX
Where:
a = intercept
b = slope or gradient
X = Independent
Y = dependent variable
CHAPTER FOUR
Data Presentation and Analysis
24
4.1 Introduction
This chapter explains the presentation and analysis of data from the questionnaires that were
retrieved from a total of Two hundred questionnaires administered through online survey.
The Statistical Package for Social Sciences (SPSS) was used to analyse the information
provided.
The results are presented under the following headings
(1) Presentation of Data
(2) Analysis of research Objectives
(3) Tests of Research hypotheses
4.2 Presentation of Data
The Analysis of the bio- data of the respondents, the analysis was done with respect to
gender, age, Work experience, educational qualification and position at work. The results are
presented in tables 4.1, 4.2, 4.3 and 4.4.
Table 4.1
VARABLES FREQUENCY PERCENTAGE (%)
25
GENDER Male 120 70.6
Female 50 29.4
Total 170 100
AGE (YEARS) 18 but less than 30 86 50.6
30 but less than 40 27 15.9
60 and above 7 4.1
Total 170 100
EDUCATIONAL Bachelor’s degree/HND 13 7.6
QUALIFICATION Master’s degree 53 31.2
Doctorate degree 81 47.6
Professional certificate 12 7.1
OTHERS(ND,SSCE,etc) 11 6.5
Total 170 100
WORK Less than 5 years 23 13.5
EXPERIENCE 5 yrs but less than 10 yrs 39 22.9
(YEARS) 10 yrs but less than 15 yrs 62 36.5
15 yrs and above 46 27.1
Total 170 100
BUSINESS SIZE Small 45 26.5
CLASSIFICATION Medium 86 50.6
Large 39 22.9
Total 170 100
POSITION IN Owner 78 45.9
BUSINESS Partner 40 23.5
Supervisor 37 21.8
Others 15 8.8
Total 170 100
RISK Yes 96 56.5
MANAGEMENT No 74 43.5
GUIDELINE Total 170 100
INSURANCE Yes 63 37.1
POLICY No 107 62.9
Total 170 100
Source: Field survey 2021
Table 4.1 above shows that 70.6% of the respondents were male while 29.4% of the
respondents were female.
It can also be seen that 50.6 % of the respondents were between the ages of 18 but less than
30years, 15.9% were between the ages of 30 but less than 40 years old, 23.5% respondents
26
were between the ages of 40 but less than 50 years, while 5.9% of the respondents were
between the ages of 50 but less than 60 years, and 4.1% of the respondents were between the
ages of 60 years and above.
Table 4.1 above shows that 7.6% represent Bachelor’s degree/HND, 31.2% of the
respondents were master’s degree, 47.6% of the respondents were holders of doctorate
degree while 7.1% of the respondents were professional certificate holders and 6.5%
represent other qualifications (SSCE, ND, GCE)
It can also be seen that 13.5% of the respondents are at less than 5 years work experience,
22.9% are at 5 years but less than 10 years work experience, 36.5% of the respondents are at
10 years but less than 15 years work experience and 27.1% of the respondents are at fifteen
years and above work experience.
Table 4.1 also shows that, 26.5% of the respondents are small business size, 50.6% of the
respondents are medium business size and 22.9% of the respondents are large business
size.The table also shows that, 45.9% of the respondents are owners, 23.5% of the
respondents are partners, while 21.8% of the respondents are supervisor and 8.8% of the
respondents are others.
It can also be seen that 56.5% of the respondents have risk management guideline for
managing risk while, 43.5% of the respondents does not have risk management guideline for
managing risk. Table 4.1 also shows that, 37.1% of the respondents have insurance policy
and 62.9% does not have insurance policy.
4.2 Data Analysis According to Research Questions
27
Section B of the questionnaire will be analyzed using frequency tables and simple
percentages and the test of hypotheses will be done using chi square.
Table 4.2 Building construction risk management process; risk transfer strategy
S/N Statement SA (%) A(%) U(%) D(%) SD(%) Total
5 4 3 2 1 (%)
1 We have insurance policy for 47 37 51 20 15 170
all building constructions that
(27.6) (21.8) (30) (11.8) (8.8) (100)
we do
2. Construction insurance policy 33 61 14 42 20 170
gives confidence in the process
(19.4) (35.9) (8.2) (24.7) (11.8) (100)
of building construction
3 Most building contractors do 58 27 11 43 31 170
not have construction policy
(34.1) (15.9) (6.5) (25.3) (18.2) (100)
because it is too expensive
4 Builders risk policy is relevant 18 26 39 54 33 170
to building construction
(10.6) (15.3) (22.9) (31.8) (19.4) (100)
projects
In the table 4.2 above which is to explain the building construction risk management process;
the risk transfer strategy shows that 47 of the respondents representing 27.6 percent strongly
agreed that they have insurance policy for all building constructions that they do, 37
respondents representing 21.8 percent agreed that they have insurance policy for all building
constructions that they do even though 51 respondents representing 30 percent are undecided
about them having insurance policy for all building constructions that they do , while 20
respondents representing 11.8 percent disagree that they have insurance policy for all
building constructions that they do and 15 respondents representing 8.8 percent strongly
disagree that they have insurance policy for all building constructions that they do.
28
It also shows that 33 respondents representing 19.4 percent strongly agree that Construction
insurance policy gives confidence in the process of building construction, 61 respondents
representing 35.9 percent agree that Construction insurance policy gives confidence in the
process of building construction, 14 respondents representing 8.2 percent are undecided about
Construction insurance policy giving confidence in the process of building construction,
while 42 respondents representing 24.7 percent disagree that Construction insurance policy
gives confidence in the process of building construction, and 20 respondents representing
11.8 percent strongly disagree that Construction insurance policy gives confidence in the
process of building construction.
The table also shows that 58 respondents representing 34.1 percent strongly agree that Most
building contractors do not have construction policy because it is too expensive, 27
respondents representing 15.9 percent agree that Most building contractors do not have
construction policy because it is too expensive, 11 respondents representing 6.5 percent are
undecided about Most building contractors not having construction policy because it is too
expensive, while 43 respondents representing 25.3 percent disagree that Most building
contractors do not have construction policy because it is too expensive, and 31 respondents
representing 18.2 percent strongly disagree that Most building contractors do not have
construction policy because it is too expensive.
It can also be seen from the table that 18 respondents representing 10.6 percent strongly agree
that Builders risk policy is relevant to building construction projects, 26 respondents
representing 15.3 percent agree that Builders risk policy is relevant to building construction
projects, 39 respondents representing 22.9 percent are undecided about Builders risk policy
being relevant to building construction projects, even though 54 respondents representing
31.8 percent disagree that Builders risk policy is relevant to building construction projects,
29
and 33 respondents representing 19. 4 percent strongly disagree that Builders risk policy is
relevant to building construction projects.
Table 4.3 risk retention strategy
5 We consider experience in 25 36 18 33 58 170

choosing the project team
management members (14.7) (21.2) (10.6) (19.4) (34.1) (100)
6 We revise design documents and 43 41 27 36 23 170

drawings to ensure compliance to
(25.3) (24.1) (15.9) (21.2) (13.5) (100)
building standards
7 Communication and coordination 14 43 36 46 31 170

between parties (clients,
(8.2) (25.3) (21.2) (27.1) (18.2) (100)
consultants and contractors) is
very sound
8 Decision making process is 37 28 49 32 24 170
scrutinized to avoid errors during
(21.8) (16.5) (28.8) (18.8) (14.1) (100)
construction
9 Test and inspection of materials 36 22 41 19 52 170

and labour are thoroughly done
in every phase of the building
(21.2) (12.9) (24.1) (11.2) (30.6) (100)
construction
From table 4.3 above which to find out the risk retention strategy shows 25 respondents
representing 14. 7 percent strongly agreed that they consider experience in choosing the
project team management members, 36 respondents representing 21.2 percent agree with the
fact that they consider experience in choosing the project team management members, 18
respondents representing 10.6 percent are undecided about the fact that they consider
30
experience in choosing the project team management members, even though 33 respondents
representing 19.4 percent disagree about the fact that they consider experience in choosing
the project team management members, and 58 respondents representing 34.1 percent
strongly disagree with the fact that they consider experience in choosing the project team
management members.
The table also shows that 43 respondents representing 25.3 percent strongly agree that they
revise design documents and drawings to ensure compliance to building standards, 41
respondents representing 24.1 percent agree that they revise design documents and drawings
to ensure compliance to building standards, 27 respondents representing 15.9 percent are
undecided about the fact that they revise design documents and drawings to ensure
compliance to building standards, 36 respondents representing 21.2 percent disagree that they
revise design documents and drawings to ensure compliance to building standards, and 23
respondents representing 13.5 percent strongly disagree that they revise design documents
and drawings to ensure compliance to building standards.
It can be seen in the table that 14 respondents representing 8.2 percent strongly agree with the
fact that communication and coordination between parties (clients, consultants and
contractors) is very sound, 43 respondents representing 25.3 percent agree with the fact that
communication and coordination between parties (clients, consultants and contractors) is very
sound, 36 respondents representing 21.2 are undecided with the fact that communication and
coordination between parties (clients, consultants and contractors) is very sound, even though
46 respondents representing 27.1 percent disagree with the fact that communication and
coordination between parties (clients, consultants and contractors) is very sound, and 31
respondents representing 18.2 percent strongly disagree with the fact that communication and
coordination between parties (clients, consultants and contractors) is very sound.
31
From the table, it can also be seen that 27 and 28 respondents representing 21.8 percent and
16.5 percent strongly agree and agree respectively about the fact that decision making process
is scrutinized to avoid errors during construction, 49 and 32 respondents representing 28.8
percent and 18.8 percent are undecided and disagree respectively about the fact that decision
making process is scrutinized to avoid errors during construction and 24 respondents
representing 14.1 percent strongly disagree about the fact that decision making process is
scrutinized to avoid errors during construction.
The table also shows that 36 and 22 respondents representing 21.2 percent and 12.9 percent
strongly agree and agree respectively that test and inspection of materials and labour are
thoroughly done in every phase of the building construction, while 41 and 19 respondents
representing 24.1 percent and 11.2 percent are undecided and disagree respectively that test
and inspection of materials and labour are thoroughly done in every phase of the building
construction, and 52 respondents representing 30.6 percent strongly disagree that test and
inspection of materials and labour are thoroughly done in every phase of the building
construction.
Table 4.4 Awareness of building construction policy by building contractors
32
10 Punitive Measures imposed on 47 37 51 20 15 170
Contractors for non-
(27.6) (21.8) (30) (11.8) (8.8) (100)
compliance with Insurance of
Building under construction is
poor
11 Most building contractors are 32 15 46 28 49 170
not aware of the construction
(18.8) (8.8) (27.1) (16.5) (28.8) (100)
policy
12 Construction policy is not 41 38 24 16 51 170

compulsory for all types of
(24.1) (22.4) (14.1) (9.4) (30) (100)
construction
13 Most building contractors have 28 48 47 36 11 170

apathy for construction policy
despite the awareness (16.5) (28.2) (27.6) (21.2) (6.5) (100)
14 Most builders have alternative 34 53 26 18 39 170

for construction insurance
(20) (31.2) (15.3) (10.6) (22.9) (100)
From table 4.4 above is to find out awareness of building construction policy by building
contractors and it shows 47 respondents representing 27.6 percent strongly agreed to the fact
that punitive Measures imposed on Contractors for non-compliance with Insurance of
Building under construction is poor, 37 respondents representing 21.8 percent agree to the
fact that punitive Measures imposed on Contractors for non-compliance with Insurance of
Building under construction is poor, 51 respondents representing 30 percent are undecided to
the fact that punitive Measures imposed on Contractors for non-compliance with Insurance of
Building under construction is poor, even though 20 respondents representing 11.8 percent
33
disagree to the fact that punitive Measures imposed on Contractors for non-compliance with
Insurance of Building under construction is poor, and 15 respondents representing 8.8 percent
strongly disagree to the fact that punitive Measures imposed on Contractors for non-
compliance with Insurance of Building under construction is poor.
The table also shows 32 respondents representing 18.8 percent strongly agree that most
building contractors are not aware of the construction policy, 15 respondents representing 8.8
percent agree that most building contractors are not aware of the construction policy, 46
respondents representing 27.1 percent are undecided as to if most building contractors are not
aware of the construction policy, while 28 respondents representing 16.5 percent disagree that
most building contractors are not aware of the construction policy, and 49 respondents
representing 28.8 percent strongly disagree that most building contractors are not aware of
the construction policy.
It can also be seen from the table that 41 respondents representing 24.1 percent strongly agree
that construction policy is not compulsory for all types of construction, 38 respondents
representing 22.4 percent agree that construction policy is not compulsory for all types of
construction, 24 respondents representing 14.1 percent are undecided about the fact that
construction policy is not compulsory for all types of construction, while 16 respondents
representing 9.4 percent disagree that construction policy is not compulsory for all types of
construction, and 51 respondents representing 30 percent strongly disagree that construction
policy is not compulsory for all types of construction.
strongly agree and agree respectively with the fact that most building contractors have apathy
for construction policy despite the awareness, while 47 and 36 respondents representing 27.6
percent and 21.2 percent are undecided and disagree respectively with the fact that most
34
building contractors have apathy for construction policy despite the awareness, and 11
respondents representing 6.5 percent strongly disagree with the fact that most building
contractors have apathy for construction policy despite the awareness.
It can also be seen from the table that 34 and 53 respondents representing 20 percent and 31.2
percent strongly agree and agree respectively that most builders have alternative for
construction insurance, even though 26 and 18 respondents representing 15.3 percent and
10.6 percent are undecided and disagree respectively that most builders have alternative for
construction insurance, and 39 respondents representing 22.9 percent strongly disagree that
most builders have alternative for construction insurance.
35
Table 4.5 project success of building construction
Building project success factors Measuring scales
Material related factors SA(%) A(%) U(%) D(%) SD(%) TOTAL

5 4 3 2 1 (%)
Quality of materials used influence building 11 31 58 43 27 170

project success (6.5) (18.2) (34.1) (25.3) (15.9) (100)
Change in material type and specifications 39 26 18 33 54 170
affects building project success (22.9) (15.3) (10.6) (19.4) (31.8) (100)
Compliance of materials to specifications 20 37 15 47 51 170
affect building project success (11.8) (21.8) (8.8) (27.6) (30) (100)
Labour and equipment related factors
Labour performance and productivity affect 52 22 41 19 36 170
building project success (30.6) (12.9) (24.1) (11.2) (21.2) (100)
Availability and efficiency of equipment 49 46 15 28 32 170
affect building project success (28.8) (27.1) (8.8) (16.5) (18.8) (100)
Finance related factors
Cost estimation accuracy helps in achieving 53 13 11 81 12 170
project success (31.2) (7.6) (6.5) (47.6) (7.1) (100)
Source of finance for the building project 54 33 39 18 26 170
affect project success (31.8) (19.4) (22.9) (10.6) (15.3) (100)
External related factors
Changes in building construction regulations 28 11 47 36 48 170
affect project success (16.5) (6.5) (27.6) (21.2) (28.2) (100)
Government permits are difficult to get 18 36 25 33 58 170
(10.6) (21.2) (14.7) (19.4 (34.1) (100)

)
We experience civil disturbances at the 51 15 47 20 37 170
construction sites (30) (8.8) (27.6) (11.8) (21.8) (100)
Table 4.5 above is to find out the project success of building construction. In material related
factors, it can be seen that 11 respondents representing 6.5 percent strongly agree that quality
36
of materials used influence building project success, 31 respondents representing 18.2 percent
agree that quality of materials used influence building project success, 58 respondents
representing 34.1 percent are undecided about the fact that quality of materials used influence
building project success while 43 respondents representing 25.3 percent disagree that quality
of materials used influence building project success and 27 respondents representing 15.9
percent strongly disagree that quality of materials used influence building project success
It can also be seen that 39 and 26 respondents representing 22.9 percent and 15.3 percent
strongly agree and agree respectively that change in material type and specifications affects
building project success, even though 18 and 33 respondents representing 10.6 percent and
19.4 percent are undecided and disagree respectively that change in material type and
specifications affects building project success and 54 respondents representing 31.8 percent
strongly disagree that change in material type and specifications affects building project
success
strongly agree and agree respectively to the fact that compliance of materials to specifications
affect building project success, 15 and 47 respondents representing 8.8 percent and 27.6
percent are undecided and disagree respectively to the fact that compliance of materials to
specifications affect building project success and 51 respondents representing 30 percent
strongly disagree to the fact that compliance of materials to specifications affect building
project success
It can be seen from the table that in labour and equipment related factors 52 and 22
respondents representing 30.6 percent and 12.9 percent strongly agree and agree respectively
that labour performance and productivity affect building project success, 41 and 19
respondents representing 24.1 percent and 11.2 percent are undecided and disagree
37
respectively that labour performance and productivity affect building project success, while
36 respondents representing 21.2 percent strongly disagree that labour performance and
productivity affect building project success
It also shows that 49 and 46 respondents representing 28.8 percent and 27.1 percent strongly
agree and agree that availability and efficiency of equipment affect building project success,
15 and 28 respondents representing 8.8 percent and 16.5 percent are undecided and disagree
that availability and efficiency of equipment affect building project success, and 32
respondents representing 18.8 percent strongly disagree that availability and efficiency of
equipment affect building project success
The table also shows the finance related factors that 53 and 13 respondents representing 31.2
percent and 7.6 percent strongly agree and agree respectively that cost estimation accuracy
helps in achieving project success, while 11 and 81 respondents representing 6.5 percent and
47.6 percent are undecided and disagree respectively that cost estimation accuracy helps in
achieving project success, and 12 respondents representing 7.1 percent that cost estimation
accuracy helps in achieving project success
It also shows that 54 and 33 respondents representing 31.8 percent and 19.4 percent strongly
agree and agree respectively that source of finance for the building project affect project
success, 39 and 18 respondents representing 22.9 percent and 10.6 percent are undecided and
disagree that source of finance for the building project affect project success and 26
respondents representing 15.3 percent strongly disagree that source of finance for the
building project affect project success.
The table also shows external related factors that 28 and 11 respondents representing 16.5
percent and 6.5 percent strongly agree and agree respectively that changes in building
38
construction regulations affect project success, 47 and 36 respondents representing 27.6
percent and 21.2 percent are undecided and disagree that changes in building construction
regulations affect project success and 48 respondents representing 28.2 percent strongly
disagree that changes in building construction regulations affect project success.
It also shows 18 and 36 respondents representing 10.6 percent and 21.2 percent strongly
agree and agree respectively that government permits are difficult to get, 25 and 33
respondents representing 14.7 percent and 19.4 percent are undecided and disagree that
government permits are difficult to get, and 58 respondents representing 34.1 percent strongly
disagree that government permits are difficult to get.
It also shows 51 and 15 respondents representing 30 percent and 8.8 percent strongly agree
and agree respectively that they experience civil disturbances at the construction sites, while
47 and 20 respondents representing 27.6 percent and 11.8 percent are undecided and disagree
that they experience civil disturbances at the construction sites and 37 respondents
representing 21.8 percent strongly disagree that they experience civil disturbances at the
construction sites .
4.3 TEST OF HYPOTHESIS
Hypothesis I
H01: Risk transfer strategy does not have significant effect on project success among building
contractors in Lagos State, Nigeria.
Regression
Model Summaryb
Change Statistics
R Adjusted R Std. Error of the R Square F Sig. F Durbin-
Model R Square Square Estimate Change Change df1 df2 Change Watson
1 .701a .000 -.021 1.439 .000 .000 1 48 .995 2.928
a. Predictors: (Constant), Risk transfer Strategy
39
Model Summaryb
Change Statistics
1 .701a .000 -.021 1.439 .000 .000 1 48 .995 2.928
b. Dependent Variable: project success among building contractors
ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression .000 1 .000 .000 .995a
Residual 99.380 48 2.070
Total 99.380 49
a. Predictors: (Constant), Risk transfer strategy
b. Dependent Variable: Project success among building contractors
Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 3.177 .481 6.599 .000
Risk transfer strategy .001 .141 .001 .007 .995
a. Dependent Variable: project success among building contractors
The regression result above showed a strong positive relationship between risk transfer
strategy and project success among building contractors in Lagos State which is indicated by
the R value (.701) at 5% significance level and it is statistically significant at .000 which is
less than (P<0.05)
Hypothesis II
H02: Risk retention strategy does not have significant effect on project success among
Model Summaryb
Change Statistics
1 .811a .000 -.021 1.439 .000 .000 1 48 .995 2.928
a. Predictors: (Constant), Risk retention strategy
b. Dependent Variable: project success among building contractors.
40
ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression .000 1 .000 .000 .995a
Residual 99.380 48 2.070
Total 99.380 49
a. Predictors: (Constant), Risk retention strategy
b. Dependent Variable: project success among building contractors.
The regression result above showed a strong positive relationship between risk retention
less than (P<0.05)
Discussion of Findings
The regression result above showed a strong positive relationship between risk transfer
less than (P<0.05). The second hypothesis regression result above showed a strong positive
relationship between risk retention strategy and project success among building contractors in
Lagos State which is indicated by the R value (.701) at 5% significance level and it is
statistically significant at .000 which is less than (P<0.05).
This result is supported by the previous studies (Beuselinck and Manigart, 2016; FASB,
2015; and Beest, 2016). The findings indicate that risk financing strategy helps builders to
mitigate unplanned risk. The findings also indicated, the power of the quality of risk
financing strategy could explain 62% of the variance in project success among building
contractors in Lagos State, Nigeria. To the best knowledge of the researcher, this result has
never been examined before. Theoretically, the vast majority of studies that have used the
effect of risk management on construction work as a theoretical foundation in their
41
conceptual models have confirmed the importance of risk financing strategy on project
success among builders in lagos state. (e.g. Beuselinck and Manigart, 2017; FASB, 2013;
Beest, (2018); Mamic, Sacar & Oluic, 2013). Furthermore, the analysis also provides
empirical evidence that the variation of the effect of risk transfer or retention strategy could
be due to their size and business experience but not to their types of business. This result is
supported by many studies (Chalaki et al., 2017; Huang, Rose-Green and Lee 2018).
42
CHAPTER FIVE
Summary, Recommendations and Conclusions
5.0 Introduction
This is the concluding chapter of this research work, summary of findings is stated, necessary
deductions are drawn, recommendation and suggestions are made for those that will benefit
from the result of this study.
5.1 Summary of findings
The data from the analysis of the survey carried out showed the need for government
agencies responsible for construction in Nigeria to enforce quality assurance on every project.
Thorough examinations and checks must be carried out during designs and construction by
duly certified professionals. Awareness should be carried out to educate investors and owners
of buildings about possible collapse from over interference in the construction process.
Considering the effects that risk financing has on a project’s goals in the form of quality and
cost, it should be an open and conscious process through all phases of the project. According
to project actors, risk management is strongly linked to the production 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 recognised importance of the programme phase,
this study showed that this phase does not play an important role in the risk management
process. Identifying risks is not a science: it is an art. It does not require a sophisticated,
mathematical exercise, although some measurement may be useful to dimension the risk.
Given a project description including project goals, work breakdown, schedule, and resource
assignments, potential risks can be identified and categorized using various tools such as
43
brainstorming. Risk is always present and must be dealt with accordingly. Risk management
can be sophisticated and complicated, but the starting point should always be a simple
assessment of the problem and possible solutions.
5.2 Conclusion
The construction industry is prone to several risks which the contractor or client cannot
shoulder alone when it occurs. Therefore, there is a need for the contractor to take up
insurance to cover these risks. But from the survey carried out, the awareness and
enforcement has not yet sink into majority of contractors and clients. It is therefore pertinent
to stress here that for the contractors to escape all risks and disputes, he needs to take the
contractors or builders all risk insurance as elaborately discussed in this paper, Builders and
other professionals also need to take professional liability insurance to free them from
liabilities. Again, commissions such as NAICOM, CORBON are to create awareness, embark
on confidence building, ensure implementation and enforcement of the insurance Act in order
to bring about compliance in the Building industry.
The compliance level of the contractors with regards to the stipulation of section 64(1), No.37
of Insurance Act 2003 was very low compared to their high level of awareness with the
stipulation. The compliance level was less than 20% compared to the awareness level that
was more than 20%. Also, the compliance level of insurance with the payment of fire
services management funds for provision of fire service equipment for fire fighting as
stipulated in section 66, No.37 of Insurance Act of 2003 was very low. The NAICOM since
the commencement of the Act had not been enforcing the stipulation of this Act. Finally, the
compliance of the notable section in Insurance Act of 2003 with regards to insurance of
property had not been satisfactory due to low enforcement of the punitive measures for non-
compliance with the Act and inadequate provision of the Act in terms of enforcement of the
44
provision of the Act by the regulatory body NAICOM. Based on these, the following are
hereby recommended towards improving the compliance level of the Act.
The National Insurance Commission should collaborate with the relevant professional bodies
such as NIOB, CORBON, COREN, ARCON, NIQS and Planning authority that are involved
in the development process of building property in order to improve the implementation
process as a whole. The contractors should accept insurance as a complementary tool for
improvement in the building and housing sector and cultivate the habit of entrusting the
insurance experts by engaging in their policies if the need arises. Offenders should be
punished to serve as deterrent to others in order to stem the tide of incessant building collapse
5.3 Recommendations
The findings of this research are expected to contribute to more effective financing strategy
implementation and, therefore, should benefit the construction industry as a whole. To
achieve this objective the following recommendations are made:
(i) The majority of respondents evaluated their knowledge of Risk financing strategy for
building construction as intermediate; it would therefore be reasonable to suggest risk
financing strategy workshops for building constructions to further educate all parties involved
with construction projects. With adequate training opportunities in place, an increase in
knowledge of the subject and an awareness of the importance of risk management throughout
the construction project life cycle can be achieved.
(ii) All built environment stakeholders should become more involved in the implementation
of risk management. Their early involvement will facilitate a better understanding of each
party’s roles and enhance collaboration and communication within the Nigerian construction
industry. Based on the research results, the recommendations are made to the construction
contractors to cope with the major risks in the industry and to improve their risk financing
strategy practice.
45
(iii) The attitude of accepting the lowest bid should be reviewed in order to facilitate
quality works. Some criteria should be used to select because most of the times the lowest
bids are not the best especially in relation to risk management. Further studies need to be
undertaking in order to explore the extent of impact of certain risk factors or sources like
materials price fluctuation, unfavourable weather condition, political risks etc.
(iv) Communication; key to construction risk minimization, construction organizations must
form effective communication links in order to realize the benefits of partnerships and
alliances.
(v) Insurance companies should endeavour to carry out proper documentation and make
their policies well known and understood by operators of Building industries. Insurance
company should try as much as possible to honour settlement of claims as at when due.
(vi) Government should monitor control and enforce insurance Act so that Builders risk
insurance will be taken very often on projects.
(vii) Level of awareness of insurance services should be increased to create an
understanding of the administration of insurance service in the industry through seminars ,
workshops and advertisement
46
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APPENDIX
UNIVERSITY OF LAGOS
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACTUARIAL SCIENCE AND INSURANCE
RESEARCH QUESTIONNAIRE
Dear Sir/Ma,
I am a Ph.D student of the University of Lagos conducting a study on “Risk management and project success
in building constrction in Lagos State, Nigeria”. In order to successfully carry out this research, this
questionnaire is being sent to you for the purpose of obtaining necessary information that will aid the study.
Your assistance in filling this questionnaire will be highly appreciated. You are assured that any information
provided will be treated with utmost confidentiality.
Thank you for your cooperation!
Akindipe Leke Ebenezer

Research Student
GSM: 08026553197
E-mail (s): lekelymome@yahoo.com
---------------------------------------------------------------------------------------------------------------------------------------
--------
Please indicate your answer by ticking (√) the option that is most appropriate
SECTION A: BACKGROUND INFORMATION OF RESPONDENTS.
i. Indicate your gender
1 [ ] Male 2[ ] Female
ii. Indicate your age bracket
1[ ] 18 but Less than 30 2 [ ] 30 but less than 40 3 [ ] 40 but less than 50
4[ ] 50 but less than 60 5 [ ] 60 and above
iii. Indicate your educational qualifications
1[ ] Bachelor’s Degree / HND 2 [ ] Master’s Degree
3[ ] Doctorate Degree 4 [ ] Professional Certificate (s) (please specify) ………………
5 [ ] Others ………………………. (ND, SSCE, GCE etc.)
iv. Indicate your years of existence in the business 1 [ ] less than five years 2 [ ] five years but
less than ten years 3 [ ] ten years but less than fifteen years 4 [ ] fifteen years and above
v. How do you classify your business size? 1 [ ] Small 2 [ ] Medium 3 [ ] Large
vi. What is your position in this business? 1 [ ] Owner 2 [ ] Partner 3 [ ] Supervisor 4 [ ] Any
other, specify.....................................................................................
vii. Do you have risk management guidelines for managing your risks?
1[ ] Yes 2 [ ] No
viii. Do you have insurance policy?
1[ ] Yes 2 [ ] No
SECTION B: Building construction Risk Management Processes

Risk transfer strategy
Using a five-point Likert scale from ‘1’ = strongly disagree to ‘5’ = strongly agree; please indicate by ticking
the appropriate box that explain the extent to which you agree or disagree with the following statement that
reflect your agreement or disagreement being possibly influenced by survey items below
59
Survey items/questions Strongly Disagree Undecide Agree Strongly
Disagree d Agree
We have insurance policy for all building
constructions that we do
Construction insurance policy gives confidence in
the process of building construction
Most building contractors do not have construction
policy because it is too expensive
Builders risk policy is relevant to building
construction projects
SECTION C: Risk Retention Strategy

Using a three-point Likert scale from ‘1’ = low extent to ‘3’ = high extent; please indicate by ticking the
appropriate box that explain risk retention strategy adopted to achieve project success in building construction.
Disagree d Agree
We consider experience in choosing the project
team management members
We revise design documents and drawings to
ensure compliance to building standards
Communication and coordination between parties
(clients, consultants and contractors) is very sound
Decision making process is scrutinized to avoid
errors during construction
Test and inspection of materials and labour are
thoroughly done in every phase of the building
construction
SECTION D: Awareness of building construction policy by building contractors

Using a three-point Likert scale from ‘1’ = low extent to ‘3’ = high extent; please indicate by ticking the
appropriate box that explain the awareness building contractors to building construction policy.
Disagree d Agree
Punitive Measures imposed on Contractors for non-
compliance with Insurance of Building under
construction is poor
Most building contractors are not aware of the
construction policy
Construction policy is not compulsory for all types of
construction
Most building contractors have apathy for
construction policy despite the awareness
Most builders have alternative for construction
insurance
SECTION E: Project Success of Building Construction
60
Using a five-point Likert scale from ‘1’ = strongly disagree to ‘5’ = strongly agree; please indicate by ticking
the appropriate box that explain the extent to which you agree or disagree with the following statement that
reflects project success of building construction
Building project success factors Measuring scales
Material related factors Strongly Disagree Undecide Agree Strongly

Disagree d Agree
Quality of materials used influence building project
success
Change in material type and specifications affects
building project success
Compliance of materials to specifications affect
Labour and equipment related factors Strongly Disagree Undecide Agree Strongly
Disagree d Agree
Labour performance and productivity affect
Availability and efficiency of equipment affect
Finance related factors Strongly Disagree Undecide Agree Strongly
Disagree d Agree
Cost estimation accuracy helps in achieving project
success
Source of finance for the building project affect
project success
External related factors Strongly Disagree Undecide Agree Strongly
Disagree d Agree
Changes in building construction regulations affect
project success
Government permits are difficult to get
We experience civil disturbances at the
construction sites
61
62

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CHAPTER ONE

1.1 Background to the Study

with a registered insurer in order to cover the owner/contractor’s liability in respect of

Furthermore, Charles (20013) observed that insurance coverage is needed during

and regulations is an important factor in creating a well-functioning society and trust in

government. It is a key element in safeguarding health and safety, protecting the

important from a social perspective and as a foundation of economic growth (Organization

for Economic Co-operation and Development OECD, 2013). Enforcement of regulations is

around poor compliance structure, ineffective implementation strategy by the insurance

stakeholders (Adeusi, n.d.).

1.2 Statement of the Problem

1.3. Aim and Objectives of the Study

contractors in Lagos State, Nigeria.

contractors in Lagos state, Nigeria.

1.4. Research Questions

building contractors in Lagos state?

1.5. Research Hypotheses

building contractors in Lagos State, Nigeria.

building contractors in Lagos State, Nigeria.

to ensure drastic reduction in building collapse by enforcing compulsory building

builders and building contractors so that building collapse can be minimized.

1.7 Scope and Delimitations of the Study

1.8 Definition of Terms

product and obligates the buyer to pay for it.

Contractor – a performing organisation whose employees are most directly involved in

doing the work on the project.

Design-bid-build – a traditional procurement option where the client contracts separately

with a designer and a constructor.

the full design.

efficient and project objectives are achieved.

Partnering – a structured management approach to facilitate team working across

start and finish dates, undertaken to achieve an objective conforming to specific

requirements, including the constrains of time, cost and resources.

Risk – an implication of significant uncertainty, which may be upside and downside.

Risk management – a systematic process of identifying, analysing and responding to project

documenting their characteristics (PMI 2000).

2001). Uncertainty – a lack of certainty, involving variability and

in order to give necessary support and solid foundation to the study.

2.2 Conceptual Framework

2.2.1 Risk Management and Building Construction

management of risk can occur.

2.2.2 Risk in Building Construction Projects

bore by principal party of the construction contract can be elaborated as below:

different legal obligations.

situation is quite necessary for the owner.

to invest a significant amount of money and time in such types of projects.

v. Deficiencies in infrastructure or services: There are a number of different other

make the project unsuccessful.

outcome of the project.

Some of these risks can be listed as below:

can be proved quite critical

2.2.3 Concept of Builders Risk Insurance Policy

Nigeria Construction Industry. It covers the contractor’s interest in materials in transit

under construction Boswall and Clark (2015).

2.2.4 Compulsory Builders Risk Insurance Policy in Nigeria, benefits/Claims

2.2.5 Coverage of Builders Risk Insurance

2.2.6 Excluded Builders Risk Policy

exclude. According to Nicon (2018) construction insurance is usually a percentage of the

locality, state or country.

S/N Structure Date Location Cause of collapse Fatality Insurance

2 4-storey building September, 28 Tinubu Structural 3 Not

3 Five-storey June 2011 11 Aderibigbe No geotechnical None -