1-ICAUD

Investigation of Risk Management perception in Albanian Construction Industry Julinda Keci, Ahmet zta
(MSc. Julinda KECI, Epoka University, Albania, jkeci@epoka.edu.al) (Assoc. Prof. Dr. Ahmet ZTA, Epoka University, Albania, aoztas@epoka.edu.al)

1 ABSTRACT The Albanian Construction Sector has for some times been suffering from problems that result in increased cost and time, and in decreased quality. One of the most significant reasons of this is not managing the risks, which is about thinking ahead and preventing projects from going wrong and about stimulating and searching for better solutions. This study investigates, on the basis of a questionnaire, the general construction industrys perception of project risk, application and status of risk management techniques and the barriers to risk management. The main methodologies considered for this study starts with comprehensive literature review followed by structured interviews with construction practitioners. The data collected were analyzed, and a Likert (Rating) scale of risks using the average index was developed. Despite the paramount importance of risk management as one of the subfields of project management, unfortunately less attention has been paid to it in Albania. The results show that there is a low to nonexistent level of education in risk management amongst the respondent and a lack of a systematic approach. Project staff, mainly, relies on their own intuition, experience and in a traditional way of planning through detailed work-plans. Keywords: Project risks; Risk management; Barriers to risk management. 2 INTRODUCTION Construction is one of the most risky and challenging industries. It has risk in all of the processes starting from the conceptual phase of a project, engineering design, placing the bid and going through scheduling, material procurement, construction, changing orders and ending with the commissioning, final payment and closing-up of the project. Due to the complex problems, the construction sector in Albania has for some time suffered from poor performance that result in increased cost and time, and in decreased quality. The major events happened, from the I and II World Wars to the regional conflicts that have followed, earthquakes, and other natural disaster and their increasing frequency and severity, have stimulated new studies on causes, effects and prediction, all parts of the evolution of risk management. In the 1970s and 1980s, risk management started to gain momentum having derived its origin from the insurance industry (A. Windapo, O. Martins, 2010). One of the earliest efforts to define risk management process belonged to Hertz and Thomas (1983), proposing a four-step procedure of risk identification, measurement, evaluation and reevaluation, following by Flanagan and Norman (1993), Edwards (1995), etc. Nowadays, risk management is an organized and regulated practice in developed countries. In countries such as United States of America, United Kingdom and Canada, risk management has become a universal management process involving quality of thought, quality of process and quality of action (Sesel, 2003). In contrast, in developing countries there are still problems on understanding and implementing these methods. Moreover, little research has explored risks in construction industry which is a high-risk business and haunts every participant: the project owner, construction companies, consultants, bankers and financial institutions, vendors & suppliers and even the service providers. Albania is a developing country; as a result the demand for founding infrastructure and other engineering projects is highly increasing. Since a major portion of Albanians budget is spent on investment in the construction industry, identifying the key risks in the construction process, perceiving information about potential effects and analyzing them will result in reducing the losses caused by possible incidents. Despite the importance of project risk management, unfortunately less attention has been paid to it. Beside some seminar works there is not any practical guideline on implementing these practices in construction industry. In these conditions this study gains a special importance as an initiator for further practices. The aiming of this investigation is to identify the current attitude regarding the importance of project risk and risk management, to define the main risk associated with construction industry and investigates difficulties to risk management implementation. Also, to propose recommendations to the construction participants to cope with the major risks in the industry and manage them effectively in long term. In order to accomplish the aim of the study, the following objectives have been recognized:

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i. Investigate the perception of project risk and project risk management; ii. To identify and classify key risks affecting construction projects; iii. To identify the barriers of implementation of risk management. 3 OVERVIEW OF RISK MANAGEMENT IN CONSTRUCTION INDUSTRY Risk is a multi face concept. It can be expressed as the potential for unwanted or negative consequences of an event or activity (Rowe, 1977), a threat and a challenge (Flanagan and Norman, 1993), a combination of probability of an event occurring and its consequences for project objectives (International Standarts IEC62198, 2001). According to PMI PMBoK (PMI , 2004), risk includes upside effects, the opportunities, but traditionally focuses on the downside, i.e. the negative effects. A review of risks definitions lead to the following faces of project risk: an event that focuses on the future, emphasize the negative effects, deals with the probability and consequences. A variety of risk definitions have been utilized also in construction projects, and there is not any standard description or methods available to explain the basis on what risk assessment is established. The level and scope of those risks vary from project to project and are tied directly to the context (the environment in which the project will be built such as geography, local regulations, etc.) and content (physical elements of the project such as scope, budget, materials, etc.) of the project (Davis and Prichard, 2000). Risk in construction cannot be eliminated but can be managed once taken. It can be controlled, minimized, transferred or shared. In these conditions the management of risk has become a key element for the completion of the project within time scheduled and planned budget, and has been frequently examined from 1987 till today. For risk management, there is not a single universal approach that can be followed to manage and controll risks. Construction requires the application of different types of resources to see a completed facility such as a multi-story building, an industrial project, or even a small room. These resources might include basic construction materials, manpower, equipment and technology, time and money. Each of these resources has some risks associated with it. For example, the risk of injuries or damage to the workforce and equipments, not completing the project as scheduled or on budget, or any means losses to the contractor as well as more losses and delays to the client. These resources, along with associated risks, should be identified and managed to minimize losses and increase profits. But what is risk management anyway? Baker (Baker, 1999), defined systematic project risk management as an advanced preparation and decision making for minimizing the consequences of possible adverse future events and, on the contrary, to maximize the benefits of positive future events, AS/NZS (AS/NZS4360, 2004) the culture, processes and structures that are directed towards realizing potential opportunities whilst managing adverse effects. Risk management is one of those ideas that sense that a logical, consistent and disciplined approach to the futures uncertainties will allow us to live with them prudently and productively, avoiding unnecessary waste of resources. It goes beyond faith and luck, the twin pillars of managing the future before we began learning how to measure probability (Risk Management Reports, 1999). A variety of risk management techniques has been studied and introduced in the literature by different authors. According to the Project Management Body Of Knowledge (PMI, 2004), the Project Risk Management processes include the following steps: Risk Management Planning: How to approach the risk management activities for a project Risk Identification: Identifying possible risks which might affect the project Qualitative Risk Analysis: Analyzing and prioritizing risks by assessing their probability of occurrence and impact Quantitative Risk Analysis: Numerical analyzes of identified risks Risk Response Planning: developing actions to enhance opportunities, and to reduce threats to project objectives The risk management process set out in the Australian and New Zealand Standard (AS/NZS, 2004), is illustrated in Fig. 1 and includes a five steps procedure interconnected to each other. According to Flanagan and Norman (Flanagan and Norman, 1993), risk management process is composed by four main steps: Risk identification, Risk Classifications, Risk Analysis and Risk Response.

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Fig.1: The Risk Management Process according to The Australia and New Zealand Standard on Risk Management(AS/NZS 4360:2004)

Fig. 2: The Risk Management Framework (Flanagan and Norman, 1993)

Similar to this approach, the British Standards (BSI8444, 1996) propose a five steps procedure to manage risks: Risk Identification, Risk Estimation, Risk Evaluation, Risk Response, and Risk Monitoring. Baker (Baker, 1999) have suggested fitting these five steps in a simple circular procedure which will yield a controlled risk environment. The first two steps, can came under the broader category of risk analysis. Risk analysis with risk evaluation can be grouped under risk assessment, with response and monitoring collectively entitled risk control. Another six steps risk management framework was presented by M.Th. van Staveren (M.Th.van Staveren, 2007) calling it Geo Q, where Q stands for quality. It is a cyclic risk management process for the ground in relation to construction activities including these main steps: Project Information, Risk Identification, Classification, Remediation, Evaluation, and Mobilization. Raz and Michael (Raz and Michael, 2001), suggested a process consisting of two main phases: risk assessment, which includes identification, analysis and prioritization, and risk control which includes risk management planning, risk resolution and risk monitoring planning, tracking and corrective action. Wang (Wang, 2004), in their study about risk management framework for construction projects in developing countries proposed a risk model, called Alien Eyes Risk Model showing the three risk hierarchy levels and the impact connection between risks. Zhou and Zhang (Zhou and Zhang, 2010), proposed a dynamic risk management system for big sized construction projects in China, composed of six main parts, namely event database, risk tracking, risk precontrol, risk assessment, risk identification, and risk database. 3.1. Risk Identification Risk identification is one of the most important steps in the risk management process and involves the identification of risks that threaten the outcome (time, cost, schedule or deliverables) of the project (Herman, 2003). There is an extensive literature focusing in the risk identification process evaluating the most frequently used tools and techniques available. Baker (Baker , 1999) identified as the most effective tool for identifying possible risks personal judgment, expert interview, and brainstorming. Akintoye and MacLeod, (Akintoye, 1997); Simister (Simister, 1998); Uher and Toakley (Uher and Toakley, 1999) stated the checklists as the most frequently used followed by brainstorming, flowchart, questionnaires and scenario planning, while Chapman (Chapman, 1997) highlighted the importance of group work introducing the Nominal Group Technique (NGT) and Delphi method (Table 1). Using these techniques a number of risks have been identified in different researches conducted in countries such as USA, Malaysia, Hong Kong, United Kingdom, etc. Washington State DOT (Washington State, 2002) prepared a list of 24 common risks classified in 9 categories; furthermore Office of Statewide Project Management Improvement (OSPMI, 2007) provided a sample risk list of 130 risks in 8 categories. Hassim (Hassim, 2009) identified 12 risks affecting industrialized building system in Malaysia, Zou (Zou, 2005) studied the construction risks in Australia from project stakeholder and life cycle perspectives identifying 20 key risks, etc. In this study, a total of 64 risks were compiled from these previous studies and some preliminary interviews with industrys practitioners, classified in 6 categories.

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Table 1: Risk Identification Tools

Akintoye and MacLeod (1997)

Hui and Yong (2008)

Hlaing et al (2008)

Baker et al. (1999)

Chapman, (1997)

Simister, (1998)

RI Tools

References

Brainstorming Checklist Scenario planning Expert interviews Nominal group Techniques Delphi methods Questionnaires Crawford slip methods Influence or risk diagramming Personal Intuition/Judgment Flowchart Site visit Historical data

O O

O O

O O O

O O O

O O

O O

O O

O O

O O O

4 RESEARCH METHODOLOGY The primary data for this research was collected via a questionnaire survey targeted at construction companies in the state of Albania. The construction practitioners surveyed were based in Tirana, basically because a large percentage of construction professionals are developing their activity in Tirana. Moreover, Tirana boasts of a good number of ongoing and recently completed development projects. The survey population was selected from 2 sources: (i) the general construction companies list published by Chambers of Commerce and Industry of Albania, (ii) a customized list of construction companies prepared from yellow pages and other sources. The questionnaire survey was administered by the means of two different ways: firstly, by email questionnaire, and secondly through distribution by the researcher to the selected companies. The questionnaire design was developed from literature review of past research focused on risks in construction. The questionnaire contained twenty questions which were grouped into four sections. Section A- Solicited background information about the respondent and the organization, Section B- Identified level of awareness and perception on project risk and risk management, Section C- Aimed the recognition and evaluation of key risks affecting construction projects, carrying a total of 64 risks associated with construction projects and asked respondents to review and indicate the likelihood of occurrence of these risks as very high, high, medium, low or very low and the level of impact on each project objective that would result in as catastrophic, major, moderate, minor or insignificant, Section D- identifies barriers and challenges for the implementation of risk management. Prior to distributing the questionnaire, a pilot study was conducted with one academic and two project managers to test whether the questions are intelligible, easy to answer, unambiguous, etc. Valuable feedbacks were obtained and after a small refinement, the questionnaire has been finalized. A total of 55 questionnaires were distributed to the construction companies from which 25 usable questionnaires were gathered. Hence, the response rate was 45.5%
Table 3: Breakdown of the responses

Total no of questionnaire sent 55

Total valid responses received 25

Questionnaires returned uncompleted 3

Percentage of valid responses 45.5%

This response rate is comfortable comparing to typical response rates of similar questionnaire surveys in construction industry. Different authors, who conducted similar survey such as Panthi (Panthi, 2007) received a response rate of 19.4%, Zou (Zou, 2007) received 33% and Wang (Wang, 2004) received a response rate of 7.75%.

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DATA ANALYSIS AND RESULTS

5.1 Data Analysis Method All returned questionnaires were thoroughly checked for completeness and suitability for use in the statistical analysis. To evaluate the opinion of respondents towards the questions a Likert scale using mean index formula (Abd.Majid, 1997) was developed.

Mean _ Index =

a x
N

i i

Where: ai- constant expressing the weight to each response (1 to 5) xi- frequency of the response N- Total number of response

In section C, the respondents were asked to score on the Likert-mode, scaled between 1-5, applied twodimensional scaling, the probability of recognized risk factors in case of happening as well as their expected consequences on project. (i) Likelihood (ii) Consequences
No Likelihood Description No 1 2 3 4 5 Likelihood Insignificant Minor Moderate Major Catastrophic Description Minor/negligible impact Trivial/small impact Moderate/Reasonable Critical Danger The effect is completely undesirable Very Low The occurrence is not anticipated 1 Low Trivial likelihood however could occur 2 Medium Possibility less than 50 50 3 High Possibility more than 50 50 4 Very High Almost certain it would occur 5 Table 4: Likelihood and Consequences of risk factors

Afterwards, the outcomes were utilized to designate the scores of likelihood and impacts to risk analysis matrix using the rating scales proposed by (Abd.Majid, 1997)
1. Very Low: 1 Mean Index<1.5 2. Low: 1.5Mean Index< 2.5 3. Medium: 2.5Mean Index<3.5 4. High: 3.5Mean Index<4.5 5. Very High: 4.5Mean Index<5 1. Insignificant: 1 Mean Index<1.5 2. Minor: 1.5Mean Index< 2.5 3. Moderate: 2.5 Mean Index<3.5 4. Major: 3.5Mean Index<4.5 5. Catastrophic: 4.5Mean Index<5

CONSEQUENCE 1 5 4 3 2 1 M M L L L LIKELIHOOD 2 H M M M L 3 H H M M M 4 E H H M M 5 E E E H M

Table 5: Qualitative Risk Analysis Matrix-Level of risk

5.2 Analysis Results 5.2.1. Section A- Respondent Organizations Characteristics 5.2.1.1 Responded Background ___________________________________________________________________________ Executive Project Manager Investor Project Designer Engineer Other Fields 16 % 0% 32 % 36 % 16 %
Table 6: Respondent job position

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Table 6 shows that 36 % of the respondents posses project manager position, followed by 32 % executive engineers, and another 16% project designers. Most of the respondents, 52%, have more than 10 years practical experience in the construction sector. Under 5 years 24 % 6-10 years 24 % 11-15 years 12 % 5.2.1.2 16-20 years 32 % Above 21 years 8%

Table 7: Respondent practical experience

Organization Profile

Figure 3 depicts information about the size of respondent organizations and the type of projects they are involved in. The size of the companies is decided on the number of the technical employees, as follows: 15small size, 6-10medium size, 11-morelarge size
Large Size 16% Medium Size 28% Small Size 56% Heavy Industry Projects 20%
Fig 3: Size of Respondent Organizations and Sector of Construction Industry Involved

Industrial Projects 10%

Other (consulta nce, etc) 7% Building Projects 63%

The results indicate that 56% of respondents organizations are small size, compared to a 46% of big sized companies; most of them are involved in residential or commercial buildings; 67% is using reinforced concrete construction for their projects. 5.2.2. Section B- Level of awareness and perception on project risk and risk management 5.2.2.1. Using Risk Management 92 % of the respondents had never been involved directly or indirectly in the practice of managing risk. From further interviews resulted that 40% of these respondents heard about risk management only occasionally. That is, risk management is certainly not a term vocabulary they are familiar with. Only 12 % of the respondents organisations are practicing competely risk management on their job, 13% use it only ocasionaly, while the rest, 72%, do never use risk management practice in their work. Although the survey indicated the low level of awareness of risk management in the clients organization, their perception towards risk management is very encouraging. Most of them, agreed that risk management can positively affect productivity, performance, quality and the project budget, defining risk management techniques very important on achieving project objectives. This new concept will eventually become more acceptable and there is a brighter future to be implemented in this industry.

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80% 60% 40% 20% 0% Never Sometimes Completely

80% 60% 40% 20% 0% Not at all Some Very Important

Fig.4: Using risk management

Fig.5: Effectiveness of risk management on project objectives

5.2.2.2. Project Risk and Project Risk Management Perception The perception of construction project risk was investigated asking a short definition of it. Only 52 % of the responders answered to this question defining project risk as: a future event that may risk the well going of the service (23%), uncertain events that may be caused by uncertainty in financial market, market competitiveness, low and regulations, etc, (15.3%), unexpected events that may happen when the project is not well planned (53.38%). For the same purpose, the responders were asked to express their perception on project risk management techniques. 70% of the respondents equalized risk management techniques to a detailed planning, which shows a gap in the perception and understanding of these practical techniques. 5.2.3. Section C- Evaluation of key risks affecting construction projects All risks observed in the questionnaire can happen to any construction projects. The main purpose of this investigation is not to identify a list of risks but to ascertain the key risks that significantly influence the construction projects in Albania. The tables below embrace the risk factors and risk levels of them. Risk levels are calculated via utilization of qualitative method through using risk analysis matrix, after calculating the likelihood and the consequences of each risk factor. 5.2.3.1. Financial Risk Factors
Table 8: Financial Risks in the Albanian Construction Projects Category Rank Risk Description 1 Availability of funds from clients on time 2 Using inexperienced personnel due to financial issues 3 Delay in payments Probability of changes in volume work, resulting in 4 decreasing in profitable items 5 Changes in market conditions 6 Change of financial resources 7 Local taxes 8 Fluctuation of inflation rate 9 Labor disruptions 10 Fluctuation of exchange rate Financial Risks L 3.56 3.16 3.12 2.95 2.63 2.49 2.49 2.47 2.46 2.44 C 3.76 3.6 3.16 3.2 3.32 2.62 2.60 2.65 3.4 2.56 Level of Risk H H M M M M M M M M

According to Table 8, there are ten risks related to Financial Risk Category. Out of these, two factors are evaluated as high risk level, as: Availability of funds from clients on time and Using inexperienced personnel due to financial issues. The reason why these two risks are evaluated as high risk levels is because of their high possibility to happen, and their consequences in case of occurrence is very high, named major in Table 4. In addition to factors evaluated with high risk level, the rest are recognised as risks with moderate risk levels. It is worth noting that these risk factors compare to those having high level of risk have a lower probablility to occur, but in case of occurrence their consequences would be considerably important. In these conditions, preventative measures should be considered by managers to be applied.

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5.2.3.2. Technical Risk Factors

Risk Description Accidents on site Shortages in supply of basic urban services (water, gas, 2 electricity, etc.) 3 Inadequate site investigation/ Unforeseen site conditions Lack of adoption between technical specifications and 4 status of construction 5 Stipulations of specific codes and standards 6 Changes of design in different stages 7 Poor quality of produced materials 8 Inexperienced designer/builder 9 Incomplete design/ Errors in design drawings 10 Lack of productivity equipments 11 Shortage of skills or technology 12 Uncertainty over the source and availability of materials Table 9: Technical Risks in the Albanian Construction Projects Technical Risks Category Rank 1 L 3.48 3.44 3.28 3.53 3.08 3.50 3.16 2.88 2.96 2.68 2.80 2.12 C 4.12 4.12 3.96 3.50 3.96 3.20 3.50 3.52 3.32 3.36 2.96 2.76 Level of Risk H H H H H H H H M M M M

As seen in Table 9, respondents evaluated 'Accidents on site, shortages in supply of basic urban serives, Inadequate site investigation/ Unforeseen site conditions, Stipulations of specific codes and standards, Inexperienced designer/builder and Poor quality of produced materials as factors with high risk level, because of their majour consequences in case of occurence. This risk category increases the probability of uncertain, unpredictable and even undesirable impact on construction progress. However, the risk of Changes of design in different stagesdid not appear with significant consequences, but it is estimated as a high risk level due to its high probability of occurrence. Lack of adoption between technical specifications and status of construction is evaluated a very serious risk due to its high probability and major cosequences. 5.2.3.3. Design and Construction Risk Factors
Risk Description Damage during construction due to negligence of any 1 party 2 Surveys incomplete 3 Price escalation on materials, equipments, labor, etc. 4 Delay in importing work orders correctively and on time 5 Non standardization of details 6 Design not up to department standards 7 Incompetence of subcontractors 8 Project extension time because of changes 9 Inaccurate contract time estimates 10 Unidentified utilities 11 Poor design and shop drawings 12 Design incomplete Delay in demolition due to sensitive habitat requirements 13 or other 14 Late confirmations and approvals 15 Unforeseen construction windows 16 Delay in receiving information from consultant 17 Unforeseen design expectations Table 10: Design and Construction Risks in the Albanian Construction Projects Design & Construction Risks Category Rank L 3.72 3.6 3.60 3.56 3.50 3.52 3.28 3.28 3.12 3.04 3.12 2.95 2.75 2.58 2.88 2.68 2.60 C 3.60 3.65 3.64 3.5 3.65 3.45 3.64 3.60 3.58 3.28 3.08 3.08 3.12 3.32 2.88 3.08 2.60 Level of Risk H H H H H H H H H M M M M M M M M

Table 10 ilustrates that there are seventeen risk facors identified under the category of design and construction risks. Out of these seventeen factors, nine factors have the high risk level and the remainer have a moderate risk level. Among risk factors with high level Damage during construction due to negligence of any party,Surveys incomplete, Price escalation on materials, equipments, labor, etc,and Non standardization of details have the highes amount of possibility as well as severity of consequences. The others are evaluated with notebly high consequences, but lower probability. The rest of risk factors are evaluated as moderate risk levels. Both likelihood and consequences are nearly at the same degree, with minor differences, and evaluated as possible.

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5.2.3.4. Organisational Risk Factors

Risk Description Pressure to deliver project on an accelerated schedule Too many projects Change in key staffing throughout the project Inexperienced staff assigned Insufficient time to plan 5 Poor coordination/ Poor relations between parties 6 Consultants or contractor delays 7 Functional units not available or overloaded Table 11: Organisational Risks in the Albanian Construction Projects Organizational Risks Category Code 1 2 3 4 L 3.64 3.12 2.96 2.84 2.96 2.68 3.04 2.58 C 3.60 3.56 3.72 3.50 3.28 3.54 3.08 2.79 Level of Risk H H H H M H M M

The most risky factor is considered Pressure to deliver project on an accelerated schedule, which was evaluated with high likelihood of occurrence and major consequences in case of occurrence, followed by the risk of too many project contemporarly, change in key staff throughout the project and inexperienced staff assigned which are evaluated with a medium probability of occurrence, but with major effects. 5.2.3.5. Policy and Political Risk Factors
Risk Description New permits required Loss incurred due to political changes Relocation of financial resources from one project to 3 another 4 Variations at managerial level 5 Funding changes for fiscal year 6 Changes in codes and regulations 7 Labor disputes or strikes 8 Opponents Table 12: Financial Risks in the Albanian Construction Projects Policy and Political Risks Category Rank 1 2 L 3.42 2.62 2.59 2.53 2.42 2.30 2.20 1.91 C 3.24 3.75 3.45 2.65 3.41 2.65 2.1 2.12 Level of Risk M H M M M M M M

According to table 12, there are altogether eight risks factors listed in the category of Policy and Political. Respondents evaluated almost all of them, with one exception, as moderate risk level. Loss incured due to political changes is evaluated as high risk due to its severity in case of occurrence. As we notice from the above table, the policy and political risks have a lower level of probability of occurrence compared to the consequences. 5.2.3.6. Weather and Environmental Risk Factors
Risk Description Insufficient availability of project data and mapping at the 1 beginning of the environment study 2 Unusual unforeseen weather Lack of consideration of: place of construction, season of 3 the year 4 Force majeure Pollutions such as dust, harmful gases, noise, solid and 5 liquid wastes Lack of specialized staff (archeology, anthropology, 6 biology, etc.) 7 Environmental regulation changes 8 Lack of observing the safety measures Table 13: Weather and Environmental Risks in the Albanian Construction Projects Weather and Environmental Risks Category Rank L 3.56 2.47 2.32 2.5 2.56 2.30 2.01 1.58 C 2.97 3.56 3.36 3.60 2.12 2.2 2.14 2.58 Level of Risk H M M H H M M M

Among the risk factors in the category weather and environmental,Insufficient data is ranked the as the morst factor important because of its high likelihood of occurrence, evaluated as high. On the other hand, there are two other risk factors evaluated with high risk level named Force majeure and Pollutions such as dust, harmful gases.

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6 BARRIERS AND CHALLENGES FOR THE IMPLEMENTATION OF RISK MANAGEMENT Risk management is not new and its techniques are well documented all over the world. So, it is the implementation of risk management that has to be done efficiently. On this basis, this section investigates the efficacy of risk management within the Albanian construction industry with particular emphasis on barriers and solutions to this activity. The above statistics clearly point out that project staff, mainly, relies on their own intuition, experience and in a traditional way of planning through detailed work-plans. To better understand the barriers to risk management, some possible factors that may affect risk management implementation were further investigated. Respondents were asked to identify from their experience the most important barriers to risk management. The barriers in implementing risk management are expected to be in the areas of knowledge, money, time, expertise, cooperation among team members, unsupportive culture in construction industry, instability, etc. Fig.6 shows the number of respondents that perceive companies are facing problems according to problem areas. So, 20 out of 25 respondents, which make a rate of 80%, believe that they lack of information and knowledge on risk management techniques is the main barrier to risk management, followed by 16 out of 25, who believe that the companies lack of practical expertise to lead risk management team is an important barrier. 32% (8 out of 25) do think that multiplicity of variable factors in projects makes the implementation of risk management techniques very hard, and another 32% believe that the prediction of risks and the application of risk management techniques is very difficult due to lack of political and economical country stability. Unsupportive culture in construction industry achieved one of the highest rates, (22 out of 25 responders). Making up only 1 and 4 out of 25, lack of time and lack of money, respectively, represented the least important barrier with average importance.
25 20 15 10 5 0

Fig. 6: The Respondents' View on Barriers of Implementation of Risk Management in the Albanian Construction Projects

This research found that the majority of the respondents attribute the problem of risk management implementation to the unsupportive Albanian industrial culture and to the organizations top management. They suggested that top management should provide training to develop expertise and come up with a workable guideline. Furthermore, the majority of the respondents feel very strongly that the implementation of risk management should be promoted by all who have a direct interest in the construction industry, including the government. 6.1 Improving Risk Management Implementation During further self-administrated interviews conducted, the respondents offered different suggestions on how risk management implementation can be improved in Albanian construction industry:

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Integrate risk management in organizational culture: The process can be made more formal in case financial penalties will be given for non-compliance. A respondent suggested that risk register may become a contract requirement Right attitude towards risks: The interviews pointed out that the industry was seen as being risk-averse. It was explained by the respondents as cited: RM require too much effort, we always add contingency anyway Risks are inevitable; it will cost what it costs Why should we use RM techniques? We have always done this way and nothing happened to us We will start the project and fix the problems during the way; No need for RM Organization must promote the concept of risk responsibility in their culture. Make an early start of risks identification: The construction projects start with the very early stage of the project-idea and the feasibility study. So, risks should be examined very early before the design stage and certainly before actual projects commence on site. Maximum use of the experience: Experience is very valuable to risk management process. One of the respondents remarked that there is an increasing number of inexperienced staff within the construction industry in order to reduce the costs. The suggestion is not to rely only on past experience, but not to discount it. Training: Both government and private construction organizations need to focus on the importance of risk management in their systems. Organizations top management must encourage innovative solutions to enhance earned value through risk management processes, instead of working in a traditional way Organizations' policies need to include clear motivational clauses to encourage employees to develop themselves and to acquire new techniques Training programs should be provided by the educational system/universities 7 CONCLUSION Risk management is a process whereby potential risks are identified and evaluated early enough in order to take the adequate steps to mitigate the risks when they occur. Based on the perception of the respondents organisations, the investigation conducted studied the status of the risk management practice in Albaninan construction industry. The major findings of this study include: - Risk in construction is percepted as unexpected event which effect completion of the project i.e. terms of cost, time and quality of performance - The risk management systems application in the Albanian industry tends to be informal. Construction companies rely in a traditional way of planning through detailed work plans. - Although the survey indicated a low level of awareness of RM, their perception towards RM is very encouraging. Respondents agreed management techniques must be introduced into the construction industry in order to minimize the chances of failure or delays. - The most important project risks related to different categories are: Availability of funds from clients on time,(Financial Risks), Accidents on site,(Technical Risks), Damage during construction due to negligence of any party(Design and Construction Risks), Pressure to deliver project on an accelerated schedule(Organizational Risks), New permits required(Policy and Political Risks), and Insufficient availability of project data and mapping at the beginning of the environment study (Weather and Environmental Risks). - Unsupportive culture, Lack of information and knowledge on risk management, and Lack of practical experience are the top three barriers to risk management, with other barriers being also rated with moderate scores. - The findings of the research will hopefully support the more successful implementation of RM in construction projects. 8 REFERENCES

Abd.Majid, M. Z. and McCaffer, R.: Assessment of work performance of maintenance contractors in Saudi Arabia. In: Journal of Management in Engineering, ASCE, 13, 1997. Akintoye, A S and MacLeod, M J: Risk analysis and management in construction. In: International Journal of Project Management, 15(1), 31-8, 1997 AS/NZS 4360 Australian / New Zealand Standard on Risk Management, Standards Australia and Standards New Zealand, 2004 Baker, W. and Reid, H.: Identifying and Managing Risk, French Forest, N.S.W.: Pearson Education, 2005 Chapman, C.: Project risk analysis and management-PRAM the generic process. In: International Journal of Project Management, 15, 273-281, 1997.

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