Perspectives of Severity in the Choice of Risk Management Techniques

This study examines the risk management practices prevalent in the South African construction industry. This was necessitated by ineffective risk management practices in the construction industry, particularly in developing countries such as South Africa. A comprehensive literature review was conducted to establish the risk management practices in use. The study adopted a quantitative research approach that employs an electronic questionnaire to contractors operating in South Africa. The findings suggest that the South African construction industry experiences ineffective risk management implementation, which is impacted by the perception of the risk severity. The study established that contractors face many risks, chief among them high competition in bids, political instability, payment delays, corruption and bribery and an overbearing influence of bureaucratic processes from government-aligned agencies. Furthermore, it was also established that risk management techniques used amongst South African contractors are largely informal with low implementation. It also emerged that risk management implementation is perceived to be an expensive venture that erodes the marginal profits contractors aim to make. Resultantly, risk management practices implementation is low among the contractors. The study recommends that public and private construction clients encourage adopting risk management practices linked to good practice and not based on perceptions of risk severity.