Risk Assignment Patterns of Small Subcontracting Firms in the Nigerian Construction Industry

Abstract

This paper is concerned with the appraising the pattern of risk assignment in construction works undertaken by small subcontracting firms. The aim of this study was to establish the prioritization of risks by small construction subcontracting firms by (I) determining which risks were identified and assigned in construction contracts handled by SMEs, (ii) ranking the assigned risks based on their frequencies. The scope of the study covered completed or ongoing public and private sector construction projects within the F.C.T Abuja and Niger State. Information realized from an extensive literature survey was filtered and modified to derive 29 risk events, which formed the basis of the survey questionnaire employed by the study. The findings of the study revealed that in about 54% of subcontract, between 11 and 20 risk events were identified and assigned between the contract parties. This was below the number of risk events assigned under common construction contracts such as that of the Joint Contracts Tribunal (JCT). Sixty-eight percent (68%) of all identified risk events were assigned to the subcontractor. The top five risk events that were most frequently identified and assigned in construction subcontracts were all potential events that lay outside the influence of the subcontractors. The study recommended that on very small and simple jobs, the risk events to be covered by subcontractors could be limited to the 10 events presented in this paper. Special notice should be taken of (I) Inflation, (ii) Poor quality of procured material, because these risks were the least likely risks to be assigned.