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An Analysis of Business Risks in Construction Industry by Comparing the Saudi Arabia with Qatar

Table of Contents

Working Title. 3
Abstract 3
Research Question. 4
Rationale. 4
Research Purpose. 6
Literature. 6

6.1 Mapping Relevant Literature. 6
6.2 Literature Review.. 7
6.3 Role of Theory. 10

Methodology and Methods. 11

8.1 Methodology. 11
8.2 Level of analysis. 12
8.3 Methods. 13
8.3.1 Data Collection. 13
8.3.2 Data Analysis. 13
8.4 Reliability and Validity. 14
8.4.1 Validity. 14
8.4.2 Reliability. 14
8.5 Ethical Consideration. 15

Discussion. 15
Proposed work schedule. 16
References. 18
Bibliography. 20

1. Working Title
Business Risks in the Construction Industry: A Comparative Study between Saudi Arabia and Qatar
2. Abstract
Construction industry is one of most highly risk prone industries characterised by extremely complex and dynamic environments leading to high uncertainty and risk on the projects within the industry. As earlier pointed by researchers and scholars, the construction industry is highly vulnerable to numerous technical and socio-political risks. Among the key stakeholders in the industry who are most affected by such uncertainties and risks in the construction industry are the contractors as they are mandated to fulfil their promises to their clients in such highly vulnerable environment. Reinforced by the highly turbulent economic and climatic conditions, the complexity in the environment has been expanding; and thus has necessitated a rigorous analysis of the risks and uncertainties by contractors before embarking on any construction project.
With the increasing client expectations in terms of quality and functional attributes on modern-day business environment where technology and increased human expertise has been explicit, project contractors in the construction industry are mandated with an extra duty of ensuring that they give a critical focus on the risks and uncertainties in their projects in order to ensure that the projects do not only avoid budget and time overruns, but also meet the clients’ expectations. In the light of these developments, it can be argued that effective risk management system in the construction industry remains the only key towards achieving overwhelming success on projects in the industry. The aim of this study will be to identify and evaluate business risks in the construction industry by conducting a comparative study between the Kingdom of Saudi Arabia and Qatar. As such, I propose to use only questionnaires in collecting data from project managers in the construction industries in both the countries in order to develop more insights on the key risks that the majority of the firms in the industry incur.
3. Research Question
The overarching research question in my study is as follows:
What are the current business risks and uncertainties in the Saudi Arabian and Qatari construction industries?
In the light of this research question, I will adopt the following sub-questions that will guide me throughout the study in examining the key issues underpinning my study:

What are the project risks in the construction industries of Saudi Arabia and Qatar?
How can business risks and uncertainties be identified in the construction industries of Saudi Arabia and Qatar?
How can the business risks in the construction risk be reduced in these two countries?

4. Rationale
I have strong innate interests in the construction industry, as I believe construction forms the realm of the future in the society today. Being a citizen of the Kingdom of Saudi Arabia, I am more interested to explore the best project management practices in the country’s construction industry by identifying the business risks that usually face contractors in the industry. Considering that risks and uncertainties are among the key challenges that contractors in the construction industry experience, and thus my special focus is to unveil the major business risks and uncertainties that face the construction industry. This will be done by conducting a comparative study between Saudi Arabia and Qatar where much of the focus will be given on the business risks in the construction industry means that an in-depth understanding of the dynamics in the industry is established which would make it easier for operators and managers in the industry to overcome the risks involved in the industry.
As an engineering student with strong passion in the construction industry, I have come to realise that over in both the developing and developed countries 90% of project failures in the construction industry is due to poor risk and contingency management. As a result of the complexities in many construction projects, Cretu, Stewart & Berends (2011) points out that higher risks for inefficiencies are created. My interest is to demonstrate how effective risk and uncertainty mitigation strategy in the construction industry, regardless of the complexity and magnitude of the projects, can lead to successful overcoming of the challenges involved.
While a great amount of past research has been conducted to analyse risk management in construction industries, the dynamic nature of technologies and changing environmental threats ranging from natural ones to human-made threats, an up-to-date research is required to explore how business owners and contractors can mitigate risks and uncertainties in the construction industry. Reinforced by the increasing demand for housing facilities, expansion of industrialization, and development of new and more advanced infrastructure; it has increasingly become important that to unveil strategies on how complexities associated with structural constructions leading to high risks and uncertainties can be reduced through effective risk management and mitigation strategies. Considering that I have strong passion in the construction industry, my research fits that perspective because I intend to explore the risks and uncertainties that contractors in the construction industry experience where I seek to analyse the mitigation strategies for such risks and uncertainties.
5. Research Purpose
The purpose of this study is to explore the business risks in the construction industry, where I intend to develop in-depth understanding of the factors affecting successful completion of construction projects, perceived risks and mitigation strategies in Saudi Arabia and Qatar. The utmost focus in this study, therefore, is to provide insights on the key risks and their impacts in the construction industry in the focus countries; and further provide strategies for contractors and owners of projects in the construction industry in order to make their projects more productive. As such, on successful completion of this study, I expect to develop a management function on business risks and uncertainties by establishing the best practices which improve the performance and realisation of projects in the construction industry.
6. Literature
6.1 Mapping Relevant Literature
The literature that will be considered in this study focuses on eight key areas associated with project risk which include project management integration, flow of information, human resources, contract management, costs, time constraints, quality requirements, and the scope of the projects (as shown in figure 1 below). As illustrated in this model, risk-driven project management must consider time and scheduling issues of the project, cost fluctuations, quality requirements, and safety issues and feasibility of the projects. In the light of the research question,
Figure 1 – The field of literature
6.2 Literature Review
According to Shina (2013), the construction industry is a highly-risky industry as characterised by high costs and low profit margin. As such, project failures usually lead to massive losses both to the owners and the contractors of the projects within the industry. The concept of ‘risk’ in constriction industry has been widely explored. Over the years, the concept of ‘risk’ in the construction industry has evolved and attracted numerous definitions. Loosemore et al (2005) defines ‘risk’ as the exposure to loss or inability to achieve intended goals within a given project. Similarly, El-Sayegh (2008) considers ‘business risk’ in the construction sector as the possibility of loss on the course of a construction project. The concept of ‘risk’ has led to the development of ‘risk management’ concept which has gained popularity over the recent years, as scholars and practitioners seek to establish holistic approaches on how to manage risks in projects. With reference to Perera, Dhanasinghe & Rameezdeen (2009), risk management involves the process through a project is planned, controlled, and coordinated to maximise its success.
Schieg (2006) established the risk-driven project management which focuses on all the aspects of construction project. One of the key elements of project that Wang, Dulaimi & Aguria (2004) points out to be critical while planning projects in the construction industry is the integration management which comprises of all the processes that are required to ensure that all the stages of the project are properly coordinated. In essence, the project lifecycle ought to be given a specific consideration in order to ensure that trade-offs are considered at planning stage of the project.
Another key important risk factor that Serpella et al (2014) consider to be critical in construction projects include information sharing and communication accuracy. The flow of information within team members on a project is critical because with information sharing inconsistencies, communication is disrupted which can largely interfere with the activities within the project. In mega-size projects, sharing of information back and forth to the other stakeholders in the project ensures coherence on the activities within the project which contribute towards successful completion of the project, while reducing the risks of project implementation inconsistencies.
Based on Edwards & Bowen (1999) model on project risk reduction model, the availability and productivity human resources are pointed out to be critical in reducing business risk in a project. Considering that most of the construction projects are technical and necessitate a highly qualified team of workforce (Loosemore et al, 2005; Tohidi, 2011), adopting a competitive workforce, which has the capacity to achieve the projects’ goals and targets is necessary. Based on an empirical study conducted by El-Sayegh (2008), about 64% of IT construction projects in the Britain have failed due to poor workforce selection strategy. As such, it can be argued that human resources productivity and competency ought to be put into consideration during risk management in a construction project.
Budget-cost overruns is also another key issue in risk management of construct projects that Shina (2013) considers to be quite important to put into consideration. As observed by Perera et al (2009), economic changes and uncertainties are among key reasons why budget-cost overruns occur in construction projects running for relatively longer periods of time. In this regard, cost-variation forecasting based on economic trends ought to be done by project managers in order to reduce the costs of budget-cost overruns which usually occur when future cost variations are not put into consideration.
Moreover, time-overrun is another key project management challenge that comes as a result of poor risk management strategy. With regard to an empirical study conducted by McGraw-Hill Construction (2011), 84% of construction firms in Britain reported at least a project with time overrun. Similarly, an earlier study conducted by El-Sayegh (2008) revealed that time overrun as a result of under-estimation of the time required to complete a project or disruptions by both artificial or natural calamities usually lead to delayed completion of projects. While time overruns can have massive repercussions for project owners leading to huge losses, it is important that mangers evaluate the project timeframe holistically in order to ensure that the projects are not delayed to avoid losses associated time overruns in projects.
Moreover, exploring the scope of the project in terms expectations and feasibility is another issue that project managers in the construction industry should put into consideration in order to avoid project failures. Scope creep in projects is situation of uncontrolled changes in the scope of the project, leading to increased complexity in the project (McGraw-Hill Construction, 2011). As such, it is quite important for project managers to understand the expected outcomes, being critical to the clients, clarifying on the expected scope and establishment of controls, while employing efficient resources in each activity within the project (El-Sayegh, 2008).
Further, Serpella et al (2014) observed that it is important to establish the quality requirements and standards required by the client within a project. This is quite important in order as it defines the nature of the contract in which the contractor gets committed to the project deal. According to McGraw-Hill Construction (2011), meeting the expectations of the clients is the bottom-line of projects and thus the contractors must plan on how to incorporate the best of human resources, and other resources in order to be able to meet the specific requirements and expectations of the clients. By addressing client expectations before the start of a project, it is usually easier to mitigate the risk of project failure as a result of inability to meet the needs of the clients.
6.3 Role of Theory
Risk management literature has increasingly become useful, both to practitioners and scholars in their bid to seek more sustainable strategies of mitigating the risks involved in the construction projects. In broader terms, various models including the project management maturity model as presented by Yeo & Ren (2009) among others have been established to redefine the realms of project planning in order to identify sources of risk in projects so as to mitigate them in time. Being directly involved in reducing business risks in projects, contractors have emerged to be the key sources of influence on project management and planning in order to reduce any risks involved in the construction projects. Extensive literature on risk management in the construction projects exist with much of the focus being given on risk identification as the fundamental step towards mitigating the risks involved in any construction project. For the purpose of my study, I intent to use theories and models on risk management in construction projects from a contractor lens. While many theories emphasise on risk analysis in order to identify its impact on the project, the utmost focus in selecting theoretical frameworks for this study would be given on the appropriateness of the model or theory in explaining the practicability of risk management in the construction industry.
My intention, after reviewing the relevant literature is to establish a comprehensive of examining, in the context of a case study scenario, the underlying business risks in the construction industry, where the ultimate role of contractors in mitigating business risks in construction projects are put into focus. While selecting theoretical models for review in this study, I will seek to select only those models which are specific in the construction projects; and hence those which would be best positioned in the context of my study. Despite that my findings will be limited to a case study of few organisations, I intend to evaluate whether the existing literature and theories on risk management in the construction industry embraces the issues identified in my study. On this basis, therefore, my proposed study seeks to establish the extent the existing models and theories on risk management in the construction industry can be considered to be valid or not based on the dynamics facing the industry over the recent years.
8. Methodology and Methods
8.1 Methodology
Methodology in a research study comprises of theoretical analysis of the methods that are applied and adopted by the researcher based on the nature of the research problem and branch of knowledge in which the study is based on (Creswell, 2014; Fisher, 2010). These comprises of the research philosophy and approach that the researcher adopts in a study. In this study, I consider pragmatism philosophical approach to be the most appropriate philosophy that I will use in this study. I think pragmatism is the best philosophy for my research as it considers claims or propositions to be true if they work satisfactorily and that their practical results are acceptable (Gill & Johnson, 2010).
Considering that my study aims at establishing the business risks and uncertainties in the construction industry while seeking to propose mitigation strategies for such risks, I consider pragmatism to be the most appropriate philosophical approach for my study because of its effectiveness in establishing how practical a claim is based on the actual results obtained from it. As such, I intend to use deductive reasoning approach in order to measure how various project planning tools are important in reducing business risks in the construction industry. As such, I consider my study to be a comparative case study design; where multiple organisations from the construction industries in the Kingdom of Saudi Arabia and Qatar will be investigated.
8.2 Level of analysis
The focus of analysis in my study is the identification of business risks and uncertainties in the construction industries in the Kingdom of Saudi Arabia and Qatar, which will further form the basis for developing mitigation strategies for the risks involved in managing projects in the industries. Being among the most rapidly developing countries in the Gulf region, studying both Saudi Arabian and Qatar constriction industry is a viable area of investigation due to the numerous number of construction projects in the two countries as they continue to experience mass growth and development in their economy. Within my focus, therefore, my study will use the contractors in the construction industries in the two countries as the unit of analysis. As such, contractors in the Kingdom of Saudi Arabia and Qatar construction industries will be the utmost units of analysis in this study.
8.3 Methods
8.3.1 Data Collection
While both secondary and primary data will be collected in this study, much of the focus will be given on the primary data. Only quantitative data will be collected in this study where questionnaires will be used the main data collection tools. The questionnaires will be administered to a sample of 100 contractors and managers in the construction firms in Qatar and Saudi Arabia; where in each country 50 contractors will be contacted. In the questionnaires, the questions will be carefully designed to identify the major risks in construction projects, and the strategies that the contractors and managers employ to achieve success in the projects. Primary data in this study will be supplemented with secondary data where the sources of secondary data will be books, journal articles, and industry publications. The source of secondary sources of data will be selected based on their credibility and reliability, as well as their relevance to the research problem in this study.
8.3.2 Data Analysis
Data analysis is among the most critical steps in a research study as it enables the researcher to breakdown the collected data into simpler and meaningful form (Kumar, 2010; Collis and Hussey, 2009). Considering that I will collect only quantitative data, I will use only statistical data analysis strategies. As such, quantitative data from questionnaires will be statistically analysed using SPSS 17.0 software where t-test and chi-square methods will be employed to analyse the data. The aim of quantitative data in this study will be to empirically measure the significance of various risk management strategies in the construction industry.
8.4 Reliability and Validity
8.4.1 Validity
According to Marczyk, Dematteo & Festinger (2010), research validity is the extent at which a research instrument measures accurately what it is supposed to measure. The two key errors in a research study which largely interfere with the validity of findings in a research include researcher error and participant error. Researcher error refers to the bias issues related to the subjective interpretation of the research findings which may largely interfere with the generalisability of the findings obtained. In this study, the researcher will ensure that researcher error is minimised by the adopted a structured checklist when analysing the data obtained in this study. On the other hand, participant error will be reduced by ensuring all the questions asked to the participants are easy to understand, and are directly related to the research problem. External validity in this study will be ensured through having great diversity among the participants who will be selected from multiple of organisations.
8.4.2 Reliability
Reliability in a research study refers to the extent at which findings in a research study can be consistently replicated in multiple similar studies (Saunders, Lewis & Thornhill, 2009). In essence, reliability is mainly related with the dependability of research findings obtained in a study. Among the key main threats of reliability in a research study include the subject error, relative research bias, and relative participant bias. I my study, I will reduce the subject error by planning the all the data collection procedures in advance so that my research can benefit from rushed data collection process which can lead to errors in the collected data. On the other hand, I will reduce relative participant error by ensuring that the data collection tool (questionnaires) is easy to understand and related to the research problem. With regard to the relative observer (researcher) error, I will try to be impartial as much as possible, where I will only make interpretations based on a checklist that I will have established before collecting the data.
8.5 Ethical Consideration
Throughout the data collection process, I will employ high degree of ethical considerations as guided by Simon (2011) who argues that ethics in a research study are important as they ensure that the research findings are valid and reliable. One of the key ethical considerations in this study is that, all the participants will be given the freedom to participate in the study, where they will be free to withdraw from the study at any time they want. Moreover, I will ensure that any confidential information among the participants will be safely stored and won’t be leaked to third parties. Moreover, no physical, emotional or psychological harm will be caused to the participants as the questions asked in this study will be carefully selected in order to ensure that they don’t arouse any emotions or psychological torture to the participants. Further, the researcher will ensure that the participants have informed consent before embarking on the study. By adopting these ethical practices, the researcher is confident that the study findings will be reliable and generalisable.
9. Discussion
This study will mainly be related to the project management maturity model which defines the risks and uncertainties in a research study. By understanding the relationships between effective risk identification, implementation of contingency plans and project success, my study seeks to bring into focus how successful risk management strategy in construction projects can be employed. As such, the findings in my study will help in drawing more comprehensive picture on how to achieve high success rate of projects in the construction industry by identifying and mitigating risks in advance. My study’s findings are expected to contribute practically to the Saudi Arabian and Qatari construction industries as it will provide insightful ideas on the key risks involved in many construction projects and how to overcome such risks. A comparative approach on the key risk management strategies employed in both countries will also be brought into focus in this study. As such, the findings in my study are more likely to act as blueprint to managers in the construction industries in both the countries, which is expected to enhance timely project completion with high client satisfaction.
10. Proposed work schedule
My dissertation is due 25 weeks time, and thus my plan is to have everything completed before the deadline. My plan is to spend about two months in Riyadh in Saudi Arabia and Doha in Qatar where I will stay for a period of one month in each city so as to conduct data collection process which will be initiated by asking permission first, then followed by selecting the participants and afterwards the actual data collection procedure. As shown in Gantt chart below (table 1), I will start this project with critical literature review, followed by the formulation of data collection tools (interview questions and questionnaires). Afterwards, I will seek permission for the organisations I intend to use for data collection and then select the participants for the questionnaires. This is followed by the actual data collection, where the collected data is further analysed. I will then write the other parts of the dissertation and revise the literature review if necessary, and then submit the first draft of the dissertation.
Table 1 – Gantt chart showing proposed research schedule  


Week number

Critical Review of the Literature

Formulation of data collection tools

Asking permission and selecting participants

Preparing for data collection

Actual data collection

Analysis of primary data

Writing other parts of the dissertation

Update Literature Review if necessary

First draft of the dissertation

Revising draft of the dissertation

Second draft of the dissertation

Revising draft of the dissertation

Submit final version of the dissertation


11. References
Collis, J. and Hussey, R. (2009), Business research: a practical guide for undergraduate and postgraduate students, 3rd edn, Palgrave Macmillan, Basingstoke.
Creswell, J. (2014), Research design: Qualitative, quantitative, and mixed methods approaches, SAGE Publications, London.
Cretu, O., Stewart, R. & Berends, T. (2011), Risk management for design and construction, RSMeans, New York.
Edwards, P. & Bowen, P. (1999), ‘Risk and Risk Management in Construction Projects Concepts, Terms and Risk Categories Re-Defined’, Construction Procurement, Vol. 5 No. 1, pp. 42 – 57.
El-Sayegh, S. (2008), ‘Risk Management and Allocation in the UAE Construction Industry’, International. Journal of Project Management, Vol. 26, No. 4, pp. 431-438.
Fisher, C. (2010), Researching and writing a dissertation: An essential guide for business students, Pearson Education, London.
Gill, J. & Johnson, P. (2010), Research methods for managers, 4th edn. Jossey-Bass Publishers, New York.
Kumar, R. (2010), Research methodology: A step-by-step guide for beginners, Sage Publications, New York.
Loosemore, M, Raftery, J., Reilly, and Higgon, D. (2005), Risk Management in Projects, Routledge, London.
Marczyk, G., Dematteo, D., & Festinger, D. (2010), Essentials of research design and methodology, Blackwell, Victoria.
McGraw-Hill Construction (2011), Mitigation of risk in construction: Strategies for reducing risk and maximizing profitability. Available at: [Accessed 23. 09.15].
Perera, J., Dhanasinghe, I. & Rameezdeen, R. (2009), ‘Risk Management in the Road Construction: The case of Sri Lanka’, International Journal of Strategic Property Management, Vol. 13, pp. 87-102.
Saunders, M., Lewis, P. & Thornhill, A. (2009), Research methods for business students, 5th edn. Pearson Education Ltd, Harlow.
Schieg, M. (2006), ‘Risk Management in Construction Project Management’, Journal of Business Economics and Management, VII (2), 77-83.
Serpella, A.F., Ferrada, X., Howard, R. & Rubio, L. (2014), ‘Risk management in construction projects: a knowledge-based approach’, Social and Behavioural Sciences, Vol. 119, No. 7, pp. 653-662.
Shina, S. (2013), Engineering project management for the global high technology industry, McGraw-Hill Publishers, Washington, DC.
Simon, M. K. (2011), Dissertation and scholarly research: Recipes for success, Dissertation Success, LLC, Seattle, WA.
Tohidi, H. (2011), ‘The Role of Risk Management in IT systems of organizations’, Procedia – Computer Science Journal, Vol. 3, pp. 881-887.
Wang, S., Dulaimi, M. & Aguria, Y. (2004), ‘Risk management framework for construction projects in developing countries’, Construction Management and Economics, Vol. 22, No. 3, pp. 237-252.
Yeo, K. & Ren, Y. (2009), ‘Risk Management Capability Maturity Model for Complex Product Systems (CoPS) Projects’, System Engineering, Vol. 12, No. 4, pp. 275-294.

12. Bibliography
Hillson, D. (1997) ‘Towards a Risk Maturity Model’, The International Journal of Project & Business Risk Management, Vol. 1, No. 1, pp. 35-45.
El-Sayegh, S. (2008) ‘Risk Management and Allocation in the UAE Construction Industry’, International. Journal of Project Management, Vol. 26, No. 4, pp. 431-438.
Brookes, N & Clark, R. (2009), Using Maturity Models to Improve Project Management Practice, POMS 20th Annual Conference, POMS, May 1-4, Orlando, Florida USA.
Uher T.E. and Toakely, A.R. (1999), Risk management in conceptual phase of a project. McGraw-Hill Publishers, New York.

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