QS 004 - AN ASSESSMENT OF PROJECT RISK MANAGEMENT IN THE CONSTRUCTION OF TELECOMMUNICATION TOWERS

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Every project has risk components. There are high levels of risk associated with High-tech projects, and these are due to their variability. Every project varies objectively in a significant way in comparison to other projects although there may be similarities between different projects. The fast pace of changes in technology may create highly significant differences between two or more projects. This is however not so with other projects other than technological.

In recent years, intensive research and development has been done in the area of project risk management. It is widely recognised as one of the most critical procedures and capability areas in the field of project management (Artto, et al. 2005). Voetsch, et al. (2004), found a statistically significant relationship between management support for risk management processes and a reported project success. Project risk management is undertaken primarily to improve the chances of a project achieving its objectives. While there are never any guarantees, broader awareness of common failure modes and ideas that make projects more robust can significantly improve the odds of success. The literature on project risk management clearly indicates that the primary goal of project risk management is to develop a credible foundation for each project, and also to examine the feasibility of the project. Construction projects are characterized as very complex projects, where uncertainty comes from various sources (Miller and Lessard 2001). Thus, such projects are associated with a high level of risk.

Risk is defined as the exposure to the chance of occurrences of events adversely or favourably affecting project objectives as a consequence of uncertainty (Al-Bahar, 2003). Dias and Ioannou (2000) concluded that the two types of risks are pure risk and the speculative. A myriad of risk and risk-related definitions are applied to construction projects, and no standard definitions or procedures exist for what constitutes a risk assessment. In the construction industry, risk is often referred to as the presence of potential or actual threats or opportunities that influence the objectives of a project during construction, commissioning, or at time of use (RAMP 2001).

Construction Industry Institute (CII) definitive work on construction risks (CII, 2008) uses classic operations research literature to distinguish the concepts of risk, certainty, and uncertainty, and is consistent with the literature (ASCE 2005; CIRA 2004; Kangari 2005; Hastak and Shaked 2000; PMI 2001; Smith 2001) on what is considered as the sequential procedures for construction risk management: identification, assessment, analysis of impact, and management response.

Risk for the purpose of this study is defined as an uncertain event or condition that results from the network form of work, having an impact that contradicts expectations. An event is at least partially related to other actors in a network (Artto, 2005). The handling of risk in the construction of telecommunication towers varies considerably. This depends on the nature and location of the work, the network operator and contractor involved and the prevailing contracting climate. Each of these varies over time and there are also outside influences such as banks, government‘s regulations and the insurance market. This study therefore, would look at the various types of risks and how they are managed in the construction of telecommunication towers in Nigeria.

1.2       STATEMENT OF THE PROBLEM

Mobile phones and other ICT facilities are vital communication tools for both business and societal development. The growing demand for mobile services has necessitated the increase in communications' infrastructure such as towers; which are needed to ensure that there are adequate network coverage and access that guarantee minimum Quality of Service. However, the very support structures required to enhance the quality of service have also raised public concerns; specifically, issues related to health, aesthetics and safety. The question therefore is; ―What are the various risks associated with telecommunication towers and how is risk managed during and after the construction of telecommunication towers?" Construction projects generally face various levels of risks. These are namely; market risks, technology risks, personnel risks, funding risks, organizational risks, process risks, competition risks and regulatory or standards risks. However, in relation to the construction of a telecommunication tower, little or no empirical evidence exists to highlight the associated risks and how they are managed. A better understanding is needed of how contractors manage risk, especially in relation to the construction of the telecommunication towers. Therefore, this research is essential in filling that needed knowledge gap regarding risk management in the construction of telecommunication towers. It is for this reason that this research is been proposed to address the following research questions.

1.3       RESEARCH QUESTIONS

1. How are telecommunication towers constructed in Nigeria?

2. What are the types of risks associated with the construction of telecommunication towers?

3. How have project implementers of the construction of telecommunication towers managed the associated risks?

1.4 AIM AND OBJECTIVES

The general objective of the study is to find out how risk is managed during the construction of the telecommunication towers in Nigeria.

The specific objectives of the study are as follows:

i. To determine how telecommunication mast are constructed in Nigeria.

ii. To find out the types of risks associated with the construction of telecommunication towers in Nigeria.

iii. To examine the associated risks in the mast construction and profer solusion

1.6       SIGNIFICANCE OF THE STUDY

More importantly, this study would add to existing knowledge on the subject matter. It is hoped that a careful explanation of previous works as well as exploration of new works on tower construction project risks management, would unfold new levels of thinking, dimensions and the outlook on the subject matter.

More knowledge would be built through conscious considerations of prospective paradigms on the issue of the project risk management in tower construction in Nigeria. The findings of the study would then provide a wide stock of information for use not only in academia but also by corporate practitioners and other telecommunication sector players in their bid to developing sustainable business climate and risk management techniques. The findings of this study on project risk management modalities are expected to shape the level of thinking and practice of these project risk managers in the telecommunication sector.

The research would also sharpen the skills of both the researcher and other prospective researchers that want to revisit the subject matter. As tangible quantitative and methodology techniques would be explored, an in-depth study of the necessary research tools would in turn improve on the research design skills of the researcher. This would serve as a foundation block for further research work and even a possible research career.

1.6 SCOPE AND LIMITATION OF THE STUDY

This study is limited to only the Nigerian setting and to the four (4) major telecom operators in the country, mainly composed of: Glo, MTN, Airtel, Etisalat. It is of major concern whether limiting this study to only the Nigerian economy and the four (4) major firms provide enough grounds for generalization and validation of the consistency of this research with other previous works. As Yin (2004) puts it, adopting case study in research is generally accepted. The study considered the four (4) major telecom operators in Oyo state, Ibadan. However, generalizing findings, using case study also comes with limitations. Thus restricting the case study to only the Nigerian economy may not provide a representative sample for generalizing on the issue of ―tower construction project risk management in the telecommunication sector. However, this approach simplified and met the academic requirements; Moreover, enough control was gained over the elements (or variables) and the data being observed and analysed in the study.

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