Professional Documents
Culture Documents
A THESIS
Submitted in Partial fulfillment of the requirement for the degree of
DOCTOR OF PHILOSOPHY IN ENGINEERING
By
MADHAV PRASAD KOIRALA
Enrollment No: 1150100267
DEDICATION
DEDICATION
i
ACKNOWLEDGEMENTS
I would first like to acknowledge my supervisors Dr. Tara Pokhrel, Dr. Megh Raj
Dangal and Dr. Rajendra Prasad Adhikari for their constant supervision, encouraging
advice, and creative guidance from MSc study level till this stage of my study. His
continuous presence, advices, and patience made me successful in fulfilling my
responsibilities.
I would like to gratefully thank to the Assistant Dean of the institute of
Engineering Prof. Tri Ratna Bajracharya, Ph.D.and Dr. Roj Nath Pandey, without
whom I would not have been able to complete my thesis. Their technical insight and
criticism made this research possible. I am very much thankful to Dr. Renu Thapa,
Associate Professor, CERID for her contribution in language editing of my thesis.I
also want to thank to Mr. Prakash Chandra Bhatrai who instruct me to ploting the
reding and getting the result from SPSS. I would not have been able to achieve my
goals without their endless love, support, patience and understanding.
I also wish special thanks to the founder Principle of city college and research centre,
Mr. Yasodham Tripathi, for his contribution in arranging classes and seminars to
enhance my knowledge
I wish my sincere thanks to the Dean of the institute of Engineering Prof. Dr.
Bharat Raj Pahari, Vice Chairman of Nepal Engineering Council Er. Saroj Upadhya,
Chairman of Nepal Engineering Professional's Association (NEPA) Er. Durga Prasad
Wosti, Chairman of Nepal Engineers Associations (NEA) Er. Mahendra Gurung
Chief Vice president Mr. Kumar Ojha, Secretary Er. Ram Bahadur Thapa, Treasurer
Er. Chuda Raj Dhakal, Member Er. Suraj Lamichhane (NEPA), who helped me by
creating appropriate environment for enhancement of my research. Similarly, I also
wish to thank Er. Sushil Gyewoli, executive director of Town Development Fund,
Nepal, Dr. Subarna Shakey Assistant Dean, Institute of Engineering of Nepal and
Prof. Suman N. Vaidya from the institute of Engineering of Nepal, Similarly exchairman of CONEP Pramod Sharma and General secretary Pemal Khanal as well as
director of civil homes one of the reputed housing company in Nepal. My thank also
goes to Respected leaders Raghuji Panta, Pasupati Chaulagain, Dr. Bijaya Paudel,
ii
Sushila Nepal, Madhav Paudel, Harikrishna Thapa for his encouragement in my
study.
I would like to state my appreciation to Er. Shambhu KC who was the
chairman of Department of Urban Development and Building Construction, Er. Dr.
Bhai Kaji Tibari, chairman of Kathmandu Valley Town Development Committee, Er.
Bidhya Nath Bhattrai, chairman of IEA/IEE section and Senior Architect Mr. Rajesh
K. Shrestha director of Comfort Housing Pvt. Ltd for their support in my study.
Similarly, I am thankful to the chairman, committee's members and staffs of Nepal
Land and Housing Association (NLHA) who helped me by giving the datum and
information during the progress of this study. Er. Susma Mahargen deserves special
thanks for her support in field data collection. Finally, I would like to thank all my
friends, who made me feel strong on the way to achieve this goal.
Last but not the least, I would like to express my foremost thanks to my
mother Dhan Kumari Koirala and my father Vishnu Prasad Koirala, my wife Kalyani
Koirala, and my sons Bhabuk Koirala, Mohak Koirala for their unlimited support and
encouragement throughout my life.
iii
ABSTRACT
Risks have an important influence in housing, apartment, and real estate project in
conceptualizing or pre-planning, planning and implementation of cost, time, and
quality. In Kathmandu valley only, 20000 housings and apartment units built every
year. As the housing and apartment project's complexity is naturally increased, an
ability to manage risks throughout the construction process has become a central
element to prevent unwanted consequences.
The overall aim of this research was to explore, analyze, and mitigate the
understanding of risk management in the housings, apartments, and real estate
projects. Deeper understanding by means of detailed study in pre-planning and
planning phase is expected to enhance more effective risk management and, therefore,
a better productivity and better quality to be achieved, which creates the satisfactions
to builder and buyer of the housing and apartments.
In this research, mixed methods with pragmatist philosophical worldview have
been used, which covers ontological, epistemological, and methodological
assumptions. Data were collected through in-depth interview as well as the
quantitative survey and questionnaire. The quantitative study involved forty housings,
apartment, and real estate construction projects running in Nepal and comprised a
questionnaire survey and a series of interviews with them. The research participants
included contractors and consultants involved in these construction projects. Data
collection techniques included qualitative survey and in-depth interview with taken
with six respondents representing authority chief from each authority and one director
of reputed developers company. In addition focus group discussions were conducted
two times.
No developers were carrying out the systematic risk management during preplanning or planning phase. If they followed then it occurred only during
implementation phase. The risk factors were external as well as internal. There were
different risk factors in the projects mainly legal problem, policy framework related
iv
problems, political problems, financial
Risk explores, Risk analysis, Risk ranking, Risk response, Housing &
Apartment projects, project pre-planning, Project Planning and Project
implementation
v
TABLE OF CONTENTS
ACKNOWLEDGEMENTS .............................................................................. I
TABLE OF CONTENTS ................................................................................ V
LIST OF FIGURES AND TABLES............................................................ XII
CHAPTER I ..................................................................................................... 1
INTRODUCTION ........................................................................................... 1
Background ................................................................................................................ 1
Global process of Urbanization and Trend in Nutshell......................................................2
Urbanization in Regional Context .....................................................................................5
Urbanization in Nepalese Context .....................................................................................6
Role of Housing, Apartment and Real Estate ..................................................................10
Housings and Real Estate in Nepal ..................................................................................11
Statement of the Problem ......................................................................................... 14
Worth of the Research ............................................................................................. 17
Research Purpose ..................................................................................................... 17
Research Questions .................................................................................................. 17
Delimitations ............................................................................................................ 18
Scopes of the Study.................................................................................................. 18
Key Assumptions ..................................................................................................... 18
Significance of the Study ......................................................................................... 18
Operational Definition of the Key Terms ................................................................ 19
Organization of Thesis ............................................................................................. 21
Concluding Remarks................................................................................................ 21
CHAPTER II .................................................................................................. 23
LITERATURE REVIEW .............................................................................. 23
Introduction .............................................................................................................. 23
What is Risks in Housings, Apartments and Real Estate Projects? ......................... 23
Why Housing and Apartment and Real Estate Projects Needed? ........................... 24
Features of Housing Apartment Projects ................................................................. 26
Housings, Apartment projects are Uniqueness and poses high risk ................................26
vi
Housing and Apartment are High Complexity ................................................................26
Construction Project are High Risky ...............................................................................27
High Professional Involvement in Housing and Real Estate Projects .............................27
Construction Projects are always an Input to another Industry or a Project ....................28
High Resource Involvement.............................................................................................28
Duration of a Construction Project is very high in Housing Projects ..............................29
Phases of the Housing and Real Estate Project incorporated in the Study .............. 29
Construction Excellence Features ............................................................................ 31
Why does Risk occur, who face the Risk and when does Risk activate? ................ 33
How does Risks factors affect in the life cycle of Project? ..................................... 35
Explore for Identification, Analyze; Rank them, and Response the Risk? .............. 36
Theoretical Study: Risk in Housing and Real Estate ............................................... 42
Real Estate Theory ...........................................................................................................42
Theory of Project Management........................................................................................44
Social Action Theory .......................................................................................................47
Research Gap ........................................................................................................... 48
Conceptual Framework ............................................................................................ 49
Condluding Remarks ............................................................................................... 53
CHAPTER III ................................................................................................ 54
RESEARCH METHODOLOGY................................................................... 54
Introduction .............................................................................................................. 54
Philosophical Consideration of Mixed Methods ..................................................... 54
Nature of the Research ............................................................................................. 59
Research Design ...................................................................................................... 60
General Characteristic of Pragmatism ..................................................................... 63
Nature and Source of Data ....................................................................................... 67
Area of Study Site ............................................................................................................67
Rationale for Selection............................................................................................. 67
Population and Sampling ......................................................................................... 68
Data Collection Techniques ..................................................................................... 70
Field Survey for Quantitative Data ..................................................................................70
vii
Field Survey for Qualitative Data ....................................................................................71
Focus Group Discussion ..................................................................................................71
Questionnaire ...................................................................................................................71
Interview Schedule ...........................................................................................................71
Observation ......................................................................................................................73
Data Processing, Analysis, Interpretation and Reporting ........................................ 73
Validity of Data ....................................................................................................... 74
Reliability of Data .................................................................................................... 75
Ethical Consideration ............................................................................................... 75
Concluding Remarks................................................................................................ 76
CHAPTER IV ................................................................................................ 77
EXPLORING THE RISKS IN HOUSINGS PROJECTS AND ITS IMPLICATION
........................................................................................................................ 77
Introduction .............................................................................................................. 77
Legal Constraint that was faced by Developers ....................................................... 79
How Easily Developers get planning Permit from Town Development Committee
(TDC) ....................................................................................................................... 82
How Developers were Losing Time in the Name of EIA/IEE ................................ 85
How Easily Developers can get local level Approval ............................................. 87
Developers were Facing Hurdle during Approval Procedure .................................. 90
Unstable Political System and Political Parties Sister Organization in Housing
Projects..................................................................................................................... 92
How Financial Factor Contribute in Housing, Apartment and Real Estate Project?
................................................................................................................................. 95
How Developers were Technically Sound and their Management part .................. 98
Social Structure of Nepalese Communities ........................................................... 100
Organizational/Institutional related Problems in Housing Projects ....................... 102
Concluding Remarks.............................................................................................. 104
CHAPTER V ............................................................................................... 105
ANALYZING THE RISKS IN HOUSING PROJECTS ACCORDING TO THEIR
RANK .......................................................................................................... 105
viii
Introduction ............................................................................................................ 105
Criticality Index (CI) to determine the Rank ......................................................... 108
Big Issue about ownership of joint housing........................................................... 110
Planning Permit from Town Development (TD) ................................................... 113
Building Bylaws, 2007 for Kathmandu Valley and other Municipalities ............. 115
Global Issue the Environment Protection .............................................................. 116
Local Government: Pre-Matured Authority .......................................................... 119
Hurdle in Approval Procedure ............................................................................... 120
Problems in the Policies Level Framework-related Rules and Acts ...................... 121
Problems: Unstable Politics and Unstable Geovernment ...................................... 122
How Financial Factor Plays its Role in Housing and Apartment Project? ............ 126
Economic Aspect: Housing Apartment and Real Estate Projects .......................... 129
Qualities in Housing and Real Estate Projects: Chalange ..................................... 132
Problems Related to Technical Aspects ................................................................. 135
Problem Related to Human Resource in the Housing and Apartment Projects..... 136
Components of Nepalese Society: How Positive in Housing ................................ 138
Culture of Consumers in Housing Projects............................................................ 140
Organization/Institutial: Play the Role in Housing Projects? ................................ 142
Summary of Risks Factors as per its Magnitude in Housing Projects ................... 144
Concluding Remarks.............................................................................................. 145
CHAPTER VI .............................................................................................. 146
RISK MITIGATION MODEL AND RISK RESPONSE PLANNING (RRP) IN
HOUSING, PROJECTS OF NEPALESE ENVIRONMENT ..................... 146
Introduction ............................................................................................................ 146
Integrated Policy framework: which Enhance housing and real Estate ................. 148
Existing Legal Polices need to be Guided by Acts and Developers Friendly ....... 154
Frequent Development and Research work is needed in Housing and Real Estate
Sector ..................................................................................................................... 158
Construction Manger including Human Resource Team must be experienced,
skilled for Risk Mitigation ..................................................................................... 159
Responses Based on their work Experience ..................................................................159
ix
Work load in Implementation Phase is more and to be careful Comparef to other
Phase ...................................................................................................................... 161
By Changing the Uses is Cosmetic treatment for Mitigation and no Permanent
Solution .................................................................................................................. 162
Developers products of Housings, apartments must be Branded and Qualitative 163
Risk Response Plan ................................................................................................ 164
Risk Acceptance .................................................................................................... 165
Risk Reduction ....................................................................................................... 165
Risk Transfer.......................................................................................................... 165
Risk Avoidance ...................................................................................................... 166
Concluding Remarks.............................................................................................. 168
CHAPTER VII ............................................................................................. 170
SUMMARY, CONCLUSIONS, AND IMPLICATIONS ........................... 170
Research Summary ................................................................................................ 170
Research Findings and Discussions ....................................................................... 179
Conclusion ............................................................................................................. 183
Implications ........................................................................................................... 184
For Government .............................................................................................................184
For Developers and Experts ...........................................................................................185
For Further Research ......................................................................................................185
References .............................................................................................................. 186
Appendix A: A Population List for Quantitative Survey ...................................... 205
Appendix B: General Information of Research Participant ................................... 213
Appendix C: General Information of Research Participant ................................... 219
Appendix D: Photo Gallary ................................................................................... 220
x
LIST OF ABBREVIATION AND ACCRONYMS
ADB
CBS
CI
Criticality Index
CIUD
DDC
DUDBC
EIA
GDP
FAR
GLD
GNP
HFA
IEE
ISIC
KMC
KVDA
KVTDC
NGO
Non-Government Organization
MoE
Ministry of Environment
MoLD
NLFS
NLSS
NLHDA
NPC
ROW
Right of Way
SAARC
TDC
UDHR
UN
United Nations
xi
UNDP
UN-HABITAT
VDC
WB
World Bank
xii
LIST OF FIGURES AND TABLES
List of Figures
Figure 1
Figure 2
Figure 3
Figure 4
Figure 5
Figure 6
Figure 7
Figure 8
Figure 9
Figure 10
Figure 11
Figure 12
Figure 13
Figure 14
Figure 15
Figure 16
Figure 17
Figure 18
Figure 19
Figure 20
Figure 21
Figure 22
Figure 23
Figure 24
Figure 25
Figure 26
xiii
List of Tables
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
Table 12
Table 13
Table 14
Table 15
Respondents' Views about the Human Resource (HR) Strategies .... 101
Table 16
Table 17
How Existing Acts and Bylaws Solved the Legal Problems ............ 108
Table 18
Joint Apartment Act 1998 and Related Act and Developer's Views 111
Table 19
Table 20
Table 21
what are the Local Authority Based on Respondents' Age ................ 118
Table 22
Table 23
Table 24
xiv
Table 25
Table 26
Table 27
Table 28
Table 29
Table 30
Table 31
Table 32
Table 33
Table 34
Table 35
1
CHAPTER I
INTRODUCTION
This chapter focuses on the background of the research sites, global process of
urbanization and trend in nutshell, urbanization in regional context, urbanization in
Nepalese context, role of housing, apartment and real estate. Moreover, this chapter
include the role of housing apartment and real estate, housings and real estate in
Nepal, the statement of the problems, objectives of the research, delimitations of
research, scope, assumptions of the key terms, significance of the study, conceptual
framework of the research study, and structural organization of the thesis.
Background
In 1948, the United Nations General Assembly approved the universal declaration of
human rights (UDHR) by 48 votes, with eight abstentions. The reworded Article 22,
now Article 25 of the Declaration, adopted unanimously states (UN General
Assembly, 1948): Everyone has the right to a standard living adequate for the health
and well-being of himself and of his family, including food, clothing, housing . . .
(Gleick, 1999).
Therefore, to acquire housing is his right including food and clothing as basic
needs. In the world everyone have right to have his/her own house. Therefore,
housing and apartments need to be constructed for each family. During construction
of the housing apartment projects a lot of money is being wasted due to not being
completed in time as well as not having the specified quality. Time, money and
quality problems occur due to the uncertainty of the project, which is called risk that
must be managed for productivity.
The Risk in housings, apartments, and real estate are important factors in the
Nepalese economy. A real estate development project starts with an opportunity to
construct a new building in which people can live, work, or shop. This opportunity
has to be developed from an idea into something real (Gehner, 2008).
Housing, apartment, and real estate sector, providing jobs for the people and
real estate business investments contribute more than eight percent to the countrys
2
GDP by ISIC (Economic survey, 2011/2012). In the same way, the construction
investments contribute 6.7 percent to the countrys GDP by ISIC (Economic survey,
2011/2012). Both the real estate and construction sectors are related to housing and
real estate industry.
Global process of Urbanization and Trend in Nutshell
Different research journals, newspapers and books, show that different stages of
revolution such as shelter in cave and sheds to modern condominiums took place to
reach to the present stage.
According to V. Gordon Child, (1950), sociologists and ethnographers last
century classified existing pre-industrial societies in a hierarchy of three evolutionary
stages, denominated respectively savagery, barbarism, and civilization Savages
live exclusively on wild foods obtained by collecting, hunting, or fishing. Barbarians
on the contrary, at least supplement these natural resources by cultivating edible
plants and in the old world north of the tropics people did breeding animals for food.
Marxist philosophy also supports the above prospective mentions that
throughout the Pleistocene Period the Paleolithic Age of archaeologists, all human
societies were savage in the foregoing sense, and a few savage tribes survived in out
of the way parts to the present day.
According to the archaeological record barbarism began less than ten thousand
years ago with the Neolithic Age. Thus represents a later, as well as a higher stage,
than savagery. Civilization cannot be defined in quite such simple terms.
Etymologically, the word is connected with city and sure enough, life in cities begins
with this stage. However, 'city' is itself ambiguous so archaeologists like to use
writing as a criterion of civilization; it should be easily recognizable and proves to be
a reliable index to more profound character.
Sociologist and anthropologist invented that during savagery stage script have
developed and people became literate, they invented shed, house and modern building
based onthe cave.
The first city is believed to be the Mesopotamia thatexisted about 5500 years
ago or 3500 BCE, which is in Iraq now. But in the last generation new discoveries
have been found. The consensus view of urbanization long back into the past 7500
3
BCE Catal Huyuk, which is in Turkey now, 8000 BCE Jericho in Jordan, 11000
BCE wadi al-Natuf in Bagdad of Iraq and probably even earlier (wyly, 2011).
Urbanization is known as growth in cities and increase in populations in
dimensional, along with the rise in proportion of its population living in urban areas.
The status of urbanization varies across the world but generally reflects the wealth of
individual countries. The rich, industrialized countries tend to be the most highly
urbanized and poor industrialized country less urbanized. It is recognized that
urbanization is more in developed countries compared to developing countries such as
more in USA and European countries and less in Asian and African countries.
Urbanization in the United States of America began in the nineteenth century.
That time people and natural resources concentrated from countryside to cities when
millions of immigrations came in effect from Europe and settled in the cities. This
module explores the reasons behind the rapid increase in urban populations during the
period 1880-1920, and thus the demand placed on urban infrastructure, which affected
the environment, and the overall development of the modern city (Opie, 2006).
It is surprising that in USA, in 1976 and 1992 the annual rate was quite high,
whereas in our country it is not started yet. The rapid urbanization of open space is
often identified as one of the key problems associated with sprawl. Using satellite
imagery data and aerial photography, Burchfield, Overman, Puga and Turner (2003)
estimate that the urbanized percentage of the U.S. landscape increased by 47.7 percent
between 1976 and 1992, an annualized rate of 2.48 percent. However, as the authors
of the study point out, these numbers can be misleading. While urbanization is
increasing rapidly, the actual percentage of the United States that is urbanized remains
quite small, only accounting for 1.92 percent of the entire U.S. land area as of 1992.
Given the very low percentage of the U.S. landscape that is urbanized, why is the loss
of open space receiving such prominence in the debate over sprawl (Nechyba &
Walsh, 2004)?
The open area always need for safety point of view in the big or small cities.
The sprawl or extension would be thus, of natural aesthetic, rescue propose which is
required for future generation.
4
The economic and social circumstances of urban areas have stimulated calls
for redevelopment and renewal since the Industrial Revolution transformed the
economic base and spatial makeup of American cities during the second half of the
nineteenth century. Industrialization not only brought about a fundamental
transformation in the nature of work, but also brought change in the systems of
transportation, the structure and operations of city government, the experience of
poverty, and the demographic movement of racial and ethnic groups on an
unprecedented scale. Henry Mayhew, Charles Booth, and Lewis Mumford
documented in graphic detail the pathological nature of uneven development
characterizing urban growth under industrial capitalism in the United States (Gotham,
2001).
Redevelopment and renewal need to be workout as per requirement of people
and country. Existing infrastructures and amenities need expansion and hence
redevelopment renewal, maintained is regular process. American came to know
urbanization, infrastructure, housing and economic growths are interrelated subjects,
which was not natural gift but an art to manage the excess population.
Urbanization is one of the fundamental characteristics of the European
civilization. It gradually spread from Southeast Europe around 700 BC., across the
whole continent. Cities and the urban networks they formed were always an important
factor in the development and shaping of their surrounding regions. Polarization of
territory between urban and rural and accessibility are still important aspects in
landscape dynamics. Urbanization and its associated transportation infrastructure
define the relationship between city and countryside. Urbanization, expressed as the
proportion of people living in urban places shows a recent but explosive growth
reaching values around 80% in most European countries. Simultaneously, the
countryside becomes abandoned (Antrop, 2003).
Similarly the urban and infrastructure development had started quite earlier in
European countries. In the southeast Europe, the urbanization and infrastructure
development started before 700 BC and rest of the Europeans learned it and followed
the same pattern.
5
In Madrid, as in other cities, urban planning projects accompanying the
globalization process have provoked new episodes of social mobilization. In Spain,
there have been few studies of this type of urban struggle to date, despite an increase
in number and intensity. Understanding the characteristics of the phenomenon and
interpreting them taking the theoretical and empirical contributions of others into
account should form part of the Spanish urban investigation agenda (Orueta, 2007).
The social mobilization, social awareness and social cohesiveness developed
early in Spain and other parts of Europe. As a result, these countries progressed in
urban development as well as in housing sectors.
Urbanization in Regional Context
In Asian region China and India are fast economy growing countries including Japan
and South Korea that are already established Asian countries. Among them, China is
more recognized as an economically fast growing country in the Asian region now. It
has been published in media and newspapers that China is technologically ahead in all
regions, even in world. Similarly, growing urbanization problem is being solved with
the formulation and implementation of strategic plan.
We can see two processes of urbanization: (a) small town development driven
by the state and (b) massive inflow of rural-to-urban migrants to large cities. By
putting social policy into this context of urbanization, we argue that social policy has
not been properly developed to facilitate small town development. On the contrary, it
has been used deliberately as a barrier to limit migration to large cities. The results are
clear. Small towns are not attractive and often are abandoned. Large cities are under
tremendous social pressure (Li & Piachaud, 2006).
India is another economically fast growing country in south Asian region.
Small cites were promoted by state government and large cities like Mumbai and
Delhi are massive inflow taking places. Nepal's economy more or less is influenced
by Indian economy comparing to China. Although both are neighboring countries the
socio-cultural and socio-economic patterns are similar to India. Until now, Nepal
government has taken the benchmark to Indian currency based on Indian currency our
monetary convertible policy is established.
6
According to the United Nations estimatation, South Asias urban population
is expected to reach the figure close to one billion by the year 2030 that is about 120
per cent increase in three decades beginning with the year 2000. Four countries
namely India, Pakistan, Bangladesh and Iran would accommodate an overwhelming
95.4 per cent of the regions urban population in 2030 as compared to 97.3 per cent in
the year 2000. This marginal decline in the share of urban population of larger
countries in the region is because of relatively fast increase in the urban population of
the smaller countries like Afghanistan, Bhutan, Maldives and Nepal. However,
growth rates of urban population are estimated to decline in successive decades in all
the countries of the region, except India and Sri Lanka (Mathur, 2011).
If the population growth dramatically increases, shelter problem will be a
challenge to have own house is human right. India is facing a lot of problems during
urbanization and more resources have to be mobilized, even though no solution to the
problem.
Urbanization in Nepalese Context
Nepal's urban development accelerated when migration took place either from internal
or external migration. There are several reasons for this and among them political,
economic and socio-culture factors are the major resones. Studies show that of from
last fifteen years migration is mainly due to civil insurgency, war, not maintaining law
and order, security problem, impunity, disturbance and employment problem.
Urban dwellers are rapidly growing in recent years, in the Nepal. Out of total
population in the country, 14 percent live in urban areas, where population density is
985 persons per square km. In developing countries, many cities include large
productive land at the beginning but it decreases as urbanization takes place. A case
of Kathmandu Valley is worth mentioning here. Kathmandu Valley is the capital city
of the country, which together with other two adjoining districts, Bhaktapur and
Lalitpur consists of most fertile land. The proportion of urban population living in
these three districts respectively receive first (65.9 percent), second (53.4 percent) and
fourth (48.3 percent) highest rank in the country. In the valley, Kathmandu City has
almost 42 percent internal migrants from both rural and urban areas of other districts
7
in 2001. Of the total valley immigrants, the city alone receives about 79 percent of the
rural migrant" (Lohani, 2006).
To address the above problems government need to plan of land acquisition
being attraction of better opportunity. Institutionalisms is a socially directed in order
to find, measure and trace patterns and sequences of social, political, economic
behavior and change across time and size. Institutionalism consider rule of law, well
policy and organizations, education the way mentioned above factors governs in every
country's social and cultural phenomenon.
As in the housing and land development process also institutions are
functioning within the rule of law which affects human behavior, institutionalism
dealt with institutional changes of various organizations, individual behavior within
boarder social political and economic forces. Well Institutionalism changes non-ethic
to ethical, immoral to moral which need to estabilish in our society too. These
standard norms are stabilized in developed countries, which is not in developing
countries because of the government not able to maintain law and order resulting
impunity.
That was still more in Nepal during the country was in transition phase due to
civil insurgency launched by Maoists in the past one decade. In the same way,
urbanization took place speedily when people started migrating from rural to urban
for peace and security, dreaming the good opportunity for business and employment.
In this period, some people did the housing and real estate business to fulfill the
demand.
It is argued that the pace and scale of urbanization should match the pace and
scale of economic development. If the urban-rural housing and labor market could be
regulated effectively, unnecessary urban problems can be reduced (Shen, 2000).
The study of past fifty years since 1962, shows that urbanization is more
where government located the administration place, where business and employment
opportunity access, and where peace and security is maintained. In the same way,
with the evolution of human beings, organized living and civilization sense was
established. The Nepalese community also flowed from same process. Urbanization
was in progress including in Kathmandu valley along with other main cities of Nepal.
8
It is found housing and infrastructure was developed during Malla period in Nepal.
Urbanization was its good example. The urban planning of those days incorporated
the necessary amenities considering planned cohesive community living. A strong
sense of togetherness, which was represented in its courtyard design for common
houses, temples and baha-bahis in the proximity, well planned Dhungedhara (Stone
carved tap stand), Sattal and Patis (Public house) for rest and recreation, Dabalis as
open air ampitheaters which can be observed from old monumental place in Darbar
square of Patan and Bhaktapur.
According to Levi (1905), urbanization was continuing when Lichhabi
dynasty was ruling in Kathmandu. Urbanization was influenced by migration. Nepal
offers two main styles in architect, The Caitya Style and the so called Pagoda or
Multi-roof style (Shaha, n.d.).
According to National Population Census 2011 (june 22, 2011), Nepal is a
country of 26,494,504.00 peoples in 1, 47,000 sq. km. of area, linear in shape,
stretching 500 km east-west and 290 km north-south.
Urban development in Nepal remains a spontaneous process. The positive
aspects of cities and towns as engines of economic growth in the context of national
development have not been adequately appreciated by policymakers, planners,
academics and development partners. Rather, the general reaction of development
agents to a spatial approach to development is that Nepal is a predominantly rural
society, and that urbanization could drain resources from rural areas to urban centers.
In many instances, the populist emphasis on rural and agricultural development as the
only strategy has caused development agents to depict urbanization as the wrong path
to development, highlighting the negative aspects of urbanity (Tibari, 2008).
The migrant pattern is growing in rural areas. From the beginning, state has
not concentrated on urbanization planning. It was found that large fertile land was
used to build the housings.
Migrant from urban in Nepal is less compared to rural. Similarly, migrant
from outside to Nepal is least one compare to other two. According to the projected
data 81.2% of rural people migrate, 7% people migrate from urban. Similarly, 11.8%
people migrated to outside of Nepal in 2010/2011 (NLFS III, 2008).
9
The above statistics show that urban population pressure is rising every year in
Nepal. In 2001, population in urban area was 3,227,879 i.e., 86.1% of total
population, whereas in 2011, it was 4525787 and 83.00% of total population (CBS of
Nepal, 2011).
This was based on 58 municipalities as urban area and remaining part was
taken as rural area. According to Ministry of Local Development (MoLD) propusing,
there are now 99 municipals including the new 41 that were declared in the fiscal
budget. Of the 99 municipals, there are four sub-metropolitan cities Lalitpur, Pokhara,
Biratnagar and Birgunj, and one metropolis is Kathmandu. There are about 3,770
village development committees (VDC) and 99 municipals under the 75 district
development committees across the country. MoLD wants to minimize the number of
VDCs and increase the municipalities for better governance and urban development
(The Himalayan Times, 2011).
It is doubtful weather it will be executed or not, because constitution itself is
in process hence local election and national election becoming uncertain. Recently the
proposed number of municipality has been increased as per the recommendation of
government of Nepal and the Ministry of Local Development to enhance the physical
infrastructure. The intensity of population pressure has become high in cities due to
the opportunities and facilities available here.
The urban development accelerates when migration takes place either from
internal or external. In the past decade the main causes of migration was civil
insurgency, war, not maintaining law and order, security problem, impunity,
government plan of land accusation and attraction of better opportunity.
Institutionalisms consider rules of law, policy and organizations, the way mentioned
above factors govern in every country's social relations and their attitudes.
As institutions are exercised the rules of law, which affect human behavior in
the housing and land development process, institutionalisms dealt with institutional
changes of organizations, individual behavior within broader social, political and
economic forces. These standard norms are stabilized in developed countries whereas
not in developing countries because of the government, not able to maintain law and
10
order resulting impunity. That was still more in Nepal during the country was in
transition phase due to civil insurgency lunched by Maoist in the past one decade.
In the same way urbanization increased when people started migrating from rural to
urban to seek of peace and security, dreaming the good opportunity for business and
employment. In this period, some people did the housing and real estate business to
fulfill the demand. It is argued that the pace and scale of urbanization should match
the pace and scale of economic development. In the last 60 years, Nepal has been
experiencing a considerable rise in population with increasing urbanization. Regional
differences in urban shows the Kathmandu valley has always remain higher level of
urbanization followed by Teria region in terms of urbanization level as well as urban
growth compared to Hill/Mountain region. Experiencing show that Biratnager,
Dharan, Janakpur, Birgunj, Hetauda, Bharatpur, Butwal, Nepalgunj, Dhangadhi in the
Tarai Pokhra in Hills and Kathmandu valley town will be the major urban extended in
the future. Housing developers are focusing in Kathmandu valley, Pokhara valley,
Biratnager and Sunsari in Terai. In the same way land pooling are concentrating other
municipality from the government site as well as privet sectors too.
Role of Housing, Apartment and Real Estate
Shelter is one of the basic needs for human beings not only for protection against
unwanted environmental event with including hostile weather, but also for
maintaining standard of living acceptable to family or even to elevate one's position in
the society through enhanced living status. First housing and real estate play the role
about to accelerate the economys of the country by getting employment opportunity
by unskilled people. Housing and apartment provide shelter to the people.
Housing is a major aspect of human development. As noted by the World
Bank (1992), housing investment typically accounts for 2% to 8% of GNP, and the
flow of housing services for an additional 5% to 10% of GNP. Residential real estate
represents around 30% of the world wealth, greater than both bonds 27% and equities
19%. Residential construction is a major employer often accounting for more than 5%
of total employment. Housing is an important economic sector with linkages to the
real and financial parts of the economy (Lea & Chiquier, n.d.).
11
Similarly, housing prevents from unwanted environment degradation and
provides the feeling of satisfaction. Secondly, it fulfills the three objective
developments: to increase the availability, to raise level of living and to expand the
range of economic (Todaro & Smith, 2007).
Housing plays important role in fulfilling the above mentioned characteristics.
The other role of housing in Nepal is to provide equal status: individual and grouped
housing on social investigation. It can remove the disparities between the so-called
high caste and low caste.
Housings and Real Estate in Nepal
It is well known that Nepal is land locked country surrounded from three sides by
India and north side by China. The total population was estimated on 2008 period
23.5 million by Labor Force Survey II (NLFS/CBS/NPC, 2008). According to NLSS
(2011), house owner ware 91.6% in 2003/2004 and it is 89.7% in 2010/2011.
Similarly, House renter was 5.4% in 2003/2004 and it is 7.8% in 2010/2011.
From above mentioned data, every one can easily assume that the demand of
house is increasing. It can observe modern house built by different professional
engineers and developers to traditional houses built by citizen of Nepal. From above
data housing and real estate demand can be expected more in coming years. To fulfill
the shelter's need, integrated and systematic housing are growing. Similarly, peoples
aspirations for modern housings are also increasing because others influence
costumers' culture. On the other hand, Nepal suffered from decade long civil
insurgency and people have migrated from village to cities seeking opportunity,
security, and improved physical facilities. Every ones desire to have their own house
where they are working is a natural desire. This has incorporated development of
housing and real estate business as a separate and distinct economic sector.
After enactment of Ownership of Joint Apartment Act, 1997, there is a rise in
developers and real estate entrepreneurs in Nepal. This sector being a newer, rapidly
growing economic sector of the country and contributing in terms of revenue,
employment and using local construction materials. During operating its services,
there is growth in the conflict ridden and politically instable environment, which
might have confronted with various types of risks. In this context, this study will
12
attempts to explore the risks facing by this sector and analyze the causes and
consequences of the risks for systematic enhancement of this sector so that it can
serve as one of the major and reliable economic sectors of the country.
The government benefits from housing business because it gets revenue during
land procurement, and ownership transfer. More than seventy percent of construction
materials are locally made which pumps the money into the domestic economy
through employment and taxes. In the past, housing and real estate were becoming hot
cake till last four years period and they did good profit in terms of money. In the past,
more investors develop the housing and real estate haphazardly not even maintaining
the level of standardization and quality.
As the rural area, it was threat of killing for those who are not support to
insurgencies. Therefore, developers could manage to build and provide the housing
and real estate even they were feeling lot of risks as mentioned above. In Nepal,
developers ware facing tremendous problems or risk in housing and real estate even it
was manageable if government took initiation because, they are mostly related to
unclear policy of government.
Unregulated and unmanaged urbanization has many problems related to the
environment. Heavy population stress tends to decrease the land suitable for crop
production. Moreover, growing urbanization put heavy strains on natural ecosystems,
i.e., polluting rivers, consuming ground water, forests and agriculture lands, degrading
soils and disrupting drainage system in the city (Lohani, 2006).
It is observing that some projects are selling even before taking final approval
from the authority. Political, social, environmental, and technical risks are being as
usual. Talking about political risks, this was the period of civil insurgency, and ended
by doing 12-point agreement between government and Maoist, so people want to have
own house in cities and do some business where security and physical facilities are
available.
Professionals are giving due concentration with customer's desire by making
houses and supply them those who have demanding. Meanwhile, Rastra Bank of
Nepal (the government financial monitoring and regulatory body), is watching to the
commercial banks against their limitation to 25% of total lending on housing and
13
developers. The Rastra bank is taking action to the commercial banks, and then the
financial problem has becoming concerned to developer, buyer, banker, and other
stakeholders. Thereafter housing and real estate sector facing financial risks along
with political parties and their sister organization were asking donation, if they did not
get they will lock the project. In the name of indigenous group and ethnicity, they
asked the employment for locals even they are not fit in the project.
Particularly in housing and real estate projects or any construction process can
be divided into four main phases: Formulation or Pre-planning, Planning,
Implementation, and Operation/Handover. In the formulation phase, the client has an
idea about the project and analyses conditions for its execution. During the planning
phase, the architects and engineers produce design and construction drawings
according to the clients requirements.
Depending on the Implementation option, the design phase follows either the
programme phase or the procurement phase. In the procurement phase, the client
chooses the contractor and the parties sign the contract. Finally, the contractor
executes the job in the implementation phase. Management involve planning,
organizing, staffing, leading or directing, and controlling an organization (a group of
one or more people or entities) or effort for the purpose of accomplishing a goal.
Resourcing begins the deployment and manipulation of human resources,
financial resources, technological resources, and natural resources. During
management, organization is another important pre-requisite entity, which can be
viewed as system, and to manage the human action also called management and it
includes design, to facilitate the production of a useful output from the system. It is
also known as the opportunity to 'manage' oneself and attempting to manage others.
Housing and real estate construction projects mobilized with the huge
investment for large sectors of human beings and the society. Most of the projects are
characterized by the incidence of cost and time overruns with unsatisfactory quality
performance, poor project management practices drive to the inability of the
constructions to meet the expectation of customers and investors. This has been
important that the need to carry out on this research to explore the reasons for these
failures so as to evaluate practices that can guarantee improvement to construction
14
projects. As improving, the performance measures of construction projects would
have major effect on competitiveness.
Professionals and developers have found it difficult to agree on methodology
and metrics to apply that can bring improvement to the construction industry. To
improve these issues, how to qualify and quantify practices is capable of ensuring
improvement has not been easy to discuss but it needed skills and practices in the
field arising from the divergent views of professionals in developer's institutions.
Stakeholders conflicting views and interest cannot be ruled out as one of the
reasons why these measures have been difficult to ascertain. However, it is worthy of
note that the question of how project performance is measured is critical to bringing
improvement to construction organization.
Although construction projects have been part of the human race, old
profession you must agree, projects continue to fail and even now the rate is on the
increase in recent time. Observations in our environment show that investors of
construction projects have not been able to justify their investment because of
frequent project failures.
These increasing failures is of major concern to investors, project team
leaders, stakeholders and larger members of the public whose economic, social and
political lives have been devastated and negatively impacted. In the western world,
the situation is better only to the extent that researchers in that environment were
vigorously and consistently attempting for find solution to halt the trend.
Statement of the Problem
In fact, it was a trend that most of the remittance that entered into Nepal was being
used for construction of houses, buying apartment units, and land. Unfortunately,
majority of the construction is carried out in a haphazard way and in an unplanned
area.
Finally, the appetite or demand for planned urban development still seems to
be weak in Nepal, and urban issues have not yet emerged as a strong sociopolitical
agenda to influence the policy makers. A proactive approach to managing a
government TPO still appears risky in Nepal. It results in more pain and less
gain.This is a management dilemma for the planners of Nepal: either to die
15
quickly by supporting a proactive or ethical stance or else to find strategic ways to
survive and slowly try to make progress whenever the opportunity presents itself
(Karki, 2004).
If this trend continues, our city would be registered as one of the ugliest built
cities in the world. It is fact that the construction takes place without taking any basic
amenities. At present, there is haphazard growth of housing and real estate companies
(developers' organization), land accusation and development design land escaping is
being questionable, and consequently the missunderstanding arises with the authority
and developers. Looking to some investors' profit, more people jump to invest on
housing and real estate, consequently leading to bankruptcy.
Another important factor is legality issues, as per building byelaw made by
municipality, floor area ratio (FAR), coverage, height of building, open spaces,
greenery offset are basic issues that developers have to maintain it. Political issues
like donation in the name of meeting conference and conventions are also other
problems. Political system is unstable and there is no clear policy of government to
monitor and control the unmanaged land polling (plotting) and housings, and
apartment system.
A very large number of housing developments both apartment houses and
individual family dwellings involve individual property to the housing unit itself
combined with communal property to the grounds, recreational facilities, and other
joint facilities. While individuals can buy and sell their individual housing units, at the
time of purchase, they assume a set of duties in respect to the closely related
communal properties (Ostrom, 2000).
In the old cities, beauty of the city has become worse as compared to Nepali's
original Malla's period and what is called medieval period. Regulating this has not
been effective. Dispute has been arising about the ownership within the neighbor
because of the lack of open space. Safety and security to the citizens has become big
problem during construction and maintenance period. Each decision to invest in the
housing and real estate project implies that risks are taken. In other words, how the
stakeholders manage to recognized the risk. To put it in simple terms, there is also the
problem in GLD (Guided Land Development) policy adopted by Town Development
16
Committee (TDC) that imagine 4, 6, and 8 m or wide river corridor road is perfect to
the papers stored at TDC office and is interesting to listen. Actually, the danger lies
right there that it is virtually unknown to public. Only after a customer has bought a
land, paid registration taxes, thought on building a house there, drawn a house map,
and gone to the Municipal Offices for ill-fated approval the drawing, he now knows
that GLD overlaps his land and now he has to sacrifice his land in the name of GLD.
It does not end there. Of course the person or company who is about to lose
his land and never be able to approvel the drawing, a permission needed to build a
house, will now start thinking on as extreme alternative as bribing the officials.
Government of Nepal conducted several land pooling projects in such areas
where more development can be ensured through the pooling projects. Not only
become able to plan a particular area right from the beginning and thus can ensure
link roads to the roads. Also need to manage sewerage to a green area.It can allow
acquiring a large piece of land and developing it as a perfect residential colony or a
business zone.
The Housings, apartment units, and real estate developers are constructing or
producing same range and categories of product targeting upper middle and higher
economic group of income level. No one developers or government's authorities are
constructing the housing units targeting middle, lower and even marginalized
economic group of income level. There is no research about the rural-urban migration.
How many of them want the housing units? What was their affordability?
Nepal government lead by Dr. Babu Ram Bhattrai took several attemps to
distribute the land to landless people in Chovar VDC of Kathmandu district and
Lalitpur sub metropolitan city, Dhobighat. After demonstrating by local people, he did
not success. What I mean is that he could have a plan to acquisition of the affordable
land and instruct to construct affordable apartment units and let them distribute the
shelter. He did not thinkit even when he was an architect. Government could have
subsidized in used construction materials, lands and other items. Landless people
want shelter not the land.
17
Worth of the Research
The housings, apartments, and real estate projects are important for providing the
shelter to the citizens, employment opportunity and contributing for national GDP.
Formulating the projects, planning the project and implementing the project are
challenging job for professional and developers, particularly risks managers.
In Nepal, every year migration taking place more than 5% in average. So
every year ten of thousand of housings or apartment units are being demanded based
on high, medium, low and marginalized economic level of income group.
Affordability need to identify based on research work and the income level of groups.
During conceptual, planning and implementation phases the housing and
apartment units were not constructed as per planned. Due to various constraints,
projects could not execute as per expected planned time, money, and quality. If it
would have been, executed earlier project could have saved the cost and what is said
as opportunity, if it took more time, means more cost and probability of risks.
Risk factors are caused due to political, legal, financial, environmental,
economical, quality, cultural, socialand technical reasons. Therefore, I felt to do this
research to provide a sound understanding about the risks in housing and real estate in
Nepal. I claim that this study is the only image of the circumstance of the risk in
housing and real estate in Nepal.
Housing, apartments, and real estate projects cannot give productivity with
effective risk management. Numbers of scholars and researchers have contributed in
different contexts. I have concentrated on the case of risks in housing and real estate
in Nepal in my research.
Research Purpose
The purpose of my research was to study risks in housing and real estate in Nepal,
especially in the construction projects that it occurs. It was to explore, analyze and to
prepare model for risk response plan in project conceptual, planning, focusing project
and implementation phase.
Research Questions
R.Q.1. How to explore the risks in housing and real estate construction projects with
its implication on the project cycle?
18
R.Q.2. How to analyze the risk factors in housing and real estate projects according to
their magnitude?
R.Q.3. What will be the Risk Mitigation model and Risk Response Planning (RRP)
for housing and real estate project particularly in Nepalese environment?
Delimitations
This study covered the construction risks in housing, apartment and real estate. That
does not cover the earthquake, landslide, flooding, inundation, volcano, tsunami, and
other disaster. It deals only the risk during formulation, planning, and implementation
phase of project life cycle. It excludes risk that occurs during close up or handed over
phase too. It exploring, analyzing, ranking, mitigation, and risk response plan.
Therefore, data had been collected from authorities, experts, consultants, the
registered developers and real estate companies, related technical non-technical
persons and as required, other stakeholders were used.
Scopes of the Study
The risks associated in project life cycle of housing and real estate in Nepal have high
scope. The projects were studied and risk management plan, risk identification, risk
analysis, and risk response planning were covered by the study. The researcher had
the following constraints: (i) time, (ii) area and (iii) method.
Key Assumptions
Risk occurs in every construction project, if it occured, it will be threat and if it is
managed it will be converted into the opportunity.Management of construction risk
could be handled by team especially experienced and skilled project managers.
Significance of the Study
Housing and real estate is rapidly growing, which is a new sector in Nepal and
suffering from various adversities. It is also observed that the recent crisis observed in
financial institutions of the country is the consequence of the investment on this
sector. However, no systematic effort has been initiated either by government or by
professionals to study the role that has been played by this sector in national economy
as well as the risks associated in this sector. Therefore, this study will be a pioneering
work and will provide a firm basis and future direction for housing and real estate
19
companies in Nepal. Similarly, it will also help government for formulating and
revising its policies affecting this sector.
Operational Definition of the Key Terms
Risk management: A simple, common and systematic approach to risk
management, suggested by Berkely and others j, has four distinct stages: (a) risk
classification, (b) risk identification, (c) risk assessment, and (d) risk response. In
the first stage, risks should be classified into different groups with criteria in
order to clarify the relationships between them. The second stage entails the
identification of the risks pertaining to risk management. The third stage is to
assess and evaluate the effects of these risks. In the final stage, appropriate
risk response policies should be developed to reduce and control the
risks.. Firstly, a hierarchical structure for classifying various sources
of risk in overseas projects is presented. Secondly, the identification of risk
factors in overseas projects is investigated. Thirdly, an effective risk assessment
technique is introduced which combines risk probability analysis with risk
impact assessment. Finally, the risk response techniques for overseas projects are
also examined, and some strategies for risk allocation among project partners
are suggested (Zhi,1995).
Construction: it is the process in which to create new structure as per engineering
drawing, specification, and instruction of civil engineer, which is guided by legal
valid document between the constructor, engineer, and client.
Housing: It is a legal entity, which gives the shelter, protect from unwanted
environment, similarly it gives social status of the human. Housing also a legal entity
owns real estate, consisting of one or more residential buildings. (This is one type of
housing tenure.) Each shareholder in the legal entity is granted the right to occupy one
housing unit, sometimes subject to an occupancy agreement, which is similar to a
lease.
Risk: Vaugham (1997) has defined risk as a condition of the real work in which there
is an exposure to adversity. More specifically, risk is a condition in which there is a
possibility of an adverse deviation from a desired outcome that is expected or hoped
for. In the same way Al-Bahar (1998) has also tried to define risks as the exposure to
20
the chance of occurrences of events adversely or favorably affecting project
objective as a consequence of uncertainty
Project: A temporary endeavor undertaken to create a unique product or service.
(PMI, Guide to PMBOK)
Project life cycle: A collection of generally sequential and sometimes overlapping
project phases whose name and number are determined by the management and
control needs of the organization or organizations involved in the project, the nature
of the project itself, and its area of application. The project life cycle provides the
basic framework for managing a project, regardless of the specific work involved
(PMBOK Guide, 2011).
Contractor: Builders who supervise the execution of construction projects are
traditionally referred to as contractors, or more appropriately called constructors
(Hendrickson & Au, 1999).
Effective risk management: Doing the right things in a way to ensure that the project
is risk efficient and project objectives are achieved (Chapman & Ward 2003).
Opportunity: A source of upside risk (Chapman & Ward 2003).
Partnering: Partnering is defined as a structured management approach to facilitate
team working across contractual boundaries(Rowlinson & Cheung, 2004).
Client: Person or organization that commission buildings or constructions for
themselves or for someone else.
Management system: The structured way, in which organizations chose to control
their business, including such ingredients as economy, organization and problem
solving. Examples of management systems are quality management systems,
environmental management systems and knowledge management system.
Project Manager: Person that is closely involved in the construction project either as
superior to the site manager or as the clients representative, closest to the project.
Site manager: The person responsible for the project on the construction site
Uncertainty: An overarching term that could have two possible outcomes, a risk or
an opportunity.
21
Organization of Thesis
There are seven chapters in this research study. Chapter 1 deals with the introduction
of the whole thesis. This chapter provides general background of the study. Similarly,
problem statement and objectives of the study as well as significance of the study are
presented in this chapter. Chapter 2, which is Literature review includes general
understanding of the subject matter under study and presents the review of the studies
undertaken in this area. In the literature, review part comprehensive survey of prior
research; could be combined with introduction; provides background/context to
research; documents of value research are incorporated as much as possible. Chapter
3, is Research methodology. It covers research design, study area, study site and
rationale for selection, population and sample including work schedule. Chapter 4 is
the data analysis chapter that includes the analysis based on the collection from the
research side as well as from knowledge obtained from the academician and experts.
Chapter 5 and 6 focus on the findings: In this chapter finding of the research are
presented based on the data analysis. Chapter 7 Conclusion: In this chapter,
conclusions are arranged based on the findings of the research. Table 3 explains the
brief summary of organization of the thesis.
Table 1 Organization of the Thesis
Chapter I
Introduction
Chapter II
Literature Review
Chapter III
Research Methodology
Chapter IV
Chapter V
Chapter VI
Chapter VII
22
beginning. Housing and apartments gives the shelter which is basic need after food for
eat and clothes for wear. When United Nations General Assembly approved the
universal declaration of human rights (UDHR) by 48 votes, with eight abstentions,
stating that everyone has the right to a standard of living adequate for the health and
well-being of himself and of his family, including food, clothing, housing, its
importance cannot express by arranging few words in my research. In the same way
and under the sub topics Statement of the Problems brief problems that has been
explained. In the same way, Worth of research, research purpose, research questions,
delimitations, scopes, key assumptions, significance of the Study, operational
definition of the key terms, and organization of Thesis were discussed related
problems under the sub topics.
After studying all principles, there are various risk factors which affect the
time, increase the expenditure and not able to achieve the specified quality which lost
the productivity of the companies. At last, the organization of the whole thesis has
given in tabulated frame. The coming chapter is literature review. In this chapter,
generic literatures are reviewed.
23
CHAPTER II
LITERATURE REVIEW
Introduction
This chapter deals the risk factors in housings, apartments and real estate projects, its
principles, theories, indicators, project reports and documents, with reference to
different scholars and writers related to construction projects hidden risk in real estate
projects of International and Asian countries with reference to housings and real estate
sectors. In this chapter literature related to the risks and risk management aspects
along with the studies that have under taken are reviewed. In context of review, books
journals and documents regarding the risk in housing and real estate construction
projects were reviewed.
In this chapter, I have presented the ideas thematically and critically. In
addition, I have presented drawing and chart in explanatory form, which I claim as
'put in the small bag review' because it provides a strong procedure to know the vital
area.
What is Risks in Housings, Apartments and Real Estate Projects?
Holton (2004) points out that the finance discipline lacks a formal, uniformly
accepted definition of the word "risk" In his Nobel Prize-winning work on portfolio
theory Harry Markowitz avoided defining the term even though risk minimization is
central to his model. Holton argues that risk includes two components: exposures and
uncertainty. This means that while we ponder risk we believe we are subject to it and
we are not sure what will happen. So we can define perceived exposure or perceived
uncertainty, and therefore perceived risk. But there is no such thing as true risk. From
this article mentioned about the perceived exposure and uncertainty so as perceived
risks.
There are a lot of definitions of risk in literature. For some authors, risk is
defined as the possible occurrence of negative or adverse effects that lead
exclusively to damage or loss, whereas other authors define it as the possibility of
occurrence of either negative or positive effects (Garrido et all,2011). However, the
24
risks that use to appear in construction projects during housing conceptual, planning
and implementation phases in project life cycle is dealing in best manner. Risk is
defined as an exposure to the consequences of uncertainty.Risk can be defined as an
uncertain event or condition that, if it occurs, has a positive or a negative effect on a
project objective (Mousa, 2005).
The word uncertainty is used where it is impossible to describe a situation in
terms of probability of occurrence of an event. On the other hand, risk can be stated as
a situation where the actual outcome of an activity deviates from the estimate or
forecast value. Thus, the major difference between risk and uncertainty is related with
its quantification. Risky situations have quantifiable attributes, whereas uncertainty
does not (Arikan, 2005).
Uncertainty denotes two alternates. It may uncertain now and may be certain
after a while. Other one will be uncertain forever. Therefore, within the uncertainty
there is risk factor.
A risky situation must involve a chance of loss. Risk is usually considered as
an unwanted event that can be identified and quantified through its impact and
probability of occurrence. Therefore, in this context, risk may be defined as the
chances of loss or gain during housing, apartment and real estate construction phases
due to best mitigated various unexpected events that project face (Arizaga, 2007).
In the above equation probability or likelihoods denotes the assessment of risk
and magnitude of loss denotes the consequences. The magnitude of risk is related to
the scientific work whereas consequence involves designing regulatory measures
based on risk assessment and on legal, political, social, economic, environmental and
engineering considerations. Generally, no one concentrates gain because every
business is gain oriented, try to maximize the gain one side, and other side minimizes
the loss as much as possible.
Why Housing and Apartment and Real Estate Projects Needed?
It is well known that housings and apartments provide shelter for people.It is also
recognition to the social status. Housing projects contributes the GDP to the country
and it gives employment opportunity to the people.
25
Atherton, I. & Nicholls C. M. (2008) consider the effectiveness of Housing
First and its applicability in the European context. Housing First approaches explicitly
incorporate secure tenures as an intrinsic part of support packages for homeless
people who have mental health and substance misuse problems. We contend that the
evidence from the growing body of research in North America makes a compelling
argument for the explicit incorporation of housing at an early stage as an effective
means of addressing homelessness. The North American studies suggest that even
those who might be considered most difficult to house can, with help, successfully
maintain their own tenancies.
Evidence suggests no deleterious effects on mental health or increased drug
misuse and indeed, possibly some benefits. Economic analysis also demonstrates
advantages, the cost of providing support to people in Housing First programmes
being considerably less than if they were to remain homeless. The introduction of a
Housing First approach, however, is by no means a simple philosophy that can be
applied everywhere. Rather, local contexts will require some tailoring to meet local
needs. Research is therefore needed to highlight obstacles to implementation and
means by which these can overcome. Furthermore, housing on its own is not a
solution. Rather, having a secure tenure has to be seen as a part of an integrated
support package (Atherton & Nicholls, 2008).
As discussed above it is essential that state or governments need to feel the
responsibility to provide housing to its people who have not their own home with a
subsidized suitable policy.
Recent moves to introduce western project management processes into China
recall the need for caution in transferring management theories and practices across
cultures an empirical comparison of matched samples of Chinese and
Western construction project managers conceptions of their work. We adopt the
interpretive research approach known as phenomenography, developed for the
purpose of understanding the different ways in which people conceive given aspects
of their reality. Many of the studys findings in both cultures relate to the primary
importance of relationships in construction project management work. At the same
time the study highlights fundamental differences in conception of the meaning and
26
significance of different forms of relationship in construction project management
work that have implications for practice (Chen & Partington, 2004).
Housing, apartment projects need to know the location, socio-cultural position,
knowledge and attitude, which must be known by the construction or risk manager in
the projects.
Features of Housing Apartment Projects
Housings, apartments and real estate projects have various features, which are
discussed briefly with appropriate literature enhancing the knowledge regarding the
same.
Housings, Apartment projects are Uniqueness and poses high risk
Housing and real estate projects are unique with identical features. The reasons being
as follows; various projects are located at various locations (but all projects are unique
even though they are located at the same location or the same site) Cost of various
projects differs from each other. Group of people who are gathered to carry out the
project differ from each project. Housing is the primary example of a unique asset. In
addition to the problems outlined in this section, there are other major problems
associated with this particular form of unique asset (Diewert, 2009).
Normally all the construction projects are unique because one project will not
be similar to others in design, orientation, location and cost. However, my concern is,
all unique projects are risky which is not addressed by this literature.
Housing and Apartment are High Complexity
High-riser apartments are naturally complex from the social, political and cultural
point of view as well as because of frequent contact with friends.
The consequences of living in high-rise buildings are many. A few may be
caused by the building form itself, but many are moderated by non-architectural
factors. Chief among these moderating factors are socio-economic status, building
location, parenting young children or not, gender, and stage of life. Although they
have not been studied empirically in high-rises, whether one has a choice about
housing form and indoor population density probably are also important. Irrefutable
conclusions about the consequences of living in high rises cannot be drawn, because
true experiments are virtually impossible in housing research and because outcomes
27
are determined by multiple factors. Nevertheless, progress can be made through
careful studies that use good research methods, and by aggregating studies either
qualitatively, as in this review, or quantitatively through meta-analyses, and by more
and better theory construction and testing. Unfortunately, research on this topic
appears to have slowed considerably (Gifford, 2007).
As the literature indicated, the complexity denotes risk. Let me say maintained
and renovation risk arise, accessibility of market, social hubs are far. Therefore, the
implementation or construction cost rise due to transportation. Due to improper safety
measures frequently risks need to mitigate and hence complexity which is salient in
literature.
Construction Project are High Risky
Construction projects are more risky because of invest on housing, apartment and real
estate project is not less, due to big amount had been invested due to uniqueness.
Compared with many other industries, the construction industry is subject to
more risks due to the unique features of construction activities, such as long period,
complicated processes, abominable environment, financial intensity, and dynamic
organization structures (Flanagan & Norman, 1993; Akintoye & MacLeod, 1997;
Smith, 2003). Hence, taking effective risk techniques to manage risks associated with
variable construction activities has never been more important for the successful
delivery of a project (Zou, Zhang & Wang, n.d.).
The risk related to the construction projects is very high. That risk can be
categorized as price risk, time risk. Cost of a construction project is very high and
those projects comprise many more activities. As a result, it is not possible to control
the cost incurred to the particular project within the budget at the completion of it. In
addition, it is very difficult to complete the project within the expected time.
High Professional Involvement in Housing and Real Estate Projects
In the latest period, it was observed that professional, qualified, and experienced
persons are attracting in housings, apartment, and real estate projects.All of the
projects reviewed are professionally managed. Each manager has a firm and clear set
of rules for the development that are enforced routinely and quickly. Strong
management is critical to building a shared culture within the development. With rare
28
exceptions, the physical structures of these projects are kept in top condition. Grass is
trimmed, common areas are attractive, and maintenance requests are handled
promptly and courteously. A great deal of attention is paid to security measures by
front desk staff, security guards, or electronic surveillance. Safety, security, attractive
maintenance, and noise control are all indications of excellent management in mixedincome housing (Brophy & Smith, 1997).
There are many professionals involved in a construction project. However, it
depends on the complexity and the size of the project. It is necessary to have qualified
and well-experienced professionals to acquire the project as expected. Professional
involvement indicate the development of housing, apartment and real estate projects
with proper identification of risk, analysis of risk and response of risk properly which
is salient in this literature.
Construction Projects are always an Input to another Industry or a Project
All construction projects including housing, apartment, and real estate are input to
other projects, for example, construction of hospital buildings is input for hospital
projects.
Increasing reliance on relational exchange would enhance conditions for
adaptations among firms in the permanent network. Customized products and services
could improve both efficiency and innovation for all actor categories. Firstly, adapted
solutions would reduce the need for adjustments thus increasing efficiency of site
operations. Secondly, customized solutions would stimulate development of
differentiated offerings. Increasing relational exchange would impact on the
temporary network as well (Dubois & Gadde, 2000).
That is one the unique feature of a construction project, because the output of
a construction projects are input to other industries or a project. For example,
construction of a road is an input to a transportation industry.
High Resource Involvement
In the housing or infrastructure projects, high resources are being involved. Money
need to heavy investment, similarly, machines, man, materials and time all resources
need to invest or mange properly.
29
The main factor on the owners side causing delay in construction projects is
financial problems. The management ability of the projects owner is the second
important factor causing delay in construction projects. From the consultants side,
the first component that seems to be the cause of delay in construction projects is
ineffective or lack of supervision, followed by slowness in giving instructions and
"lack of consultants experience". Weakness in consultant management is the next
most important factor that causes delay in construction projects. Finally, the most
important external factor causing delay in construction projects is lack of materials
and lack of equipment and tools. The next most important factor is poor site
conditions (location, ground, etc.), followed by a lack of equipment and tools in the
market, poor weather conditions and transportation delays (Alaghbari et al, 2007).
Most of the construction, projects are very complex and huge, resource
involvement is also very high. The resources related to the construction project are
material, men, and plant.
Duration of a Construction Project is very high in Housing Projects
The empirical analysis offers an improved understanding of tenant turnover, building
occupancy, and rent flows critical to investment property valuation and development.
In that regard, elevator high-rises tend to attract longer-duration tenants, whereas the
opposite is evidenced for garden apartments. Also, occupancy duration varies
significantly across metropolitan areas, after controlling for important housing stock,
tenant, and macroeconomic factors (Deng, Gabriel, & Nothaft, 2002).
Time taken by the construction projects need to very lengthy. Project
conceptual, plan and implementation period take more duration of time.
Phases of the Housing and Real Estate Project incorporated in the Study
There are different phases of the projects, which can be divided to make easy for
study and research work. Different writers and scholars have divided different ways
and they are not same. Similarly, in this study for risks asses propose it has divided
into four different phases as Pre-planning, Planning, Designing and implementing
phase. Of course, there is also close up or handed over phase which is not studied in
this research.
30
Although a project can be divided into a number of separate phases and the
risks assessed and managed as such, there is a need to manage risks as a continuum
over the project life cycle. Maximizing the process of assessing and managing project
risks requires initial recognition combined with a systemic method of monitoring
changes and impacts over time (Walewski& Edward, 2003).
It is good explanation in numbers of phases on entire project life cycle
including try to assess the critical factors, which create the critical risks, the
identifying, allocating and managing the risks. However, it is incomplete analysis
particularly without the risk response plan and absence of using different analyzing
tools, which I am going to arrange.
Figure 1 Phase of the Housing and Real Estate Project
31
Planning Phase
Design Phase
r
e
p
l
a
Appropriate delivery
Funding amount and
Occupancy
Agreement
g
P
Professional Services
Constructability
Review
Project Management
Plan
Definition Rating
Index)
PDRI (Project
schedule
Project Scope
Simplify Design
system
Design Brief @
Design
Update Occupancy
Agreement (OA)
Construction Phase
Manage the Construction
Selection Contractor
Partnering Session
Requests for Information
with A/E and contractor
Paid Timely
Monthly Evaluation
Construction Peer
Review
Dispute Resolution
Walk Through
Performances Evaluation
Commission Plan
Commissioning Plan
Preliminary & PE
32
neighborhood's morphology. It becomes difficult in this light to perceive the evolution
of neighborhood planning as a linear progression towards improved land-use
efficiency and quality of life (Filion & Hammond, 2003).
Planning became essential work in 20th century. The risk manger as much as
detail planning work in pre-planning and planning phases it is said the risk manager
could identify the risk, analyze the risk, rank and response the risk factors as well as
perfect project management. Therefore, the pre-planning and planning phases are very
important for detail planning work. Design phase next after planning, actually all
designing, estimating, soil investigation work also done during planning but named as
designed phase.
This article examines how traditional neighborhood design (TND) can restore
a sense of community to distressed neighborhoods. Traditional neighborhoods, such
as those found in many cities and inner suburbs, provide their residents numerous
opportunities and venues for social interaction. We apply the principles of TND
(Traditional Neighborhood Design) to the redesign of a public housing project. We
call our approach architecture of engagement (Bothwell, Gindroz & Lang, 2010).
Designer need to be concerned to design within the budget, capable to
simplify or sophisticated design as per requirement, able to project mange system
through web based, skilled to consolidated his professional services, need to review
the constructability, can able to estimate to compare others are the basic needs.
Construction or implementation or execution phase is very important because after the
planning and design most of the risk factors need to identify and mitigate in this
particular phase. To conclude, if risks are to be properly managed, it is self-evident
that the risk management process must be present, transparent and activated in the
whole project life cycle.
There are many factors that influence project risk management.
. explored risk management on the example of nine constructions
projects and contributed to better understanding of risk management in the different
procurement options (Osipova, 2008).
In the construction or implementation phase the construction work need to be
managed with selected contractors, need to discuss about arising problems and what is
33
called 'partnering session' requests for information with A/E consultant and M/S
contractor. Similarly, need to pay timely the bills, monthly evaluation and
construction peer review, dispute resolution, walk through, performance evolution,
final evaluation and commissioning the plan are important works.
Why does Risk occur, who face the Risk and when does Risk activate?
Risk occurs in every business even it is more volatile in housing, apartment and real
estate projects because of the nature of business having high investment.
Every BOT (Built Operate and Transfer) project is subjected to multiple risks.
Thus it has become the responsibility and liability of the promoter to mitigate the risks
to ensure the success of a BOT project by recruiting a strong management team. The
promoter requires support and cooperation from the host government and investor to
assist them in accomplishing the project. The host government should play more
active role by providing guarantees for a BOT project that will benefit public. It
always recommended to the lender and investor to conduct feasibility studies before
they finance a BOT project, similar to the promoter before they embark on the project.
It can be concluded that a comprehensive risk management for any BOT project
should be conducted and the mitigation plan must be followed strictly in ensuring the
success of the project (Bokharey et al, 2010).
It is obvious that the proponent or developer need to learn from such litreture,
which uses to arise in housing, apartment and real estate projects too.
According to (Birgonul & Dikmen, 2001), Although foreign investors enter
the Turkish construction market because of its high growth potential and high
profitability, achievability of their long-term and short-term profitability objectives
depends on how well the risks are managed. Questionnaire results demonstrate that
there are significant risks due to legal system, macroeconomic and political
environments in Turkey, which can affect cost, time and quality of a construction
project adversely. Client organizations, which is the government in infrastructure
projects, is a major source of risk due to its outdated regulations, poor communication
between its bodies and high level of bureaucracy. Delay of progress payments and
cancellation of projects due to political changes are very likely to occur in the Turkish
construction market. Moreover, availability of resources (skilled labour, equipment,
34
materials) and current subcontracting system constitute significant risks for a foreign
contractor. The major risk management strategy should be to effectively scan the
Turkish economic and socio-political environment before entering the market and to
establish partnerships with local contractors in order to increase familiarity with local
practices. Selection of the right partner becomes a critical success factor for a foreign
company doing business in Turkey. Differences between organizational cultures,
communication styles, risk taking attitudes, and managerial capabilities may
significantly affect the project performance.
However, useful in housing, apartments and real estate developers in Nepal
too and construction related financial, legal, political instability and cultural deference
between two parties which are same that developers of housings, apartments are being
faced in Nepal.
According to (Ismail, Abd & Chik 2007) the wide range of topics that are now
representing the domain of construction management is more than emphasis on
scheduling, cost control and resource management. They include, but are not limited
to, engineering project management concepts, quality management system,
environmental management system, and techniques for analysis of the potential
success factors. This paper presents the results of a study carried out to identify some
of the core issues in construction management which are mentioned above as a
skeleton of integrated project management system for construction
industry,. to better equip middle and top level managers in the construction
industry with the state-of-the-art tools, techniques and methodologies of project
management.
This litreture is useful to emphasise on scheduling, costing and resource
management with engineering project management, quality, environmental and
technology management. However, the author did not addressed identified, various
adversities mentioned on above factors. Within the project management risk
management need to perform carefully in the entire project of different phases that is
not found in this article. Due to the same risks had being facing by Nepalese
Housings, apartment and real estate projects. Therefore, it is salient about the risk
management procedure. However, it is salient about the risk management procedure.
35
The problem with many deals is the mix of foreign capital: many projects
have too much dollar-denominated debt, which drives the demand for allocating
exchange rate risk to governments and consumers. While allocating the risk this way
keeps the initial financing costs low, it risks a blowup in the longer term. Reducing
reliance on foreign debt may mean that the volumes of private finance mobilized in
the 1990s for green field projects and privatizations in developing countries will not
be forthcoming and that the initial costs of finance will be higher. But the benefits
may be longer-lived and more robust investments that can weather the vagaries of
emerging markets (Gray & Irwin, 2003).
The mentioned article salient regarding active risk in housing and real estate
projects, but it describe about the foreign exchange risks which were facing housings
and apartments projects by means of importing construction materials like marbles,
tiles, sanitary materials and much more.
How does Risks factors affect in the life cycle of Project?
In every project life cycle, there is chance of adversity, pre-planning, planning, design
and implementation, which have own risk factors and negligence of one phase affects
other phase of the projects.
The actors participation in the risk management process is generally limited
by their roles in the project. The absence of systematic risk management is especially
noted in the programming (planning) phase, where it arguably has the greatest
potential impact. The production phase is where most interest and activity is to be
found. Unfortunately, this can easily prove to be too late in the day to mitigate some
risks, including those that might have been avoided at an earlier phase. Whilst this is
self-evident, scant attention to early identification of risks confirms this practice as
commonplace. As a concept and matter of practice, the communication of risks
between the actors simply does not work to the extent that it must if projects are to be
delivered with certainty, irrespective of the form of procurement. If risks are to be
properly managed, it is also self-evident that the risk management process must be
present, transparent and activated within each phase (Osipova, 2008).
This article is weak to explore the risk in pre-plan, plan, implementation
phases in which I was reviewing. However, it mentioned that risk management was
36
not carried out systematically in all phases, which was identical in housing and real
estate projects in Nepal.
Explore for Identification, Analyze; Rank them, and Response the Risk?
Whenever we people get sick, we go to clinic to meet doctor, carry out the diagnosis
to know the cause of the sickness. After getting the diagnosis report, patient gets the
medicines for recovery. In the same way, the housing and real estate sector get the
number of risks during Pre-planning, planning, and implementation phases. Identify
analysis or assess, its rank or magnitude of each risks and its response plan that are
described with the help of different literature given below.
It is important to manage the multifaceted risks associated with international
construction projects, in particular in developing countries, not only to secure work
but also to make profit. This research seeks to identify and evaluate these risks and
their effective mitigation measures and to develop a risk management framework,
which the international investors/ developers/ contractors can adopt when contracting
construction work in developing countries. A survey was conducted and twenty-eight
critical risks were identified, categorized into three (country, market, and project)
hierarchical levels and their criticality evaluated and ranked. For each of the identified
risks, practical mitigation measures have also been proposed and evaluated. Almost
all mitigation measures have been perceived by the survey respondents as effective. A
risk model, named Alien Eyes Risk Model, which shows the hierarchical levels of
the risks and the influence relationship among the risks, is also proposed. Based on
the findings, a qualitative risk mitigation framework was finally proposed which will
benefit the risk management of construction project in developing countries (Wang
Dulaimi & Aguria, 2004).
This litreture is sound for risk identify, analysis but weak to risks response in
housing and real estate sector which trying to incorporate the same. However, it is
helpful for reference.
With assistance of a practical survey, this paper has systematically examined
major risks affecting the Sino-foreign construction joint ventures. ...The
investigation of several practical risk management strategies demonstrates effective
examples of adopting risk management principles properly. They provide useful
37
references to other joint ventures or those overseas firms who are planning to operate
their businesses in China. The analysis and findings in this paper also present valuable
data for the Chinese government and local partners to have an in-depth understanding
of the risk environment to the operation of Sino foreign joint ventures. Such
understanding is very important for implementing further effective measures to ensure
the right direction of future development and create a more attractive market to
overseas construction professionals (Shen, Wu & Ng, 2001).
This litreture instruct the risk in Sno-China construction industries, which
were joint venture projects. It is weak to address the general construction projects that
are too weak in housing project in developing countries. This research can give sound
knowledge about the same.
As we have seen, the risks in overseas construction projects can be enormous.
In order to manage them effectively, a comprehensive method for managing risks
during the construction process, particularly in the pre contracting and postcontracting stages, should be applied. The method described in this paper has
provided contractors with a supportive framework for the risk management of
overseas projects. The method supports a systematic thinking process that classifies,
identifies, assesses and allocates risks. In relation to the risk identification and
classification processes for overseas projects, the need for a global view has been
emphasized, not only in terms of the project itself, but also in terms of the macro
levels of the political and economic situations in the region. The vital risk factors in
overseas projects should be carefully examined, and not only the probability of
occurrence of each risk, but also its impact level, should be considered. The risk
response methods used in overseas projects should vary from project to project, and
should be very flexible in terms of their operation ( Zhi, 1995).
It is strong for risks identification, analysis and response them in some extent
for overseas project. This article has not covered all risks and the rank of risk will be
changes from place to place. It has failed to incorporate the housing and real estate in
developing countries. However, it can give some positive idea.
Avoiding construction claims and disputes requires understanding of the
contractual terms, early non-adversarial communication, and understanding of the
38
causes of claims. The paper addresses the latter issue by presenting the results of a
pilot study undertaken by the University of Calgary and Revay and Associates Ltd.
This paper examines, among other things, the causes of claims, delays, and cost
overruns on 24 projects in Western Canada. Projects investigated in this study
included civil, institutional, high-rise apartment building, and petrochemicals. To
identify some of the critical elements in construction contracts, the investigative
process also included determining the causes of claims, categories of compensation
for claims, and contract clauses quoted in claims. Results of this pilot study indicated
that critical elements in construction contract~ relate changes/ extras, disputes,
soil/site conditions, and delay. It is the writers' opinion that special attention to factors
identified in this study will help industry practitioners in minimizing the risk of
contract disputes (Semple, Hartman & Jergeas, 1994).
This article is strength from the claim made by different contractors with
projects so different claim should be stopped tominimize the risks and convert the
risks into opportunity. The weakness of this article may not be contextual, for the risk
in housing and real estate in Nepal.
Model for International Construction Risk Assessment presents a risk
assessment model for international construction projects. The International
Construction Risk Assessment Model (ICRAM-1) assists the user in evaluating the
potential risk involved in expanding operations in an international market by
analyzing risk at the macro (or country environment), market, and project levels. The
paper discusses some of the existing models for country risk assessment, presents
potential risk indicators at the macro, market, and project levels, and explains the
ICRAM-1 methodology through an applied example. The ICRAM-1 provides a
structured approach for evaluating the risk indicators involved in an international
construction operation and is designed to examine a specific project in a foreign
country. It can be used as a tool to quantify the risk involved in an international
construction investment as one of the preliminary steps in project evaluation. Four
main results are obtained from the ICRAM-1 analysis: (1) High-risk indicators; (2)
impact of country environment on a specific project; (3) impact of market
39
environment on a specific project; and (4) overall project risk (Hastak & Shaked,
2000).
The high-risk indicators are useful and the discussion about the macro or
country level as well as international level is positive but weak in risks depend upon
the country-to-country and time-to-time and particularly socio-political risks which
has not discussed.
It can be concluded that risk management is a tool that must be applied in all
D&B projects in order for the construction and employer to achieve a satisfaction in a
project (Adnan, 2008).
The above article describes the particular types of risk in design and builds
(D&B) projects which describing in of D&B project. However, it is salient to other
type of projects like private housing and real estate projects.
According to Akintoye & MacLeod, 1996, Risk analysis and management in
construction describes, on the basis of a questionnaire survey of general contractors
and project management practices, the construction industry's perception of risk
associated with its activities and the extent to which the industry uses risk analysis
and management techniques. It concludes that risk management is essential to
construction activities in minimizing losses and enhancing profitability. Construction
risk is generally perceived as events that influence project objectives of cost, time,
and quality. Risk analysis and management in construction depend mainly on
intuition, judgment and experience. Formal risk analysis and management techniques
are rarely used due to a lack of knowledge and to doubts on the suitability of these
techniques for construction industry activities.
It is true that construction risk minimizes by intuition, judgment, and
experience of risk managers and risk management enhance productivity by
minimizing the losses, which can learn in housing project, but risk factors, which
usually appear in projects, are salient in this article.
According to (Arizaga, 2007), Projects are commonly over budget and behind
schedule, to some extent because uncertainties are not accounted for in cost and
schedule estimates. Research and practice is now addressing this problem, often by
using Monte Carlo methods to simulate the effect of variances in work package costs
40
and durations on total cost and date of completion. However, many such project risk
approaches ignore the large impact of probabilistic correlation on work package cost
and duration predictions. Major projects are over budget and behind schedule and
hence cost and duration increases, which apply in housing projects also but not
guiding regarding risk management.
Often, construction projects fail to achieve their time, budget, and quality
goals. This is frequently due to the failure of the contractor to analyze and assess
unanticipated risks. The analytic hierarchy process (AHP) is a new approach that can
be used to analyze and assess project risks during the bidding stage of a construction
project and to overcome the limitations of the traditional approaches currently used by
contractors (Mustafa & Al-Bahar, 1991). The AHP presents a flexible, easily
understood way to assist the decision-maker in formulating his problem in a logical
and rational manner. The paper also includes a review of the AHP and its application
in the assessment of the riskin constructing the Jamuna Multipurpose Bridge in
Bangladesh.
One cannot disagree for events that influence project objectives of cost, time
and quality which loss the productivity whoever be the looser but the systematic
procedure which is salient to identify, assess, rank and response to various risks.
According to (Walewski & Edward, 2003), identifying, allocating, and
managing risks at the front end of the project planning process can improve project
performance. International project risk assessment planning is a process that assists all
project participants to handle risks before they become significant problems.
It is instructing to identify, allocating and managing at the beginning of the
project planning which is most in housing, apartment projects also, but it is salient in
pre-planning and implementation when it is important for mitigating the risks.
According to Zhang, 2001, the transition from plan to market has become a
dominant theme in Chinese housing policy in the last two decades. A growing body of
literature on the process of this transition has been produced. However, the issue of
uncertainty in the Chinese housing market has been neglected. The uncertainty and
risks are emerging at a number of levels and areas. This article looks at the
uncertainty of the Chinese housing market and identifies its consequences for housing
41
consumption, housing production and homeownership. Chinese housing market
would not neglect for every time because some time will be favorable and for some
not. The uncertainty and risks are emerging at different number of level and area.
However, Nepalese housing market is not favorable due to various risks
factors and area, which incorporates by this research.
The measures for mitigating each of these risks have been evaluated by
respondents. Most of the measures are regarded as effective or very effective, and
only a few of them are regarded as fairly effective. The most effective measures to
mitigate the risks are, (1) for the Chinese entities reliability, obtain accurate financial
information about the Chinese entities so that the most capable ones can then be
chosen. (2) For force majeure risk, insure all insurable force majeure risks. (3) For
change in law, obtain governments guarantees on tariff adjustment or extension of
concession period. (4) For delay in approval, establish a one-stop agency for all
approvals. (5) For expropriation risk, having a combination of international financing
and insurance policies (regarded as the most effective measure (Wang et al, 2000).
Since Chineses culture and social system, will not familiar to other foreign
investors' critical risks is especially crucial for successful investments in Chinas
infrastructure is sound analysis. It has been mentioned the effective measures to
mitigate the described the particular risks even it may not be valued other country
have unique culture and social system. It is sound to the instruction of mitigation
method, in Nepal too, long procedural for approval investors are demanding one door
approval. Weakness of this article was not mentioned the general construction project
particularly housing and apartment projects and categorically elaborated for BOT
(build-operate-transfer) projects in China.
According to Idrus, Nuruddinand Rohman (2011), this paper presents a model
to estimate cost contingency for a construction project based on risk analysis and
fuzzy expert system. This model can accommodate contractors experience and
judgment. The validation exercise indicates that the model is acceptable since the
error resulted by the model is 18% compared to the actual project cost contingency
values.
42
This literature talks about the model to estimate risk of about 18% in which
not appropriate. The contingency amount estimated in ad-hoc basis is not practicable
for technical professional. For accurate calculation is needed based on identified risk
and allocated the amount. But without allocating for risk management something
better than nothing.
Theoretical Study: Risk in Housing and Real Estate
Theory is the platform for academic interaction of great worth wisdom among
scholars.
Given the current theoretical perspectives on knowledge, KBV (knowledgebased view) is not yet a theory of strategy (i.e., a theory that links independent
variables to a specific conception of firm performance) that goes beyond the insights
provided by the resource-based view and the related dynamic capabilities approach.
That is, once knowledge is conceptualized as a resource, the thinking simply becomes
a special case of the resource-based view of the firm. Similarly, the empirical
literature suggests that it is unlikely that we have a new theory of organization, given
that internal and external knowledge transfer processes are not appreciably different
(Eisenhardt & Santos, 2000).
It is also a part of study in intellectual research for the discovery of new
knowledge.
Real Estate Theory
Even though academics often talk as if theory and practice are unlike rule, as in 'that
is only theoretical,' nobody is more practical than a good theory. Composition of the
concept of price distribution, pricing models, and prediction error analysis (from the
land) with value approaches. Based on above grounds real estate in modern economic
and finance theory with the help of statistical method academicians have developed
the literature in recent period and what is called as real estate theories.
According to (Krainer, 2001), the model used here is a search-theoretic model
where prices and liquidity are derived from the maximizing behavior of both buyers
and sellers. Agents who live in houses consume housing services. Trade in houses
takes place because individuals are vulnerable to idiosyncratic shocks that sever the
match with their house. This might happen because of a change in household size or a
43
job transfer. When an agent loses his match, he moves out immediately and puts the
old house up for sale. As a seller, the agent prices the house so as to maximize the
expected value of having the house on the market. At the same time, the agent is
temporarily homeless and must search for a new house. As a potential buyer, the
agent searches until he finds a house that offers him enough utility net of price to
warrant leaving the market. Since both buyers and sellers are optimizing, price and
liquidity are determined endogenously. When the per period housing service flow is
allowed to vary, liquidity also varies so as to match the observed correlations between
prices, liquidity, and sales volume.
Buyer want the house for his utility, seller want the house to convert into
liquidity. Buyers minimize the expected value of the proposed house in market,
whereas, seller maximize the expected sell value. Thus, buyer and seller price will
correlate with each other.
This article attempts to accomplish two tasks. One is provide simple
theoretical framework to study optimal choice of listing price by the seller in housing
markets and examine the impact of listing price in time it takes to sell the property.
The other task is to provide an empirical analysis of the relationship between listing
price and the time it takes to sell the property (Yavas & Yang, 1995).
It is obvious that seller need to sell to convert the money as soon as possible to
start other business, whereas buyers use to examine from different angles weather the
proposed price is correct and s/he utilizes the value of money?
Real estate markets perform cylindrically. The cycle affects output and
absorption of units and they influence the price and rents of existing properties and
new construction. Expectation for rent increases and the time to start and continue
construction are central to the structure of real estate cycles. When participations
under forecast rent increases, seriously correlated unexpected excess returns trigger
construction even if contractors distinguished between relative and nominal price
changes (Chinloy, 1996).
It is according to economics theory, if the demand increases, supply need to
increase, if not there will be imbalance and suppliers automatically face the risk by
excess supplying, similarly demand increases but supply price of the housings need to
44
be increased. In the same way, if buyers are getting good return and rent developers
will get good value even they distinguish relative and nominal price of their
commodities.
Agents are often better informed than the clients who hire them and may
exploit this informational advantage. Real estate agents have an incentive to convince
clients to sell their houses too cheaply and too quickly. We test these predictions by
comparing home sales in which real estate agents are hired to when an agent sells his
own home. Consistent with the theory, we find homes owned by real estate agents sell
for 3.7% more than other houses and stay on the market 9.5 days longer, controlling
for observables. Greater information asymmetry leads to larger distortions (Levitt &
Syverson, 2008).
Of course, promoter or supplier need to every nock and corner, how can s/he
sell his product quickly and invest in other business to save the bank interest.
Theory of Project Management
Project management is an art of creating magic that any effect is the result of a
sequence of preset reflect acts when in reality, it was dumb coincidence.
According to Harold Kerzner (2006), project management is the planning,
organizing, directing, and controlling of company resources for a relatively short-term
objective that has been established to complete specific goals and objectives.
Furthermore, project management utilizes the systems approach to management by
having functional personnel (the vertical hierarchy) assigned to a specific project (the
horizontal hierarchy).
Project management is a skilled art rather than academic science and
technology, it is also track where all the staff needs to walk through. For risk
management also same principle needs to apply.Let us first clarify the basic issues.
What are the constituents of a theory? What do we require from a theory of project
management? Why do we need a theory?
A theory ... On the most general level, there are three possible actions:
design of the systems employed in designing and making; control of those systems in
order to realize the production intended; and improvement of those systems. Project
management, and indeed all production, has three kinds of goal. Firstly, the goal of
45
getting intended products produced in general. Secondly, there are internal goals, such
as cost minimization and level of utilization. Thirdly, there are external goals related
to the needs of the customer, like quality, dependability, and flexibility. An explicit
theory of project management would serve various functions. In prior research, the
following roles of a theory have been pinpointed (Koskela & Howell, 2002).
1. A theory provides an explanation of observed behavior, and contributes thus to
understanding. A theory provides a prediction of future behavior.
2. On the basis of the theory, tools for analyzing, designing and controlling can
be built.
3. A theory, when shared, provides a common language or framework, through
which the cooperation of people in collective undertakings, like project, firm,
etc., is facilitated and enabled.
4. A theory gives direction in pinpointing the sources of further progress.
5. When explicit, testing the validity of the theory in practice leads to learning.
6. Innovative practices can be transferred to other settings by first abstracting a
theory from that practice and then applying it in target conditions.
7. A theory can be seen as a condensed piece of knowledge: it empowers novices
to do the things that formerly only experts could do. It is thus instrumental in
teaching (Koskela & Howell, 2002).
In the above mentioned statement constituents of theory, requirement from a
theory and needed a theory has been mentioned.Similarly, project management have 3
kinds of goals that are mentioned and lastly, role of theories have been mentioned in
brief. It is useful to review the project management theory even it is needed to append
issues in my research.
In conclusion, it has to be restated that management is the process of designing
and maintaining an environment for the purpose of efficiently accomplishing selected
aims. Managers carry out the functions of planning, organizing, staffing, leading, and
controlling. Managing is an essential activity at all organizational levelThe
goal of all managers is to create a surplus and to be productive by achieving a
favorable output-input ration within a specific time period with due consideration for
quality. Productivity implies effectiveness (achieving of objectives) and efficiency
46
(using the least amount of resources). Managing as practice is art; organized
knowledge about management is science. The development of management theory
involves the development of concepts, principles, and techniques. There are many
theories about management, and each contributes something to our knowledge of
what managers do. Each approach or theory has its own characteristics and
advantages as well as limitations. The operational, or management process, approach
draws on each school and systematically integrates them (Olum, 2004).
Management is really art with the organized knowledge about the management
science. Knowledge of management is being vital in coming days for innovation new
technique and knowledge.
The game theory allows mathematical solutions of conflict situations. Besides
the fairly established application to economic problems, approaches to problems in
construction operation have been worked out. An overview of applications is given.
Solution strategies for such engineering problems are collected. Furthermore, concrete
application examples are presented and an overview of further potential applications
is given. Solutions of two-person zero-sum games are discussed as well as approaches
to fuzzy games(Peldschus,2008).
In the present days, for being easy, to take decision different theories were
invented and among them the game theory is an important one.
Suppose the real estate system is composed of land developer and real estate
developer. A model of government, land developer and real estate developer is
established. Through using game theory the price decision of land and housing is
analyzed. The equilibrium solutions about cooperative game and non-cooperative
game are also discussed. Efficiencies of each price decisions are further compared
when government profit as well as housing prices is taken into consideration.
Research result indicates that cooperation is the optimal strategy and regulating the
tax rate in a moderate rang is an efficiency way for government to increase its profit
while decreasing housing prices so as to maintain social stability (Mu & Ma, 2007).
As discussed above, this is same as game theory and useful for housing and
real estate for taking decision even not enough with this alone.
47
Social Action Theory
The Social Action Theory is a societies-oriented model that is applied to raise the
investigative skilled of complete society during achieving real changes towards social
justice. That means, persons inside communities come mutually to restore the
inequality of powers or constitutional rights between a poor group and whole society.
These main framed include empowerment, critical consciousness, society's capacity,
social capital and participation and relevance.
We conduct a within-country empirical analysis of the correlates of conflict
intensity in Nepal, analogous to cross-country analyses of civil wars. Our withincountry approach enables us to examine the occurrence of the same insurgency across
different parts of the country and over time. We find that conflict intensity is higher in
places with greater poverty and in places where geographical characteristics favor
insurgents. These findings are consistent with cross-country results, suggesting that
similar factors are relevant in both settings. We find suggestive evidence that the
association between poverty and the number of conflict-related casualties is driven by
the fact that poorer districts are more likely to be involved earlier in the conflict. In
contrast, geography is not likely to predict which places are involved earlier in the
conflict, but does make conflict more severe after it has started. Other potential
factors identified in the cross-country literature, such as social polarization, are not
found to affect the levels of violence in the Nepalese civil war, once the effects of
poverty and geography have been accounted for (Do & Iyer ,2009).
This article mentioned the socio-political conflict "what was called civil war
by maoiest" that took 10 years long in Nepal creating the socio-political risks for
every industry. However, this article is weak to give the impact from the mentioned
conflict how the housing, apartment, and real estate sectors affected due to the same
conflict. It was guided by the society, acted by the social people and hence it is social
action theory. Therefore, housing apartment and real estate projects need to operate as
per the needness from social action.
In some one of its numerous forms the problem of the unanticipated
consequences of purposive action has been treated by virtually every substantial
contributor to the long history of social thought (Merton, 1936).
48
In the society action are associated as per purposive even need not be acted or
if it took place will be loss in the project.
How behavior and institutions are affected by social relations is one of the
classic questions of social theory. This .concerns the extent to which economic
action is embedded in structure of social relations, in modern industrial society.
Although the usual neoclassic accounts provide an "under-socialized" or atomizedactor explanation of such action, reformist economist who attempt to bring social
structure back in do so in the "over-socialized" why criticized by Dennis Wrong.
Under and over-socialized accounts are paradoxically similar in their neglect of
ongoing structure of social relations, and a sophisticated account of economic action
must consider its embeddedness in such structure. The argument is illustrated by a
critique of Oliver Williamson's "markets and hierarchies" research programme
(Granovetter, 2003).
Behavior needs to make as per action required by the society in the projects,
even it explains about economic action.
Much of the early psychological theorizing was found on behavioristic
principles that embraced an input-output model linked by an internal conduit that
makes behavior possible but exerts no influence of its own on behavior. In this view,
human behavior was shaped and controlled automatically and mechanically by
environmental stimuli. This line of theorizing was eventually put out of vogue by the
advent of the computer, which likened the mind to a biological calculator. This model
filled the internal conduit with a lot of representational and computational operations
created by smart and inventive thinkers (Bandura, 2001).
In this article, Paradigm Shifts in Psychological Theorizing was useful for
social theory. Human behave is really shaped and controlled mechanically by its
cognitive environment.
Research Gap
In Nepal Population is increasing and internal and external migration is a continuous
process of urbanization. In coming days, rural people will attract towards city because
government do not want to uplift the rural people by modernizing the agriculture and
49
rural infrastructures. Whenever government gives some opportunity to rural, the
migration process does not stop even it minimize.
Therefore, minimum required dream of each one is food to survive, cloths for
wearing and house for shelter. Hence, housing is being one of the basic needs. During
past decade, many housing projects were boomed in the country.
In recent days, housing and real estate projects are being stagnation.
Developers' companies are facing risks. Professional developers are working slowly
and some developers are waiting and see position. During my research, it was found
that partially developers were operating the projects.
In fact risk in housing and real estate in Nepal could have been measured in
quantitative parameters but it is important to find the reality of the above-mentioned
topic in terms of quantitatively as well as qualitatively. Quantitative measurements
helped me to bring all the data received from housing, apartment, and real estate
project scattered in Nepal.
Similarly, qualitative measurement helped me to bring all data received from
multiple authorities, expert, department head and authority head. It is true that there
are multiple authorities of the measurement of risk in housing and real estate. After
getting both result I mixed it, which was pertinent to find the best way of
management. In addition this research guides to conduct more research gaps for most
favorable use and managing of risk in housing and real estate in Nepal.
Conceptual Framework
The concept is being full context of my thesis to study Risk in Housing and Real
Estate in Nepal, especially focusing on the pre-planning, planning and construction
phase through management during entire year of 2011 and 2012. The framework
conceptually lying down in the centre is the main topic. It has linked four phases of
risks (i) Risks during project formulation or pre-planning, (ii) Risks during planning
phase, (iii) Risks during implementation phase, and (iv). Risk during close up or
operation phase.The risks during operating are not incorporated in this study. These
major factors are further supported by use of different theories (Real Estate Theory,
Construction Management theory and social theory). Within this framework, I used
50
various documents, empirical study and theoretical frames as well as aid risk theory
and principles.
Figure 2 Conceptual Framework of Risks in Housing and Real Estate Construction
Project
Risks in Housing & Real Estate:
Theoretical Append
Methodology
Project
Management Theory
Formulatio
Risk in
Project
Handover
Risk in
Risks in Projects Life Cycle
Risk in
Project
Planning
Risk in
Project
Execution
Ontology: Notion of
Multiple Realities
Principles and Facts
Epistomology:
Principles
and Facts
Individual
conversation
respondents
Explanatory
Principles&and
Descriptive
Facts Research
Risk management
Principle & Facts
Principles and Facts
Mixing/Critical
Analysis &
Interpretation
In-depth
interview/FGD
Principles
and Facts
Analysis
Principles
and Facts
Survey Research
The figure 3 below is theroritical framework. Risks in housing and real estate project
in Nepal, in the centre there is risk management. In each project cycle, there was the
identification of risk, analysis of risks, responding of risk, monitoring and controlling
of risks that has to be analyze. In every process, there were its causes and effects. For
example, risk identification can be done by means of updating the risk register,
making the plan as per received information, adopting correction action,
Programming Change Request (PCR), updating to risks identification checklist for
51
future construction projects. Once the risks identification work is over then how
sensitive the risks are that must be analyze properly.
For that work, qualitative and quantitative analyzing was done to know the
risk level, consequences and likelihood, hazard and risk's impact. The third step is
response of probable risks. Depending upon the rank or the level of risks, it was as per
the rank of risks. Generally, there was acceptance of risk when the level was low, risk
will reject or avoidance if the level of risks was high. Also as per the level of risks
was to mitigate the risk which will try to reduce. The fourth and last one is
transferring the risks, which is in practicing.
For example, transfer the risks to insurance company by paying the money. In
the last stage, risks monitor and control was applied in the upcoming project by
converting risk to opportunity. For applying it potential risk exposure has to be kept,
the risks whatever identified, that has to classify, similarly construction of risk curve
or risk mapping was essential, for monitoring control of construction project.
52
Figure 3 Theoretical frameworks of Management Risks in Housing & Real
Estate Project
Qualitative
1. Update the Risk register
2. Make the plan as per new
information received in future
3. Corrective actions
4. Programming Change
Request(PCR)
5. Updates to risk identification
checklist for future
construction Projects
1. Low<50/50
2. Medium 50/50
3. High>50/50
4. Risk consequences
Quantities
1. Numerical Analysis of the
project's risk likelihood to obtain
objectives
2. Risk Impact and Risk Hazard
Risk
Risk
Analysis or
Identification
Assessment
Management
Risk
Risk Monitoring
& Control
Risk
Response
Risk Register
1. Identify the potential risk
exposure
2. Classify the identified risk
3. Construct the risk curve using the
risk mapping concept
1.
2.
3.
4.
Risk Acceptance
Risk Rejection/Avoidance
Risk Reduction/Mitigation
Risk Transfer
Source: (Adopted from: Oztas & Okmen, 2005; Tummala & Burchett, 1999)
As presented in above figure, the theoretical framework of risk factors, based on
theoretical information has clearly shown. The entire risk life cycle can be divided
under the identification, the analysis, the response and the monitoring and control
mechanism in every construction projects. Based on above process risk in housing
and real estate research study is being conduct, which has not yet done in Nepal.
53
Condluding Remarks
This is literature review chapter which consisting its principles, theories, indicators,
project reports and documents, with reference to different scholar and writer related to
construction projects risk in real estate projects of International and Asian countries
with reference housings and real estate sectors. It is with the literature review related
to the risks and risk management aspects along with the review of the studies that
have been undertaken. To begin with, I reviewed the book journal, documents
regarding the risk in housing and real estate construction projects.
In this part, I presented the ideas thematically and critically. In addition, I
present in the form of an explanatory drawing and chart and hence I claim such kind
of review as 'put in the small bag review' because it provides a strong procedure to
know vital area. In the coming chapter will be the Research Methodology. In this
chapter, research method adopted, populations, survey method to ethical consideration
adopted are included.
54
CHAPTER III
RESEARCH METHODOLOGY
Introduction
This chapter deals with the research methodology of my study. The research's purpose
for this study was to explore the risks in housings, apartments, and real estate,
analyzing the risks, mitigation and develop the model for Risk Response Plan of my
research methodology. It includes the philosophical consideration of mixed methods,
nature of research and research design. Moreover, the general characteristics of
paradigms, nature and source of data, area of the study, rationale for selection,
population and sampling are covered in this chapter. This chapter also contains the
data collection techniques, tools used for data collection data processing and data
analysis and interpretation techniques, validity and reliability of data and ethics in my
research.
Philosophical Consideration of Mixed Methods
According to New World Encyclopedia (2008), "Ontology is a major branch of
philosophy and a central part of metaphysics that studies questions of being or
existence. The questions include a wide range of issues concerning being or existence
such as: the meaning of being or what it means "to be" for each of such beings as
physical entities, souls, God, values, numbers, time, space, imaginary objects, and
others; what is real existence; why something exits rather than nothing, etc".
An ontology is, an explicit specification of a conceptualization. The term is
borrowed from philosophy, where ontology is a systematic account of existence. For
knowledge-based systems, what exists is exactly that which can be represented
(Gruber, 1993).
The definition of ontology is very specific which is useful to keep in mind.
Ontology in my research was what I know from this socio-technical research despite
the thought. How could be able to achieve the knowledge in this research from
multiple realities as well as single reality was my ontology. It is very simple and
specific to remind.
55
According to Britannica Online Encyclopedia (2012), Epistemology is the
study of the nature, origin, and limits of human knowledge. The term is derived from
the Greek epistm (knowledge) and logos (reason), and accordingly the field is
sometimes referred to as the theory of knowledge. Along with metaphysics, logic,
and ethics, it is one of the four main branches of philosophy, and nearly every great
philosopher has contributed to both objective and Subjective knowledge can be
achieved through focused interactions discourse with research participants and
through literature study was my epistemology
Pragmatisms connection of theory to practice brings a significant change in
meaning to both. Rather than visualizing theory as something outside of practice
informing practice from above Dewey shows thought as functioning on the same
ontological level as action, and . . . thinking and acting as continuous events . . .
thinking is not merely instrumental . . . but . . . it issues in practical knowledge that is
ontologically consequential (Sleeper, 1986, p. 65; cf. Hickman, 1990, p. 48). The
work of knowledge is to transform the experienced reality of ordinary events from a
status of problematic to satisfying (Evans, K.G., 2000).
I understand the advancement of any technique possible implies a pragmatic
viewpoint, because of its focus on the practical success of the method. Therefore, I
can say that experimentalist believe on the knowledge found from practicality rather
than knowledge getting from dogmatic theories, the process, norms, scientific rules
followed same as pragmatist.
As in my research the knowledge getting in the pre-planning to implement
construction phases were the source of risk factors rather than the attractive decorated
theory alone. According to theory action were performing in the different phases of
project life cycle which gives sound knowledge. Risk management is not rocket
science - Its much more complicated (Adams, 2007).
With the development and perceived legitimacy of both qualitative and
quantitative research in the social and human science, mixed method research
employing the combination of quantitative and qualitative approach has gained
popularity. This popularity is because research methodology continues to evolve and
56
develop, and mixed method is another step forward, utilizing the strength of both
quantitative and qualitative research (Creswell, 2009).
Using mixed methods within the confines of a single study can simultaneously
broaden and strengthen the study. However, a continuing challenge is to maintain the
integrity of the single study, compared to inadvertently permitting the study to
decompose into two or more parallel studies. points to pitfalls and
remedies for integrating mixed methods throughout the conduct of a single study,
ranging from the ways of splitting the studys initial research questions to the
strategies for conducting analyses. The stronger the mix of methods throughout
these procedures the more that researchers can derive the benefits from using mixed
approaches (Yin, 2006).
Philosophically, this is said to be the third wave or third research movement.
The movement took place in the past and the paradigm wars by offering a logical and
practical alternative. Therefore, mixed research makes use of the pragmatic method
and system of philosophy. What is pragmatism? According to the original statement
of Professor James, pragmatism is a principle of method for estimating the practical
value and results of philosophical conceptions. The soul and meaning of thought, he
says, can never be made to direct itself towards anything but the production of belief,
belief being the demicadence, which closes a musical phrase in the symphony of our
intellectual life.
Thought in movement has, thus, for its only possible motive the attainment of
thought at rest. But when our thought about an object has found its rest in belief, then
our action on the subject can firmly and safely begin. Beliefs, in short, are really rules
for action; and the whole function of thinking is but one-step in the production of
habits of action. If there were any part of a thought that made no difference in the
thought's practical consequences, then that part would be no proper element of the
thought's significance (Bawden, 1904).
The legitimate of inquiry includes the use of induction, deduction, and
abduction in research. In other words, it discover patterns, derives the testing of
theories and hypothesise and explores the uncovering and relying on the best of the
set of explanation for understanding ones result.
57
The study of constructing project risks in housings, apartments, and real estate
is an important in Nepal, because the construction projects are facing time and cost
overrun, which affect the entire project, from which tremendous amounts that was
being lost. There was no framework and precedence, which had provided us with a
point of entry except the report of some books and some journals, articles,
unpublished thesis based on the narratives of workers in different parts of the world
and within the country. For this study, I decided to visit some housing, apartments,
and real estate projects, in which the risk management practiced, some contractors and
some consultants who were involved in the project.
It recognizes the importance of traditional quantitative and qualitative research
but also offers a powerful third paradigm choice that often will provide the most
informative, complete, balanced, and useful research results. Mixed methods research
is the research paradigm that (a) partners with the philosophy of pragmatism in one of
its forms (left, right, middle); (b) follows the logic of mixed methods research
(including the logic of the fundamental principle and any other useful logics imported
from qualitative or quantitative research that are helpful for producing defensible and
usable research findings). (c) relies on qualitative and quantitative viewpoints, data
collection, analysis, and inference techniques combined according to the logic of
mixed methods research to address ones research question(s); and (d) is cognizant,
appreciative, and inclusive of local and broader sociopolitical realities, resources, and
needs. Furthermore, the mixed methods research paradigm offers an important
approach for generating important research questions and providing warranted
answers to those questions. This type of research should be used when the nexus of
contingencies in a situation, in relation to ones research question(s), suggests that
mixed methods research is likely to provide superior research findings and outcomes
(Johnson, Onwuegbuzie & Turner, 2007).
In the mixed research paradigm, researchers need to use Pragmatist
philosophy (especially in terms of mixing methods is a way that works) and make
compatibility of thesis (i.e., quantitative and qualitative are compatible and they can
be fruitfully mixed in many ways, which can work quite well).
58
The fundamental principle of mixed research is that the researcher should use
a mixture or combination of methods that has complementary strengths and nonoverlapping weaknesses.
First, this principle is important because it provides researcher logic for
mixing quantitative and qualitative research approaches. Secondly, mixing
quantitative and qualitative approaches in a haphazard way may produce undesirable
results and hence should be carefully studied and research repeatedly. Thirdly, Mixing
need to be systematic and well throughout when planning and designing a research
study. Therefore mixed method research is just another name for mixed research. It is
the broad type of research in which elements or approaches from quantitative and
qualitative research are combined or mixed in a research study. Here in this study,
qualitative paradigm is given major emphasis and the design occurs in three separate
phases. A qualitative phase occurs first then the quantitative phase occurs, and then
mixed phase occurs. One might use this design if his or her primary research question
is to be addressed by a qualitative approach but at the same time, the researcher want
to collect some exploratory qualitative information before and after the qualitative
phase.
Truth is what works at the time. It is not based in a duality between reality
independent of the mind or within the mind. Thus, in mixed method research,
59
investigators use both quantitative and qualitative data because they work to
provide the best understanding of a research problem.
The pragmatist researchers look to what and how to research, based on the
intended consequences where they want to go with it. Mixed method
researchers need to establish a purpose for their mixing, a rationale for the
reasons why quantitative and qualitative data need to be mixed in the first
place.
Thus, for the mixed method researcher, pragmatism opens the door to
multiple methods, different worldviews, and different assumptions, as well as
different forms of data collection and analysis.
Nature of the Research
60
main purpose of the study was formulating a problem for more investigation that is
precise or of developing the working hypothesis from an operational point of view.
In order to fulfill the specific objective of the study, the analysis was based on
primary and secondary data. It is formulated in a sequential exploratory method, in
which the research questions were formed based on explore concept and was formed
on qualitative design. The results were the analysis of the responses. The second step
was quantitative design. In this step the result received from first step was formulated
in the form of exploratory design. Finally, result was tried to verify from quantitative
data.
Figure 4 Exploratory Designs in Mixed Method Research
Quantities Data and
Analysis results
61
Figure 5 Research Design and Mixed
Research Method
Quantitative Research
Qualitative Research
Literature
Housing
Preparation of
Review
Projects
Questionnaire
Main
Study
Questionnaire
In-depth
Data
Survey
Interview and
Analysis
Focus Group
Discussion
62
qualitative data, analysis it, interpret it and then quantitative data collection, analysis,
and interpret to verify the previous interpretion.
How can both quantitative and qualitative designs be intermingled to produce
good research? Is there any procedure? Sequential and explanatory methods
introduced in this research and researcher goes to use quantitative method to seek a
deeper or richer explanation for what is uncovered or disclosed by the other type
research. Generally most of the hybrid research, which is using focus group to
determine the issues and available answer options, should be included on the
quantitative questionnaire, observation, and behavior of people on the mycological
features and then using observations to determine what instrument or questions to
gather quantitative data.
For those conducting mixed method researches, consider the important role of
qualitative research in mixed methods research. It might weigh heavily into the study
as a major priority. It might begin a study, provide the context necessary in a study,
explore variables and constructs that are unknown, and develop themes necessary to
study underrepresented populations. It should be conducted with rigor and using the
methods and procedures of qualitative research. For those reading mixed methods
research, recognize that some qualitative researchers will be threatened by mixed
methods research, see it primarily as a quantitative orientation toward research, and
seek to keep qualitative research pure without being diluted by quantitative
research. But, with increasing frequency, qualitative researchers are involved in the
development of mixed method research, and it has a major role in this form of
research. As strong, knowledgeable qualitative researchers engage in mixed methods
research, qualitative inquiry will continue to hold prominent positions in mixed
methods approaches (Creswell et al, 2006).
According to David L. Morgan, (2007), Pragmatism is certainly not new to the
social sciences, and there are several good reviews of pragmatism, both as a general
belief system for the social sciences (e.g., Maxcy, 2003) and as a specific justification
for combining qualitative and quantitative methods (Johnson & Onwuegbuzie, 2004).
My goal in this section is to add to that existing work by suggesting several
ways that pragmatism provides new options for addressing methodological issues in
63
the social sciences. Table 2 provides a simple summary of the framework I purpose.
The columns represent the main comparative distinctions in the table, contrasting a
pragmatic approach with the two most common methodological stances in the social
sciences, Qualitative and Quantitative Research. The rows make these comparisons in
terms of three choices that are central to both the kinds of purposes we pursue and the
kinds of procedures we use in that pursuit. The table is thus self-consciously
organized around key issues in social science research methodology, rather than the
metaphysical paradigms emphasis on abstract issues in the philosophy of knowledge.
Table 2 A Pragmatic Alternatives to the Key Issues in Social Science Research
Methodology
Connection of
Qualitative
Quantitative
Pragmatic
Approach
Approach
Approach
Induction
Deduction
Abduction
Subjectivity
Objectivity
Inter-subjectivity
Generality
Transferability
64
Recognizes the existence and importance of the natural or physical world as well
as the emergent social and psychological world that includes language, culture,
human institutions, and subjective thoughts.
Places high regard for the reality of and influence of the inner world of human
experience in action.
Knowledge is viewed as being both constructed and based on the reality of the
world we experience and live in.
Replaces the historically popular epistemic distinction between subject and
external object with the naturalistic and process-oriented organism-environment
transaction.
Endorses fallibilism (current beliefs and research conclusions are rarely, if ever,
viewed as perfect, certain, or absolute).
Justification comes in the form of what Dewey called "war-ranted assertability."
According to Peirce, "reasoning should not form a chain which is no stronger than
its weakest link, but a cable whose fibers may be ever so slender, provided they
are sufficiently numerous and intimately connected" (1868, in Menand, 1997, pp.
5-6).
Theories are viewed instrumentally (they become true and they are true to
different degrees based on how well they currently work; workability is judged
especially on the criteria of predictability and applicability).
Endorses eclecticism and pluralism (e.g., different, even conflicting, theories and
perspectives can be useful; observation, experience, and experiments are all useful
ways to gain an understanding of people and the world).
Human inquiry (i.e., what we do in our day-to-day lives as we interact with our
environments) is viewed as being analogous to experimental and scientific
inquiry. We all try out things to offers the best chance to obtain useful answers.
Many research questions and combinations of questions are best and most fully
answered through mixed research solutions. In order to mix research in an
effective manner, researchers first need to consider all of the relevant
characteristics of quantitative and qualitative research. For example, the major
characteristics of traditional quantitative research are a focus on deduction,
65
confirmation, theory/hypothesis testing, explanation, prediction, standardized data
collection, and statistical analysis. The major characteristics of traditional
qualitative research are induction, discovery, exploration, theory/ hypothesis
generation, the researcher as the primary "instrument" of data collection, and
qualitative analysis. See what works, what solves problems, and what helps us to
survive. We obtain warranted evidence that provides us with answers that are
ultimately tentative (i.e., inquiry provides the best answers we can currently
muster), but, in the long run, use of this "scientific" or evolutionary or practical
epistemology moves us toward larger truths.
Endorses a strong and practical empiricism as the path to determine what works.
Views current truth, meaning, and knowledge as tentative and as changing over
time. What we obtain on a daily basis in re-search should be viewed as provisional
truths.
Capital "T" Truth (i.e., absolute Truth) is what will be the "final opinion" perhaps
at the end of history. Lowercase "t" truths (i.e., the instrumental and provisional
truths that we obtain and live by in the meantime) are given through experience
and experimenting.
Instrumental truths are a matter of degree (i.e., some estimates are more true than
others). Instrumental truth is not "stagnant," and, therefore, James (1995: 1907)
states that we must "be ready tomorrow to call it falsehood."
Prefers action to philosophizing (pragmatism is, in a sense, an anti-philosophy).
Takes an explicitly value-oriented approach to research that is derived from
cultural values; specifically endorses shared values such as democracy, freedom,
equality, and progress.
Endorses practical theory (theory that informs effective practice; praxis).
Organisms are constantly adapting to new situations and environments. Our
thinking follows a dynamic homeostatic process of belief, doubt, inquiry,
modified belief, new doubt, new inquiry, . . ,in an infinite loop, where the person
or re-searcher (and research community) constantly tries to improve upon past
understandings in a way that fits and works in the world in which he or she
operates. The present is always a new starting point.
66
Generally rejects reductionism (e.g., reducing culture, thoughts, and beliefs to
nothing more than neurobiological processes).
Offers the "pragmatic method" for solving traditional philosophical dualisms as
well as for making methodological choices.
Figure 7 Different Type of Research Design in Mixed Method
Quantities Dominant
Equal weight of
Qualitative dominant
QUAN (quantitative)
Quantitative
QUAL (qualitative +
+QUAL (qualitative)
and Qualitative
QUAN (quantitative)
research
Pure mixed
research
67
Figure 8 Logical Framework of Mixed Method Research
Research Question
Use Results to Formulate
Explore Concept
Qualitative Design
Analyze Results
Quantitative Design
Analyze Results
68
the advice of the expertise, first and second part results were mixed together. Then the
research problem had been accomplished using the rational process, for further
development. Research was being interactive workshop, interviews with responding,
academicians, expertise, and authoritarian.
Population and Sampling
The research followed mixed method approach. The Risks in housing and real estate
in Nepal is a problem and itself determines the choice of a particular research design.
In my experience, I had survey and Nepal Land and Housing Developers' Association
(NLHDA) was my specific group for conducting focus group discussions to
understand their views. Authorized housing and real estate construction project, which
was registered with (NLHDA), was the population for research survey. In addition,
knowledgeable professionals, academicians, experienced project manager who have
best expertise were my respondents the sample was being taken in such a way that it
covered different geographical regions -Terai, Hill and valley.
Table 3 Population and Sample distribution of registered member in Nepal Land
and Housing Development Association (NLHDA)
S.N.
Description
Population
NLHDA Members
146
Total
146
Functioning Members
50
Sample taken
40 +5=45
69
For qualitative data collection, I took each one from all the stakeholders as a
respondent of my research which authority involved for approval, regulate, monitor,
and control of the government's policy of the housing, apartment projects. I took chief
of the department head, technical head, and director of reputed developer in Nepal.
They will be best judgment. Therefore, the chief authority that is responsible
for housing and real state from the ministry of physical planning and construction and
one from the Department of Building, the chief authoritarian.
Table 4 Research Participants for Qualitative Research
S.N.
Description
Respondent
Total
70
Table 5 Research Participants of Focus Group Discussion
S. No.
Description
Number
Developers
6 nos.
Technical Expertise
6 nos.
both qualitative and quantitative data collection tools. The survey was descriptive cum
exploratory. The first aim of this survey was to collectthe data and facts about certain
aspect of the company. The following data collection methods had been used in this
study.
Field Survey for Quantitative Data
Reconnaissance surveys were done at different places. In this context, the researcher
visited all the housing and real estate construction projects to collect primary
information. The aim of the visit was to carry out reconnaissance surveys about
construction risk management, which was being practiced by construction projects.
Study areas were pre- defined as mentioned above on such a way that it could
address different issues on construction project risks through survey, observation,
brainstorm, Focus group discussion, and in-depth interview. It was expected that well
knowledgeable professionals, academicians, experienced project managers who have
best expertise in housing and real estates would be available in different projects.
During the field survey, sampling survey had been made and questionnaires
were filled up. The sampling survey had been made because of expletory sampling as
mentioned above through designed structured questionnaire based on the objective of
study. Formal as well as informal interviews were made with the key respondents.
Concerned issues were made clear by discussing with the developers, consultants and
contractors. These formal and informal interviews were made to understand the actual
performance of the schemes.
71
Field Survey for Qualitative Data
Qualitative results serve to explain the quantitative results. For gathering information
on benefit of the schemes managing through different options, open discussions were
mademade. Open-ended questions were used for the survey.
Focus Group Discussion
Focus group discussions were conducted with the local people on benefit of the
schemes managing through different options. Focus Group Discussions were
conducted with professionals, experts, and developers, to understand the clear version
on construction project risks management options.
Questionnaire
Questionnaires were set up in such a way, which could satisfy the objective of the
research study. Out of 50 running housing and apartment projects in Nepal, I took 5
projects for pilot test and 40 developer project's technical chief were my respondents
for survey research. I fail to cover to all 50 respondents for quantitative part.
I took 5 respondents each from KVTDP, Environment section, DUDBC under
the ministry of physical planning and works (MoFPW). Similarly, one from KMC
under the ministry of local development and one from comfort housing pvt from
developer's representative. I also took two layer of FGD. The First layer was
represented of expert and policy maker and next one was developer is represented
containing six persons in each FGD for qualitative data.
Questionnaire were divided into Section A and B. In section A Personnel,
qualification, experiences etc were asked and in Section B, there were 13 questions
and 45 sub questions were ask regarding the Risk in Housing and real estate for
quantitative data. In the same way I had managed separated guded open ended
questions for qualitative data. For detail it is given in Appendix-B & C
Interview Schedule
Interview is fundamentally a process of social interaction According to A Dictionary
of Sociology 1998), interview A social interaction, which results in a transfer of
information from the interviewee to an interviewer or researcher. Interviews may be
personal, conducted face to face, or by telephone (which has certain advantages for
more sensitive topics), or may be conducted at one remove through a
72
postal questionnaire (which gives people more time to consider their replies)
Interview schedules were developed for construction project risks. The interview
schedules included open-ended questions in the first phase. In the second phase,
closed questions were used to verify the result by the help of using statistical tools.
The interview schedule was prepared based on objectives of this study and
field observation. It had been tested with the construction project authority,
construction project risk recommender risk identification and risks analysis, risks
response and risk monitoring and control. Data had been revised, with the respective
construction project authority by asking the questions to get relevant answer.
I have been arranged the following interview schedule
I invited before 1 month, before 15 days, before 1 week and lastly before one
day to each respondents through telephone and email. The first invite was
meeting with respondent and give him the letter from university for help.
I was presented before 15 minute to take the interview with subject guidelines,
so there was no confusion.
I introduce myself and show the identity of university. All most all the
respondents were recognized with my profession and became easy
I became open about the research. There was no suspicion, establish trust that
creates rapport is to be as open as possible about the purposes and processes of
the research.
73
I transcribe the data and again I took interview for some cases were not clear.
Observation
Non-participant observation was adopted in the field survey to understand the overall
situation of the study area in detail. It was through the non-participant observation that
the construction project risk, the site instruction book, their letter? Issued by
consultant to owner and contractor, social norms and value, behave within their stake
holder and out of the allied communities. It had observed employed labor, over or
under staffing, ideal construction equipments construction material dumping site,
storing site to compare the different aspects such as causes of projects time overrun,
cost overrun and, working condition made of employment etc. It also try to inspection
the quality achievement from where important data may expect for study.
Data Processing, Analysis, Interpretation and Reporting
There were two-types of data, one is qualitative, and other is quantitative
analysis.According to Borrego, Douglas & Catherine, (2009), much of engineering
research seeks to identify how outcomes (i.e., mechanical failure) are determined by
reducing plausible causes to a discrete set of indicators or variables. Quantitative
methods are a good fit for deductive approaches, in which a theory or hypothesis
justifies the variables, the purpose statement, and the direction of the narrowly defined
research questions. The hypothesis being tested and the phrasing of the research
questions govern how data will be collected (i.e., a locally developed survey,
commercial instrument, or final course grades) as well as the method of statistical
analysis used to examine the data (Creswell, 2002). In mixed method that too,
qualitative data had considered in first preference because, the research topic is
74
sensitive and I want the data credibility, transferability, depenabiliti and reflexivity.
So, mixed method with exploratory sequencial method choosen as proper method had
used to understand different characteristics and to make up with sound segmentation.
Similarly, to improve the validity in my research had taken as some important tools
under statically analysis like graph chart, pie chart, frequency distribution, ratio
percentage, arithmetic mean, standard deviation had applied as per required. SPSS
16.0 for windows was used for analyzing the quantatetive data. The descriptive
analysis, cross tab and compare means were used to describe and interpret data.All
the unrefined information of qualitative primary data were transcribed, whereas
quantitative data has been plotted in SPSS software and formed into tables and figures
as per required by the theme. Similarly, the secondary data were extracted. The
transcribed data were coded. The coded data were divided into more than one hundred
themes. After that, I arranged my final theme during a processing of data by means of
reducing by grouping, extraction, evaluation, assimilation. After completing the above
process than I mixed the quantitative data with qualitative and secondary. Then I
interpret it based on qualitative data, quantities data, and data from secondary like
literature, theories, and principles.
Validity of Data
Validity denotes the degree to which an instrument measures of the research work.
Validity of the research work was supposed to be one unit, it must be one unit
wherever of propose research area after tested in quantitative data. But in mixed
method what is called as legitimating the data.
In quantitative research, the importance of validity has been long accepted. In
qualitative research, discussions of validity have been more contentious and different
typologies and terms have been produced. In mixed methods research, wherein
quantitative and qualitative approaches are combined, discussions about validity
issues are in their infancy. We argue that because mixed research involves combining
complementary strengths and non-overlapping weaknesses of quantitative and
qualitative research, assessing the validity of findings is particularly complex; we call
this the problem of integration. We recommend that validity in mixed research be
termed legitimation in order to use a bilingual nomenclature. Tashakkori and
75
Teddlies (2003, 2006) evaluation criteria frameworks involving the concept of
inference quality are summarized. Although providing a framework for assessing
legitimation in mixed research always will be incomplete, it is important to address
several legitimation types that come to the fore as a result of combining inferences
from the quantitative and qualitative components of the study into the formation of
meta-inferences" (Onwuegbuzie & Johnson, 2006). The collected data were crosschecked byasking cross-questions to the respondents, by retesting the questions and
interview schedules, and by accepting the feedback.
Reliability of Data
The goal of reliability is to minimize the errors and biases in a study. The object is to
ensure that, if a later investigator followed exactly the same procedures, the same
findings and conclusions would result (Amaratunga, D. et al, 2001).
The reliability of the study is ensuring by the use of various sources of
evidences like who collected data. Researcher collected all qualitative data and trained
enumerators collected quantitative data. Sources of the data were in-depth interviews,
FGD and for quantitative data were questionnaire with intellectual personality who
were experiencing day to day work. In both data were perform the pre-test and pilot
test to check consistency. Most of data were collected at beginning of the day after
taking consent with respondent by telephone and email. There was no bias of
compiler. Best-level of accuracy is trying to maintain. During collecting the data
ethical consideration was taken in high level. So the reliability of data had been
maintained
Ethical Consideration
If any ethical issues arise, the researcher will be responsible for his/her research work.
Researcher is responsible to maintaining the confidentiality of the data, in gaining
access to the field, in avoiding deception as to the role of researcher and respecting
the respondents and their culture. Researcher respected all respondent.
There was a friendly atmosphere between respondents and researcher was
maintained during data collection. Researcher takes responsible for any errors that
might have been committed in this study. The researcher did not expose respondents
76
personal matters that affect in their dignity. The research did not force people who
were not willing to participate in discussion.
Concluding Remarks
In this chapter is really a heart of my whole thesis. This chapter is methodology
chapter where, in the short introduction of this particular chapter, Philosophical
consideration of mixed method, nature of the research, Research design, Nature and
source of data, Study site, Rationale for selection, Population and sampling, Data
collection, Field survey for quantitative data, Field survey for qualitative data, Focus
group discussion. Similarly, Questionnaire, Interview schedule, Observation, Data
processing, Analysis, Interpretation and Reporting, Validity of data, Reliability of
data and Ethical consideration of mixed method research.
This part, I present the research design as a mixed method. I present in the
chapter by the help of table and figure in very simple language from which everyone
can understand easily. In the coming chapter will be Explore the risks in housing
projects and its implication.
77
CHAPTER IV
EXPLORING THE RISKS IN HOUSINGS PROJECTS AND ITS
IMPLICATION
Introduction
In this chapter, I discuss the exploration of risks in housing, apartment and real estate
projects and its implication on productivity.
The main purpose of this chapter is to explore the problems in housing,
apartment, and real estate in Nepal, which occur during conceptual or pre-planning,
planning, and especially in implementation phases due to intensity of uncertainty of
money, time, and quality management, and productivity losses. .
Based on the utility theory, we assume that individuals do their best and give
their particular housing situation to maximize their utility. For that reason, the level of
satisfaction derived from a given housing situation will ultimately be an important
determinant of individual well-being (Vera-Toscano & Ateca-Amestoy, 2007).
It is important to know the reality in the housing, apartments, and real estate
projects, need to know the entire problems before exploring the associated problems
and the implication in the project life cycle. The Problem is a potential event that, if it
created would have an impact on the project time, cost and quality. However, if the
team of the project, able to solve it on appropriate time, it will have a positive effect.
Three main causes of time-delays were the number of change orders, financial
constraints, and owners lack of experience in construction. The three main causes of
cost overruns on the other hand were contractor-related problems, material-related
problems and, owners financial constraints (Koushki, Al-Rashid & Kartam, 2004).
Regarding the problems related to Legal, Socio-Political, Technical,
Institutional, Financial, Economic, and Environment respondents said that first of
all,there is government's policy problem because government policies are not
consistent for joint apartment and housing companies. It is due to instability of
political situation in the country governments are changed frequently. The policy
formulated by one government use to be rejected by another government and vice
78
versa. The second problem is that government does not permit to build high buildings
or joint housing.
The third problem is related to banking. Once the bank makes one contract
with the developer to invest in housing and real estate sector for one objective and
without fulfilling the commitment, they change or endorse another terms and
conditions. Nepal Rastra Bank (the government's financial authority) instructed banks
to change or update immediately. It is well known that all the projects are long-term
and when the banks change its policies it is difficult for the developers to survive.
Similarly, the changing interest rate is another risk in housing and real estate sector.
The fourth problem is non- professional investor entering into the housing and real
estate sector. There is no concrete policy from the government to demark which
professional and non-professional developer is. Developers who were legally
registered with the government authority are practicing with this sector, which is
natural and lawful. In other hand, the individual, or group who were not registered
with government's authority also practicing as developers of individual houses and
real estate. They were taking approval of the drawing in individual's name and
transfer to buyer later on which is objectionable matter for jenune legal developer.
They classified the causes of delay as project participants and extraneous
factors. Client-related delays included variation in orders, slow decision making and
cash flow problems. Contractor-related delays identified were financial difficulties,
material management problems, planning and scheduling problems, inadequate site
inspection, equipment management problems, and shortage of human resources.
Extraneous causes of delay identified were inclement weather, acts of nature, labor
disputes and strikes (Sambasivan & Soon, 2006).
The fifth problem is the organizational problem within the developers those
are, they do not assign competitive, capable and skill construction manager, technical
teams and other human resources personnel as per the demand of projects, Developers
were not being responsible according to their commitment with the buyer. Developers
were not handover the apartment or house as per committed time. Next was
construction material quality and reliability. There was no monitoring andguaranteeof
the materials of the apartment and housing project. What is the requirement and what
79
requirement did the developers fullfill? The Next was construction material quality
and reliability. No one monitoring, guaranteed about the materials of the apartment
and housing project what is the requirement? Did developers assured or full fill it? In
this condition, even buyers came to purchase, may get quite different despite of the
commitment by the developers. If the buyers opposed about the same issue,
developers used to answer that, the land price was in half when contract was signed
and you are getting now in cheap price? Such an irresponsible commitment made the
developers non-ethical. Commitment is commitment even the price of commodity
might have doubled. Anyone who buys one product one year ago would have the
chances of getting triple value in this year. Who will buy the housing and apartment?
How buyers can convene that they get the time value of money?
Another problem was that there was no construction guarantee, weather the
engineer should be responsible or not. Similarly, land is belonging to the developers,
company, or someone else. After buying the property whether the land also will
belong to the buyers or not, which is not clear in ownership of joint apartment act.
Fire extinguisher is functioning or not in case of fire in 12 storey and onwards.
Emergency staircase is functioning or not, greenery exists in the apartment complex,
playground for children exist or not. Without providing all physical amenities,
housing and apartment cannot survive and cannot treat as conducive. The entire
proposed projects must be made as an integrated housing apartment friendly zone
with the access of all amenities point of view, There were not identified zone where
are available of physical facilities are problems.
Clients said that they run to those housing and apartments which are cheaper.
As per demanded price, initially they paid some installment and stoped it. When the
stallment was not paid on time the developers also cannot implement housing or
apartment units for hand over to client as per scheduled time. Thus, the commitments
were not fulfilled either from the developer or from the client's side.
Legal Constraint that was faced by Developers
Legal issues exist at least in between two parties to multi-parties. It is the dispute of
legal and fake, it is the work in between approval and unapproved from the
authorities. The developers need to be careful regarding the legal constraint and it
80
begins from pre-planning stage to close-up phase, even during life of the structure in
housing, apartment, and real estate projects.
Respondent from the department of urban development and building
construction (DUDBC) said that the responsible authority, who checks structurally
safety of building and legality as per ownership of joint apartment act 1997 and its
related polices is.
"If it demolished how it can owned. If it destroyed, what would be ownership
to all and not at all clear in existing act. Some buyers who sit upstairs use to say that
they were occupy for air of open layer and really, act has to update to make
ownership for real owner. There is no provision in the act, related ownership of joint
commercial complex, which is needed to endorse." (Field Note, 23 May 2012).
In most of the cases, buyers receive ownership only of the flat and not of the
land. In the event of an earthquake and structure collapse, none of the owners would
be able to make a claim for the land (Shrestha, 2010). It is unclear in the act about the
building collapsed or demolished due to natural calamities such as earthquake,
erosion, and landslide. But it is mentioned that in such a case the land will be that of
the developer's company. Is it not owned by apartment unit owner? In the act it is not
mentioned which part of the building or land will be owned by apartment or housing
unit owners in the pro-rata proportionate basis in terms of investment ratio.
The respondents representing DUDBC said, "The acts, related ownership of
joint factory building and policies should be updated as per demand of the people for
their betterment"(Field Note, 23 May 2012).
In premium location of Kathmandu valley and out of valley a lot of
commercial buildings are starting the construction works. However, in absence of
commercial building act and related policies professionals suggesting non appropriate
way, illegal way like take approval for residence and operate as commercial or let it
be on perpetual lease.
81
Table- 6 Professionals' Views Regarding Existing Building Related Acts
Existing building
Designations
Total
CM
MD
RE
Strongly Disagree
Disagree
11
Neutral
Agree
15
Strongly Agree
Total
12
40
sound or need to be
updated?
Disagree
Neutral
Strongly Agree
4
Agree
3
2
1 11
0 0
CM
1
0
MD
0 0 0
RE
11
0
1 1
0
Manager
0
T..Su.
0000
P. Chair
000
Others
Source: Table 6
Question was asked to various dignitaries available in the projects sites. Regarding the
existing joint apartment act 1997, building by laws, including all related acts are
sound or need to be updated or restructured, 7 respondents ( 5 construction managers,
82
1 managing director and 1project chairman) strongly disagreed such act. Similarly, 11
respondents (3 construction managers, 2 managing directors, 1 resident engineer, 4
managers and 1 technical supervisor) disagreed on those subjects. Meanwhile, 5
respondents were in neutral position of response (1 managing director, 1 manger and
3 from technical supervisors). In the same way, 15 respondents (4 (construction
managers, 1 managing director, 4 resident engineers, 1 manager, 1 technical
supervisor and 4 others (electrical engineer) similarly, 2 from others (mechanical
engineer) were strongly agreed on the subjects strongly agreed on the subjects.
Based on the above data, it could be concluded that 18 respondents were
against the existing act including joint ownership act 1997, local governanceact and
bylaw need to be updated or restructured in present context.Seventeen respondents
were in favor of the subject as Nepal is the process of formulating national
constitution. Developers cannot expecting new building acts without indorse the
constitution incorporating all problems. So in the absent of others alternatives existing
building act is somehow useful whereas 5 respondents were in neutral position i.e.,
either they did not understand or did not want to reply.
From the above-mentioned facts, it could be concluded that the existing act
need to be updated or restructured incorporating all the issues as explored above
including the ownership of land to buyers of the housing apartment units in
proportional basis.
How Easily Developers get planning Permit from Town Development
Committee (TDC)
Previously Town Development Committee (TDC) did well as per provided resources
by the government. During survey period, it was TDC. At present (since June 15,
2012) Kathmandu Town Development Committee" is under Kathmandu Valley
Development Authority Act, 1988 (2045 BS). This act was of same nature as defined
in Town development Act. However, this act is for Kathmandu valley only. Recently
this organization has expanded roads in the valley. It was not active before June 15,
2012. Its strength and weakness will be evaluate based on its execution in coming
days However, both the acts were formulated almost at the same time and this act
would be updated contextually. TDC is functioning rest of the country except in
83
Kathmandu valley based on TDC Act, 1988. Before introducing Kathmandu Valley
Development Authority (KVDA), town development committee was working.
One of the respondents said, Planning Permits for building and apartment was
given by TDC in Kathmandu valley and outside the valley as well. It will not take
more than one week by an engineer even manually to give the planning permit.
However, they are taking not less than 3-month, which is affecting in completing the
project on time (FGD2, 15 July 2012).
These include the Building Code, The building by-laws, the Local
Government Regulations, The Local Governnance Act, The Public Health Act, The
Town Planning Act, The Registered Land Act, The Land Control Act, The Land
Planning Act and the Landlord and Tenant Acts. The multiplicity of land-use
planning, development and management legislation has been identified as a key
problem in the management of urban areas (Kamau, 2002) Land pooling work by the
town development committee is also time taking and lengthy. This work already has
taking seven years of ten-year period. Land acquired system in the act is difficult due
to ineffective land use policy in the country. Land was owned by the local peoples and
was continue using for cultivation. Unless the owners agree, it is difficult to acquire
the land. This is the weakness of the authority.
Table -7 Time Taking by Town Development Committee (TDC) for Planning
Permit
Town development
Represented
Total
M/S
A/E
Developer
Consultant
Strongly Disagree
Disagree
Neutral
Agree
13
19
Strongly Agree
M/S Contractor
84
Total
29
40
13
7
6
1
2
0
0 0
Strongly
Disagree
Disagree
1
Neutral
4
2
2
Agree
1 1
Strongly
Agree
M/S Developer
A/E Consultant
M/S Contractor
Source: Table 7.
In the above chart, among the M/S developers 1 respondent strongly disagreed and 2
disagreed regarding more time taking from TDC, meanwhile 9 respondents out of 6
were from M/S developers, 1 was from A/E consultant and 2 were from M/S
contractors were in neutral. Similarly, 19 respondents out of which, 13 were
representing from M/S developers, 4 from A/E consultants and from M/S contractors.
From the above quantitative survey it can be concluded that Town
Development Committee (TDC) was taking more time in getting planning permit for
housing and apartment projects. Three respondents representing M/S developers were
not feeling so.Authorities should remove such time consuming work as soon as
possible. Particularly, planning permit work need to be easy, transparent and less
time consuming.
85
How Developers were Losing Time in the Name of EIA/IEE
Environment, being a global issue, government, international non-government
organizations, non-government organizations and even political parties are taking
initiative about the environment degradation and its solution. Similarly, housing,
apartment and real estate and other infrastructures also degrade the environment. In
this context, one of the respondents said, Taking about the various risks that suffered
by proponent, how far this IEE/EIA section is responsible. it is not correct and any
one developers or proponent were blaming to this section that is only false allegation,
because this section give permission promised by proponent that mitigate the
environment risks created by developers to all the society"(Field Note 18 April,
2012).
Most of the real world environmental impact assessment (EIA) problems
involve large amount of human judgments and various types of uncertainties, which
significantly increase the complexity and difficulty in the EIA process. The support to
the solution of such EIA problems requires powerful methodologies that are capable
of dealing with uncertainties in a way that is rational, systematic, reliable, flexible,
and transparent. The evidential reasoning (ER) approach provides a novel, flexible
and systematic way to support EIA analysis. The new analytical ER algorithm
developed in this paper provides an explicit aggregation function, which can be used
in many decision situations such as optimization (Wang, Yang & Xu, 2005).
Proponent or developers make the sound report decorated by different
literature, he also had estimated the various impacts during the project implementation
phase and gives the way of mitigation to minimize the risks, and this section seems
not responsible about developer's risks. However, one thing is bitter and real, taking
2-year time during IEA period is very lengthy, and it affects the projects efficiency in
the mentioned time. So authorities need to decrease the time for the approval.
This ABC theory formulation implies that for personal behaviors that are
not strongly favored by context (e.g., by being required or tangibly rewarded), the
more difficult, time-consuming, or expensive the behavior, the weaker will be its
dependence on attitudinal factors. Supporting evidence for this implication exists in
studies that have used the same attitudinal variables to account for different pro-
86
environmental behaviors.These findings suggest a provocative
hypothesis that is worthy of further exploration, namely that the more important a
behavior is in terms of its environmental impact, the less it depends on attitudinal
variables, including environmental concern(Stern,2000).
Table No-8 Time Taking by EIA/IEE Authority for Approval the Report
EIA/IEE Authority
Total
experienced
<5 Years
5-10 Years
>10 Years
Strongly Disagree
Disagree
Neutral
Agree
15
Strongly Agree
13
18
Total
15
22
40
14
12
10
8
<5 Years
5
6
4
2
2 2
>10 Years
2
0
Strongly Disagree
Disagree
Source: Table 8.
Neutral
Agree
5-10 Years
Strongly
Agree
87
In the column chart mentioned above, 1 respondent having work experience of 5-10
years strongly disagreed and 1 disagreed. Meanwhile, 1 of the respondents was having
work experience of less than 5 years, 2 having 5-10 years work experience and 2 were
having more than 10 years of work experience were neutral about their response. In
the same way, among the total15 respondents, 2 had less than 5 years, 6 had 5-10
years and 7 had more than 10 years of work experience who had the agreed position
in the response. Likewise, out of the total 18 respondents 5 had 5-10 years and 13 had
more than 10 years of working experienced in strongly agreed.
From the quantitative survey it is clear, authorities taking more time and from
qualitative survey also indirectly authority support to this issue.Hence stakeholders
need to minimize the time for maximize the output.
How Easily Developers can get local level Approval
People go municipality and village development committee (VDC) to submit the
drawing and get approval. In municipality, there was provision of some short of
engineer or junior engineers. But in VDC, no technical persons were there during
observation. The authority was just for revenue collection. Therefore it seemed that
the local government is a pre-matured authority.Local Level Authority Act 1999, and
Town Development Act, both are government authorities and both authorities provide
the building approval. Developers were facing procedural and time passing, which
affected the project.
In the first layer of focus group discussion the respondents said,
It was said that the developers suffer as they have to go to different authorities for
approval of same apartment project with same proposal. This was confusing and
discouraged the proponents anddevelopers demand. The government does not
incorporate the one-door approval systet" (FGD1, 25 June, 2012).
Local Self-governance Act was promulgated eleven years after the launch of
the Town Development Act. The intention of the decentralized governance was
substituting the Town Development Committees. However, in reality, both acts are
still in practice, at times creating confusion, and conflict of interests. In recent years
as municipalities are becoming stronger, Town Development Committees roles are
88
increasingly ceremonial and largely limited to projects of the Department of Urban
Development and Building Construction projects (UN-HABITAT, 2010).
Both authorities issue the permit of proposed housing or apartment project and
both organizations review the FAR, ground coverage, ROW, Access road, open space,
greenery, and building height that are being proposed by developers A/E consultant.
In my experiencefor the same task developers had to go different places again and
again and were confused about submitting the particular documents to particular
authority.
Next in self governs act, notification to neighbor within 15 days, 35 days etc
are not feasible because if the developers violet their duty of care than they must be
punished wherever provethe allegation. Another weakness for owner, if owner did
wrong implementation, there is no sound punishment. In this case, the authority or
officer can decide whether to him or not? Now, final step is local government
authority, municipality, or VDC. This authority also takes minimum 3-month times
from drawing register to approval the drawings for housing and apartment projects.
Thus, the developers have to face minimum 3 years time in planning phases.
Table -9 Time Taking by Village Development Committee (VDC) for Approval
Village
Development
BE
Committee (VDC)
MSc.
Total
in CM
in
in Others
Disclose
Engineer
Strongly Disagree
Disagree
Neutral
Agree
10
26
Strongly Agree
Total
14
15
40
89
In the above-tabulated data, question was asked whether Village Development
Committee (VDC) takes more time to give approval for implementing the housing
and real estate project.
Figure 12.Time Taking by VDC for Approval
12
10
10
8
6
4
2
2
0
1
0 0
Strongly Disagree
000
1
1
1
1 1
00 0 000 0 0
0
Disagree
Neutral
Agree
Strongly Agree
Source: Table 9.
In the above chart, 1 respondent from diploma in engineering strongly disagreed and 4
respondents out of which 2 were from bachelors in engineering, 1 from Msc. in
construction management and 1 respondent who did not wanted to disclose the
qualificationwas in disagreed position of the response. Meanwhile out of the total 3
respondents 2 were from bachelors in engineering and 1 who did not disclose his
education was in neutral position. In the same way, out of 26 respondents, 9 from
bachelors in engineering, 10 from MSc. in construction management, 1 from diploma
in engineering, 4 from others faculty of bachelors and 1 did not want to disclose the
education was in agreed position. Similarly, out of 6 respondents,1 from bachelors in
engineering, 4 from MSc. in construction management and 1from architect strongly
agreed on the question asked by the researcher. Threerespondents did not want to
comment and stayed in neutral position. Five respondents did not feel that local level
takes time. They said so because hard work or involved in others project or do not
want the answer or did not know the reality.
90
From above data, conclusion could be drawn that village development
committee (VDC) or local level authorities also take more time for giving the
approval. The approval from various authorities discourages to developers for
continue their profession.
Developers were Facing Hurdle during Approval Procedure
Our system is lengthy, time consuming and the government authorities have no
positive attitude. Attitude of government staff want covert money if anyone want the
work done quickly. Anyone who can spend money may get approval early but who
does not spendhas to spend more time to get approval.
Respondent said that, "it is not known how many approvals supposed to get for
same project, same proposal, same objectives, and same documents. Approach one
ministry, which passes it on to the next ministry and departments. This is time taking
and making process very difficulties as well as confusing. (Field Note, 1 June 2012).
Delay in approval risk means that the central or local government authority
does not approve the project-related issues in time or even cancels the already
approved ones. Obtaining approvals for a project from a complex web of government
agencies and departments, from municipal to provincial to central government levels,
can be an extremely time-consuming process, delaying entire projects and hurting
their financial viability (Wang et al, 2000).
Developers really became sad due to the hurdle created by authorities. There
were so many hurdles during approval from VDC/Municipality, Town Development
Committee, IEE Authority, Air Traffic Controller, and Department of Urban
Development and Building Construction (DUDBC). It was observed that almost all
developers had given the hidden (covert money) money to make the task easy and to
execute it by reducing approval process as less as possible. It is also observed that
some of the representatives from the authority were not accepting the covert money,
some were taking but do not want to expose it, and some were directly realizing that if
the developers are going to take extra facilities then they pay covert money.
91
Table -10 Respondents' Views about the Hidden Money
It is common belief that some Represented
Total
A/E
Developer
Consultant
Strongly Disagree
Disagree
Neutral
Agree
14
20
Strongly Agree
10
14
Total
29
40
M/S Contractor
process
92
14
10
1
0
0
0
10
31
Developer
Consultant
Contractor
StronglyDisagree
Neutral
Disagree
Agree
Strongly
Agree
Source: Table 10
Fourteen people agreed that they serve with hidden money, out of that 10 respondent
from developers, 3 were from consultant and one from contractors. In the same way,
20 respondents agreed that they were giving the hidden money, out of 14 were from
developers, 3 from consultant and 3 were from contractors. Meanwhile one
respondent from developers' side was unknown whether hidden money enhances the
approval process or not. Similarly, 4 respondents from developers disagreed about
hidden money and one respondent from contractors disagreed on the same matter.
From the above facts, it could be said that even authorities do not agree, most
of the developers or consultants or contractors offer the hidden (covert) money to
enhance the approval process and not to suffer from the hurdles.
Unstable Political System and Political Parties Sister Organization in
Housing Projects
Political problem generate due to instability of political system, instable government
i.e., frequently changing in government. The policy made by one-government is
changed by another government. The government politicizes the high rank staffs. In
such condition industry sector become risk due to uncertainty.
Respondent said, the developers get the permission from all authority and get
ready to implement, different clubs, organization, political leaders and their sister
organization, NGOs, police men, local so-called leader go to proposed project office
93
and demand money by raising different unnecessary issues. Government social
security is passive and citizens have not felt weather government is there or not
(Field Note, 23 May 2012)?
The responding construction contractors regarded political risks as very
important. Indeed, government policies, decisions, attitudes, and actions are very
likely to endanger business environment and particularly construction projects.
Evidence shows that politically motivated factors have a large influence upon
construction projects in the country. Political events exert influence at macro level
including market, and project.
Hurdles in smooth project implementation, closure (Bandhs) and strikes like
problems have delayed in achieving the expected results from projects. Problems as
such can only be resolved through political consensus since these problems prevail
mostly at time of political volatility (Economy Survey, 2012).
Nepalese community is fertile land for political point of view. So, developers
were donating the money to political parties in the name of meeting, conference and
many more. Absence of political stability, creating the security condition, the law and
order is questionable. Housing apartment and real estate condition before 2007 due to
existing political risk in the country was terrible.
Table -11 Respondents' Views about Political Influence in the Projects
Un due pressure from
Represented
Total
political parties
M/S
A/E
M/S
Developer
Consultant
Contractor
Strongly Disagree
Disagree
Neutral
Agree
10
15
Strongly Agree
18
20
Total
29
40
94
an undue pressure from sister organization, cadres of the political parties including the
donation problems. Likewise, 1 respondent from M/S contractors disagreed on the
subjects. Two respondents from consultant were in neutral position because most of
the problem would be shut out by M/S developers and consultants and contractors
hired by developers. In the same way, among 15 respondents 10 from M/S
developers, 2 from A/E consultant and 3 from contractors agreed on the matter.
Similarly, out of 20 respondents, 18 from M/S developers and 2 from A/E consultant
strongly agreed on the matter. The above fact is also made clear from the cone chart
based on above datum, which is given below.
15
10
5
0
1
1
18
10
2 0
0
0
Strongly Disagree
Disagree
3
2
0
Neutral
Agree
Strongly Agree
95
How Financial Factor Contribute in Housing, Apartment and Real Estate
Project?
Respondent said, "The depositors withdraw the money from their bank and hence
face liquidity problem in the market. Bankers' monitoring agency from Nepal
government Nepal Rastra bank (NRB) was closely observing those activities. Now
NRB instructed to bankers the ceiling that the loan would not invest more than 25% of
total lending amount and this constraint has to be decreased within years. Was that
decision appropriate or if from the beginning bankers would have monitored and
tightened their policy the situation would not have been worse" (Field Note, 23 May
2012)?
In December 2009, Nepals Central Bank the "Nepal Rastra Bank" tightened
their lending to the housing and real estate sector to control speculative and
unproductive investments. Banks and financial institutions were required to reduce
their real estate lending to 25 per cent of the total lending (UN-HABITAT, 2010).
The important aspect was, when NRB had introduced the ceiling of loan in
housing and real estate sector the supply and demand curve became descending
supply became more and demandless. Before the endorsement of the policy of NRB,
this supply and demand was increasing even one day it would have collapsed. If the
NRB had initiated to this sector from the very beginning by making gentle polices,
not decided to loan ceiling to housing and real estate immediately, this sector would
have met the supply and demand of the all economic groups. As we know all the
projects are long-term basis and when the banks change its policies how can
developers survive? Similarly, the changing interest rate is being another risk in
housing and real estate sector, which is being a chance of collapse in Nepal.
Ultimately, the financial risk also generats other risks or other risk also affects on the
financial risks. Project approval procedural delay risk creating other risks and the
price risk became up and down i) price risk, ii) social risk because as long as time
taken, more means they could put other demand. When time was taking more
developer had to pay the interest of the bank money so, iii) interest risk iv) market
risk will arise because the model built for one year earlier will not suit for next year.
Construction materials' price will rise so v) price escalation risks on construction
96
material, political leaders, and their sister organization lock out vi) political risk,
regarding institutional risk and technical risk are manageable risks.
When it became saturated it stoped according to its supply and demand
principle. In the market, bankers faced liquidity problem. Therefore, bankers had
increased the interest rate to solve the problem and hence entrepreneur faced high
interest risks. Similarly, construction material became expensive, construction labors
went abroad and hence financial/economic, material, labor, political risk was raised.
Table-12 Frequent Changes in Government's Financial Policies
Frequent Changes in
Respondent's age
Total
Government's Financial
<35 years
35-45 years
>45 years
Strongly Disagree
Disagree
Neutral
Agree
12
Strongly Agree
12
24
Total
14
15
11
40
policy
97
12
10
8
6
4
2
0
6
5
0
1
0
1
2 0
5
1
0
Strongly
Disagree
Disagree
<35 years
Neutral
Agree
Strongly
Agree
Source: Table 12
In the above cone chart one respondent (less than 35 years old) strongly disagreed,
one respondent of the same age group agreed and 2 respondents aged35-45 age group
were in neutral. In the same way, out of 13 respondents, 5 respondents of age
groupless than 35 years old age group, 1 belonging to 35-45 years age group and 6
belonging to more than 45 years old age group agreed. Similarly, among 24
respondents,7 belonging to more than 45 years age group, 12 respondents of age
group 35-45 years and 5 respondents who were above 45 years strongly disagreed.
From the above datum, respondents of age group35-45 were positive.Even 2
respondents of the same age group were in neutral and no one remained in negative
position. Respondentts belonging to age group more than 45 were positive and
remained clear. However, among the total 14 respondents of age group less than 35
years 2 were had negative and 12 had positive attitude towards the question being
asked. From this pattern it can be concluded that the age group more than 45 was very
clear and the age group 34-45 was not so clear because out of 17 respondents 2 were
in undecided position. Similarly, the age group less than 35 were unclear, they were in
negative as well as in positive position even almost all were positive, which means,
frequent changes in policy by government creats more problems to developers.
98
Based on above facts, it could be concluded that frequent changes in
government's financial policy creates problem to all business sectors including
housing and apartment sectors.
How Developers were Technically Sound and their Management part?
Technical risk is associated with pure technical work, process, and analysis. Technical
risk is created due unavailability of skilled and experienced project engineer, who
does not study the project document like working drawing and specification and
implement the project accordingly. Technical risk occurs due to unskilled and
inexperienced awarded consultant and contractor who does not incorporate client's
requirement and reflects their own feeling in the design and construct differently
rather than specified one. That means consultant and contract were not being
responsible due to either not understanding the work properly or due to being
overconfidend.
Technical risk could be classified into construction risk and O&M (Operation
and Maintenance) risk. Essentially, technical risk is the most common and wellunderstood form of risk. Technical risk is the subject of close surveillance. To
minimize the technical risk, the concessionaire is responsible to evaluate the risk in
detail. To ensure the project it should be constructed in accordance to the design
specification and host governments requirements and functioning well. Thus, well
reputed and established consultant together with an experienced contractor should be
hired to implement the BOT project without any tolerance to the standard codes and
practices (Bokharey et al 2010).
In this context, a respondent said, "Developers or contractors did not assign
technically sound and skilled person who is able to handle the risks properly. The
feelings of some builders was that all of them are engineers so why to pay more
money in the name of skill and experience, which is surface conclusion of the
employer and hence cannot handle the risks by unskilled and inexperienced
engineer"(FGD1, 25 June, 2012).
99
Table-13 Respondents' Views about Inadequate Analysis of Geo-Technical
Strata
Inadequate
Total
Bachelors Some
Disagree
Neutral
Agree
21
Strongly Agree 3
Total
15
40
disagree
14
8
7
4
3
Strongly disagree
3
2
2
1
2
1
00 0
1 1
000
Disagree
1
0
Neutral
Agree
Strongly Agree
Risks?
100
Designers were not design-based on objective. They designed as per their skill and
experience, which lead high phi design. We concentrate on our design to maximize
the incompact and to develop the salable units and to know how to destruct the norms
guideline for optimum benefit? In the mentioned method, locally climatic condition
and circulation would not incorporate and left in the design. Similarly, quantity
survey, geo-technical investigation, procurement of good, and services and
construction management all need to intact in technical part.
Developers also faced technical problems.
Social Structure of Nepalese Communities
Social problems were raised during different phases of the housing, apartment and
real estate project. Such things appear in the society due to the inadequate education,
poverty, unemployment and sickness of the society. The system of the country is
failed for education: to be moral, honest, and hard working. The moral and attitude of
people of society must be positive and respected to the industry.
Respondent said The alligation to developers of housing, apartment, and real
estate projects is like cheaters of the society because they earn money from the
society. They are not like respected professional business person who are
contributing the revenue to the country, giveing employment to people and
contributed in national GDP of the country, hard working in their profession"(Field
Note, 1 June 2012).
Risk management has entered the public domain, whether we like it or not.'
Risk apparently sounds less disturbing than poverty, sickness or unemployment. If
taken under control by good management, social risks look no more threatening than
those involved in selecting a good financial investment. What has happened, many
ask, to the social element, to a responsibility that reflected concern and a community
of interests? Have we really said farewell to the social element by adopting the
inflationary vocabulary of managing by this or managing by that? The answer is
no (Schmid, 2002).
Somebody will run to court to complain the case and some will come to fight
for claim. Hence to disturb for implementation phase is more vital and more socially
risky. In this phase local people come to stop saying that their society is being
101
affected. Similarly, regarding the risk oriented, which did mediate or facilitate by
respondent, he said that social risk oriented is mitigated because in the name of
sunshade, rainwater and so on stopped the project by the society and was mitigated in
his period.
Table-14 Respondents' Views How Local People put Unnecessary Demand
Local people put unnecessary
Respondent's age
<35
constructing
years
Strongly Disagree
Total
35-45 years
>45 years
Disagree
Neutral
Agree
10
23
Strongly Agree
Total
14
15
11
40
10
8
6
4
2
0 0
0 0
4
2
<35 years
35-45 years
>45 years
0
Strongly Disagree Neutral
Disagree
Agree
Strongly
Agree
102
Organizational/Institutional related Problems in Housing Projects
Organizational or Institutional Risk is being generated due to its organizational or
institutional problems. It is also partly related to human resource management. When
discipline, responsibility is not maintained within its organization, such problems
create uncertainty or unfavorable condition in every organization. Housing and Real
estate organizations also compose high-ranking employee, the project manger to
unskilled employee and need to careful for their job description, direction, monitoring
and controlling along with perk and facilities.
Respondent said, The organizational problem within the developers are i)
they do not assign competitive, capable and skilled construction manager, technical
teams and other human resources as per the demand of the projects. ii) Developers
were not responsible as per their commitment with the buyer.iii) Developers did not
handover the apartment or house on time as per committed (FGD1, 25 June 2012)
Job, team, and organizational aspects can result in negative acts through
(process one) frustrations and strains and the adequacy of conflict management.
Process risk factors may directly elicit negative acts regardless of developing
frustrations or conflicts by encouraging or enforcing negative behavior. Moreover,
negative acts in turn can change the original job, team, and organizational factors.
This may lead to new or more frustrations, strain, and conflict, influence how they are
managed, or reinforce direct stimulation of negative acts at work (Baillien, Neyens &
Witte, n.d.).
Organization or institution need to be perfect. The structure of organization
should be highly motivated to achieve its goal . All members of the team must be
disciplined, responsible, experienced and skilled. The commitment of Organization
must be taken seriously and then only its reputation could be established in the
competitive market. The performance established and brands can always work as
tools for market and identify the project risks based on previous project experience.
Table -15 Respondents' Views about the Human Resource (HR)
Strategies
One of HR strategies that impact on
performance and productivity of the
projects is acquisition of the human
resources
Strongly Disagree
Disagree
Total
<5 years
5-10 years
>10 years
103
Neutral
Agree
11
23
Strongly Agree
Total
15
22
40
11
12
10
7
<5 years
6
3
4
2
>10 years
1
0 0
Strongly Disagree
Disagree
Neutral
5-10 years
0
Agree
Strongly
Agree
104
and productivity of the projects, which is not found in housing, apartment and real
estate sector in Nepal.
Concluding Remarks
This particular chapter has the flowing topics, Legal constraint that was faced by
developers under the sub topics of legal constrain, How easily developers get
planning permit from town development committee (TDC), How developers were
losing time in the name of EIA/IEE, local level approval, and hurdle during approval
procedure that were facing by developers. Other topics were in this chapter are
unstable political system and political parties' sister organization, How financial factor
contribute in housing, apartment and real estate project? How developers were
technically sound and their management part, Social structure of Nepalese
communities and Organizational/Institutional related problems in Housing Projects.
This part, I presented the exploring the problems based on available data. The
chapter has presented by the help of table and figure from which everyone can
understand easily. In this chapter, qualitative and quantitative survey analysis has
mixed attractively. In the coming chapter will be analyzing the risks in housing
projects according to their rank.
105
CHAPTER V
ANALYZING THE RISKS IN HOUSING PROJECTS ACCORDING TO
THEIR RANK
Introduction
In this Chapter, I analyze the risks in housing, apartment and real estate projects and
its rank as per the magnitude of housing companies. This chapter consists of problems
related to legal, policy framework, political, financial, economic, technical, quality,
human resource, social, cultural and organizational or institutional. Legal problems
are being analyzed in six sub-chapters, which are, ownership of joint housing,
planning permit from TDC, building by-law, environment, local authorities.
Risk Analysis is the method of examining and judging something to decide the
benefits and a sum of money paid in additional wage, rate, price, or other uncertain
amount that will fit a developer of the apartment projects. In every construction,
projects are guided by social or cultural phenomenon. When public or private
housings, apartments or real estate projects focuson benefit of the society even
developers get profit, estate gets the revenue and society getsthe shelter, employment
and development of periphery's amenities.
Housing conditions affect both individual and community health to a great
degree. International human rights law recognizes this nexus and provides minimum
requirementsrequirements that governments are legally obligated to respect,
protect, and fulfill that, if met, will create more healthful living conditions for
everyone, everywhere. The right to adequate housing is solidly established and
defined under international human rights law. Indeed, in the words of Matthew
Craven, one of the leading scholars in the area of economic, social, and cultural rights,
The Committee (on Economic, Social, and Cultural Rights) has dedicated more
attention to the right to housing than to any other right (Thiele, 2002). Human right
and basic right depend on the state's available resource and responsibility of
106
government. Government does not take responsibility to fulfill such type of basic
needs.
The housing for everyone is being his or her human right. Everyone has the
right of standard living, well being for himself with his family including food,
clothing and housing with medical care and social services, which are universal
declaration of human rights, adopted and proclaimed by the United Nations General
Assembly by resolution 217A (III) on 10 Dec. 1948.
In terms of the three leading questions, systems theory stresses the importance
of social or cultural frames for selecting outcomes and providing meaning to them.
Depending on the reference system, risks refer to loss of money (economic system),
power (political system), solidarity (social system), health (health care system) or
legal security (legal system) among others. The impacts on these system-based risk
targets cannot be translated into a common currency (Renn, 2008).
Developers are providing the housing and apartments units to homeless family
which even government is not contributing in these sectors. However, developers are
not contributing in research and development work in housing apartment and real
estate sectors. Except very few, all of the developers are making housing and
apartment units as already in market which becalming monotonous to buyer for higher
and middle level of income group. Meanwhile either government or private sectors
are making the housing apartments units for low and marginalized economic income
group. Housings and apartment constructed by private sectors are facing various risk
factors.
According to Carl L. Pritchard (2005), Risk is defined as the "cumulative
effect of the probability of uncertainty occurrences that may positively or negatively
affect project objectives"(Ward 2000, 172). Almost all the risk factors, which leads
for loss is very serious and need to be carefully studied and by the effort of human
knowledge and skill need to be changed into positive to negative. However,
developers are not feeling so and they are ruining their fame in the name of donation
to political party, strike (bandha), and in the name of participation in the programs
organized by political party, legal problems, financial problem due government's
financial policy and others. The Figure given below shows the various problems that
107
were being observed during research survey. Risks in housing, apartment and real
estate projects were facing all or partial risk by the developers. Some projects were
mitigating financial risk but facing political risk. Some were mitigating quality risk
but were facing social risk, etc. It means that projects were depended on the location
targeted customer, time and situation for facing the uncertainty of adversity.
Figure 19 Risk Breakdowns of Housing Projects
Legal
Social
Housing
Risk
Project Risk
Policies
Risk
Cultural
Risk
Risk
Quality
Risk
Financial
Human
Risk
Political
Resource
Risk
Economic
Organizational
Risk
Technical
Risk
Risk
108
Criticality Index (CI) to determine the Rank
The 'criticality index' was calculated for each risk using the following formula:
Criticality index = (5n1 + 4n2 + 3n3 + 2n4+ n5) / 5(n1 + n2 + n3 + n4+ n5). Where n1 =
number of respondents who answered Strongly agree"; n2 = number of respondents
who answered Agree"; n3 = number of respondents who answered Neutral; n4 =
number of respondents who answered Disagree; and n5 = number of respondents
who answered Strongly Disagree (Wang et al, 2000).
Table -16 Rating Systems for Risk Criticality and Mitigation Measure
Effectiveness
Rating
Risk Criticality
Slightly critical
Slightly effective
Somehow critical
Somehow effective
Critical
Effective
Very critical
Very effective
Exceptionally critical
109
houseowners. We also focus attention on impediments to market development that
originate in the legal, regulatory, and tax systems (Caplin, 2000). Legal provision
need to associate by rule of law. Law must be accepted by the state. But in the name
of legalities and policies housing, apartment projects are spending the time in the
name of project approval, lengthy process for taking approval spending time in which
they are losing productivity of the projects.
Table 17 How Existing Acts and Bylaws Solved the Legal Problems?
Risks in Housing & Real Estate
Frequencies
SD D N A
Mean S.dv.
SA
Rank
CI
in Nepal
Existing apartment acts and Building
12 6 14 2
VDC/Municipality
4 3 26 6
2 9 19 9
EIA/IEE Authority
7 18 11 2
3.1
0.93 0.62 7
Department of Building(DUDBC)
1 4 21 13 4.1
0.87 0.82 3
Total
Average
110
since it also takes more time and more documents even approved from others
authorities.Covert payment was fourth ranked, which would need proper access to
have approach, which was unethical. Respondents have ranked fifth to Town
Development Committee (TDC) from where need to take planning permit, which also
not easy and sixth rank was village development committee (VDC) or concerning
municipality from where all drawings need to be approved. Developers would have
faced the hurdles here too. Respondents ranked seven to civil aviation authority
(CAA) from where height of apartment need to be determined even lot of civil
engineers and architect are working in one apartment project. The eighth rank was
joint apartment act 1997, building bylaws and other related act, which were creating
legal problems due to not being updated or restricted.
From above fact, it can be concluded that developers were facing legal risks
during the approval period from Kathmanu Valley development authority or Town
development committee for the planning permit. From above fact, it can conclude in
the name of Legal risks, developers were being facing during the approval taken from
Kathmanu Town development committee for the planning permit time taken in the
name of environment (EIA/IEE) for the approval. Time taken from ministry of
physical planning and works, department of urban development and building
construction need to go for approval of safety and structurally sound and local
authority municipality or Village development for approval of the working drawing.
Big Issue about ownership of joint housing
Ownership of joint housing Act (1997), preamble "Whereas, it is mentioned that
expedient to resolve the existing housing problem and provide for systematic
settlement by developing joint housing and selling and distributing moderate housing
units in an easily accessible manner and to provide for the rights and; obligations of
the owners of such housing units, in view of the existence of a situation that the urban
habitants can be deprived of housing facility due to increase in the price of land
because of excessive population pressure on the urban areas of Nepal" (Act, 1998).
The above-mentioned paragraph gives emphasis on existing Ownership of
joint housing Act, 1998. It seems that the objective of the act is to fulfill the housing
units in urban area as per the demand due to increased population.
111
Respondent representing buyer said in the first phase of FGD Developers are
taking advance money and not handing over the units as per stipulated time is the
problem from developer's side" (FGD1, 25 June 2012).
In the first layer of focus group discussion, developers representing buyers
said that the commitment were not fulfilled by the developers but in focus group
second layer, the developers criticized the commitment violated by buyers and not
only by the developers. Commitments need to be fulfilled byboth developers as well
as buyers for healthy environment and especially developers need to be more
responsible to fulfill the commitment to establish their reputation in the market.
Similarly, respondents representing developer in the FGD second layer said,
"It is not only the developers are taking advance money but buyers also are not
paying the money in the scheduled installment as per commitment made in the
agreement" (FGD2, 15 July 2012).
In economics and decision, making it is essential to be able to take into
account the impacts of cultural, social, moral, legislative, demographic, economic,
environmental, governmental, and technological change, as well as changes in the
business world on international, national, regional and local markets. Cost benefit
analysis approach is a useful tool for investment decision-making from an economic
perspective (Turskis, Zavadskas, & Peldschus, 2009).
It was observed during survey that some of the developers were taking all the
money and the apartment units were not handed over after two years despite the
commitment. In the contract document developers write that, the apartment will be
given with full furnishing but the developers handed over only RCC and partition
wall. Buyers did rest of the things. While asking about the contract agreement
developers said that the commitment was made at that time when the land price was
three hundred thousand rupees per 32 meter square and now it is nine hundred
thousand rupees for the same land. So the buyers were benefited not cheated. It is due
to cultural, social, moral, legislative, economic, environmental, governmental and
technological factors, which created such environment particularly weak legal
problem.
112
Table -18 Joint Apartment Act 1998 and Related Act and Developer's Views
Existing joint apartment Act 1997 &
Represented
Number
Mean
(N)
Standard
Deviation
updated
M/S Developers
2.55
1.183
29
A/E Consultant
3.67
0.817
M/S Contractor
3.60
1.14
Total
2.85
1.21
40
3.67
3.6
2.55
1.183
0.817
M/S
Developers
A/E
Consultant
1.14
Mean
Standard Deviation
M/S
Contractor
113
over phase he usually handled the problems after words developers and investors
know the problems.
Planning Permit from Town Development (TD)
TD Act (1988), in the context of growing population and urbanization, it is expedient
to provide necessary provisions, services and facilities to the residents of the town by
reconstructing, expanding and developing existing towns and by constructing new
towns and maintaining health, convenience and economic interest of general
public(TD Act,1988).
One of the respondents said, "The land acquiring process is very complicated
and so need to be made easy in the act and policy to give good service to the
people"(Field Note, 1 June 2012).
There are two types of opposing landowners. The first includes those who are
only concerned with what they will lose and do not believe that there is anything to
gain. There are good reasons for this attachment to the land; there are few diversified
employment opportunities in Nepal, and peoples land is their last hope in case of a
financial crisis. The second type of opposing landowners have their own plans for
their land and, for this reason, they motivate others to go against the project. Large or
small, all opposing landowners belong to one of these two categories, and the
majorities are in the first category (Karki, 2004)
Therefore, to take land from the farmer is very challenging job. If they
convince they will agree, if not they will go to court and court use to say no proceed
on private property without owners approval. So this act needs to be updated giving
more option for land development work. The model may be different like PPP (public
private partnership) model, cooperative model, and proportional contribution model,
etc.
A respondent said, "Migration from rural to urban is big intensity in
Kathmandu, Pokhara, Biratnagar and Sunsari including all main cities of Nepal due
to security and opportunity in cities. Therefore, it was started to build unplanned and
unmanaged housing and land plotting which created huge environment risk in the
cities"(Field Note, 10 May 2012).
114
Urban areas of Nepal are facing an unprecedented rural-urban migration and
subsequent increase in population. The 2001 census recorded an annual population
growth of 2.25 per cent while the urban population grew three times of that rate i.e.,
6.4 per cent (UN-HABITAT, 2010).
Present situation in the cities are dominated by migrated people to purchase
minimum land, make one drawing, and go to municipality or city-oriented village
development authority for approval. The authority gives approval with additional
letter instructing that they need to build as per approved drawing in mentioned
property. According to the provision space for road building in future need to be left
while constructing buildings. When the house is complete there is need of water
supply pipeline, wide road, electricity supply line, etc. So everywhere, it was looking
unplanned and unmanaged.
Table 19 Respondent's Views Regardin Town Development Committee (TDC)
How the educated professional
Represented
Mean
Number
Standard
(N)
Deviation
4.00
1.195
15
BE
3.86
0.770
14
Architect
4.00
0.00
3.00
1.414
3.50
0.577
3.67
0.577
Total
3.825
0.931
40
115
and Architect felt that time taken to take planning permit from town development
committee was in fist and second rank. In same way, the bachelor in engineering don't
want to disclose the education and diploma in engineering were 3, 4 and 5 rank
respectively according to their rating scale. Architect and Msc construction manger
were project chief and they express their clear views, bachelor in engineering, do not
want to disclose the education and diploma in engineering reflects the rank as per
their responsibility and result is natural.
Building Bylaws, 2007 for Kathmandu Valley and other Municipalities
Engineers are concerned, primarily, with Building Codes, and statutory
regulationsthat are enforced by Metropolitan or Municipal or other authority, which
are frequently referred to as codes or building by-laws. These codes or by-laws
adopted or enacted by a state or local legislature or town corporation, is a
standardized of minimum provisions respecting the safety of buildings with reference
to public health, fire and structural safety. If it fails to, fulfill the requirements of these
codes and by-laws then penalties are imposed to the Professional.
Since 1956 the building regulation of Hong Kong (HKSAR 1959) prescribed
minimum distance between building blocks based on "sustained vertical angle
requirements". They are basically requirements for the horizontal distance between
buildings and the permissible height of the buildings. This antiquated law was first
developed in the UK in the 19th century. The concept has been widely used in many
countries around the world (Ng, 2003).
Normally, Byelaws formulates by concerning municipality in different
municipalities out of Kathmandu Valley, but in Kathmandu case, town development
committee has formulated and implemented it. If state cannot implement country's
law and order, it creates impunity and every one define the law as per own favor and
not for all. In Kathmandu Valley also some developers were found that the process of
approval as well as projects are starting simultaneously without bylaws' regulation
from which creating the problems.
Regarding the buildings' bylaw respondent said, it has been already revised
and still not appropriate. In the 1525 square meter of land proposed apartment the
rear side should be 6 metres and backside 4 metres. This 4metres, border margin can
116
be used either as playground or parking. In the case of 2.5 Anna (80 sq.meter) land,
developers can build1 30 metres 2 low-cost building. However, there is no positive
attitude of policy makers and other stakeholders to solve such problems (Field Note, 1
June 2012).
According to Building, By-laws, (2008), for Kathmanu Valley for construction
in municipalities and urbanizing village development committees (VDCs) are as
follows. 1) Allowable ground coverage of 50% of available plot; 2) Allowable floor
area ratio (FAR) of 3 and 3.5 in case outside of ring road of proposed project's plot;3)
At least 20% open land of proposed available plot in the project. 4) Other open land
area needed 30%. 5) Allowable front setback is 6m and 8m in the case of outside of
ring road; 6) Allowable back and rear setback of 4m and 6m in case outside of ring
road. 7) Distance between two blocks must be maintained 6m (NHLDA, 2008). The
existed bylaw, 2007 for Kathmandu valley is not subjective and scientific. Bylaws
must address the orientation and location of the proposed project. In future
development, existed infrastructure would not make barrier.
Global Issue the Environment Protection
It is expedient to make legal provisions in order to maintain clean and healthy
environment by minimizing, as far as possible, adverse impacts likely to be caused
from environmental degradation on human beings, wildlife, plants, nature and
physical objects; and to protect environment with proper use and management of
natural resources, taking into consideration that sustainable development could be
achieved from the inseparable inter-relationship between the economic development
and environment protection (Environment Act, 1997). The above-mentioned
paragraph is preamble of Environment Protection Act 1997. Even before the
formulation of the environment act, being a global issue was lot of efforts had been
givenfor environment protection.
A Parliamentary Committee on Environment was formed in 1990 to advise the
House of Representatives in the areas of environment such as forests, soil
conservation, industry, housing and physical planning. As a legislative body, the
Committee had authority to issue directives for actions on environmental protection.
Subsequently, an Environmental Protection Council (EPC) was established in 1992,
as a high-level national body under the chairmanship of the Prime Minister, and with
117
representatives from various sectors. Its role was to provide guidance on the
formulation of environmental policies and on the management of natural resources
(Khadka et al, 2012).
The housing, apartment, and real estate projects degrade the environment if it
is allowed run without planning. In order to implement even a one-apartment project,
it is essential to import the construction materials, construction equipment, human
resources and new technology from inside and outside the country. During
construction period, lots of chemicals are used. By-product generated from the
apartment projects affects the environment. The byproduct and chemicals need to be
disposed properly in the appropriate places.
Procedure is becomes lengthy as lot of other activities has to be incorporated.
Publishing notice from daily newspaper is not enough to give the excess of
information. It is also essential to use electronic media for advertisement.
Respondent said from concerning authority said,"The environment issue is
becoming a global issue and the byproduct from environment risk is a disaster, which
need to be examined carefully. To mitigate the environment risk cost varies from one
housing project to another, one place to another. Public consultation, impact
identification, zone of influence, baseline survey and its reliabilities need to be
updated in the act as well as it need to be incorporated in policiesas well" (Field Note
18 April, 20120).
All living things are dependent on each others. Particularly, cities need to be
sensitive in this manner, because the water which is needed for drinking, air which
need for respiration and vegetables for eating, all are becoming polluted. Due to the
environment pollution citizens suffer from health risk. It was observed, the
improvement was always there. Preliminary it could be reduced to some extent.
During that approval period, developers would have been experienced procedural
risks because long procedural work and more time taking, legally the notice need to
be published in national daily newspaper, put it on different public places, and
verified by legal authority. It was improving compared to old and recent EIA/IFF
report. It was known during survey procedural risks are about 2 years in EIA and 3 to
4 months for IEE.
118
Table 20 Experienced Respondents' Views Regarding the Environment
How the work Experienced ranking to
Represented
Number
Mean
(N)
Standard
Deviation
projects
Less than 5 years work experienced
3.67
0.577
3.87
1.187
15
4.50
0.673
22
Total
4.20
0.939
40
3.87
3.67
1.187
0.577
0.673
Mean
Standard Deviation
Less than 5
years work
experienced
119
lengthy procedure of the environment authority. It indicates that the more experienced
professionals were more discouraged then less experienced professionals.
Local Government: Pre-Matured Authority
This four-country comparison has four sections. First, some remarks on appropriate
definitions and concepts are made (inter alia by introducing and emphasizing the
distinction between traditional and New Public Management-inspired administrative
reforms). Then, country by country accounts of the pertinent reforms are submitted in
a nutshell. Third, with the convergence or divergence question in mind, the
conclusion is put forward that significant differences persist (and even increase),
particularly between Sweden and Germany, on the one hand, and Great Britain and
France on the other. In the final section, an attempt has been made to assess the
performance of the different local government systems in looking at their capacity to
co-ordinate policies and activities. It is argued that Swedens and Germanys
traditional type of democratically accountable, multi-functional and territorially viable
local government does relatively well in achieving policy co-ordination, democratic
participation and political accountability. Great Britain and France, however, could do
better (Wollmann, 2004)
The local level authority act may differ from country to country, place to place
time to time and context to context. Act must be able to address the regulations as
much as possible regulations. Act must be able to address the sentiment of majority
people.
Table -21 What are the Local Authority Based on Respondents' Age ?
How the educated professional ranking
Represented
Number
Mean
(N)
Standard
Deviation
projects?
Respondent's age less than 35 years
3.50
1.225
14
3.73
0.704
15
4.27
0.467
11
Total
3.80
0.911
40
120
In the table above, respondents age iss divided into 3 categories: less than 35 years,
in between 35-45 years and more than 45 years old.Their dissatisfaction performed by
local authority have been tabulated and it is plotted on column chart as given below.
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Mean
1.225
0.704
0.467
Standard Deviation
121
ministry, which passes it on to the next one. In addition, that was taking too much
time, made the process difficult and confusing."(Field Note, 1 June 2012)
The above descriptive facts and survey shows that almost all the authorities
were exercising the old act and policy so that the developers are facing a lot of
problems. In the name of autonomous authority, project approval need to be taken
from different five authorities. Developers are demanding to make effective one-door
system from where all the processes could be approved through one place.
Problems in the Policies Level Framework-related Rules and Acts
Policies are the plans or strategy action of a government, business organization, and
political parties to review, change, or update as reform progresses. Different levels of
government endorse policy to determine the decisions. Let us say, Ministry of
Physical Planning and Works decided on its policy to subsidize the amount to the
buyer of a house or an apartment unit cost of an amounting not more than some fixed
amount.
Respondent said, Integrated polices framework need to be endorsed after
incorporating the problems and solution given by the stakeholders including the
professionals, developers, bankers, suppliers, insurers, contractors and consultants
who are involved in this particular business (Field Note, 1 June 2012).
As used in this framework, a policy refers to an overall plan or course of
action by national or local government. Specific legislation, regulations or sectoral
policies should then derive from the overall policy and should be enforceable in a
manner and style that conforms to the policy intent (Chen, Jhabvala & Lund 2001).
It is obvious that to maintain favorable, disciplined and legal track, an
integrated guided policy framework facilities, the contracted human services
including or excluding the technology program are required. The discussed
framework provides priority, direction, recommendation, award process, which
includes guided principle, funding criteria, targeted income level of community and
human services mechanism always mitigated by reducing the risk factors.
122
Table 22. Problems-Related Polices Level Framework
Policy Risks in Housing & Real
Frequencies
Estate in Nepal
SD D N A SA
Mean S.dv. CI
Rank
2 16 17 4
Total
Average
15 13 5 5 2
123
Political risk existed due to uncertainty of law and order, respective policies,
socio-economic, civil insurgency like Maoist civil war. Internal and external conflict
disturbs the investment environment.
Respondent said, "Developers need to run their professional practice where it
is easy to find the land, for developing housing and apartment projects. The public
amenities will not be there and developers have to develop it. Political parties'
leaders and their sister organizations and local people are giving trouble in the name
of renovation of public road, temple, pond and so on. Some of Political parties'
cadres do not perform hard work. However, they are jealous towards investor".
(FGD2 15 July 2012)
Political risk is the risk that the laws of a country will unexpectedly change to
the investors detriment after the investor has invested capital in the country, thereby
reducing the value of the individuals investment. Put simply, political risk is the risk
of government intervention. Examples of political risk are the risks that a government
will raise import or export duties, increase taxes, impose further regulations, or
nationalize or expropriate the assets of the investor (Comeaux & Kinsella, 1994).
Respondent said, "Civil insurgency due to Maoist civil war was in favor of the
business group. In the period, people who were working out of the country were not
able to pass their money to rural areas because of terrorism and possibility of loss of
property along with his life. So, at that time, the urban cities became safe place to
invest, and they thought tot purchase one unit of house or one flat or one plot of land.
In the period during 2003 to 2007, developers came to these sectors as an investment
for good profit. From the beginning due to Maoist insurgency middle class people
migrated in Kathmandu valley seeking security and they started buying and selling
land excessively"(FGD1, 25 june 2012)
In the mid-1990s, the government began to encourage private-sector
investment in land and housing development and promulgated the Apartment
Ownership Act 1997, which was only finalized in 2003 due to legal and
administrative obstacles. Within a span of 2 years (20032005), as many as 15
housing companies were sanctioned by the KVTDC for the development of housing
units (independent, duplex and apartment types) in the valley. Over a 3-year period,
124
14 private housing programs produced about 965 dwelling units on 254.3 ropani of
land. In response to the publics overwhelming approval of the programme, as many
as 150 real estate companies have since registered with the Nepal Land and Housing
Development Association. Among them, about 40 to 50 of those companies are
registered as Housing Developers and are engaged in various types of developments,
each with variation in design, facilities and prices (Shrestha, 2010).
Therefore, everyone invested on land and houses-apartments and sold as soon
as possible with good profit, so the value of land and housing rised in an optimum
level. Secondly, in the past, banks and financial institutions were attracted to the real
estate sector because the Nepali economy was not competitive in terms of
manufacturing and with political problems and unfavorable business environment, the
responsibility of the economy shifted towards non-manufacturing areas like real
estate. The property bubble was because of over investment of banks, finance
companies, adding that frequent strikes (bandhs), lack in policy implementation, and
absence of state support to manufacturing led by financial institutions to turn away
from manufacturing and investing in real estate. To prevent this collapse, overinvestment had diluted at the earliest by creating direct interaction between sellers and
genuine buyers. In addition to this, equal proportion of demand and supply must be
ensured. Investors started their investment for resell purposes in housing, apartment,
and real estate projects. It is due to these reasons that the value of land, housings, and
apartment was being increased. Therefore, the accessibility of middle and lower class
was impossible to be the owner of the land and housing hence professional developers
felt the risks.
After 2007, buyers focused on the product and started qualitative product
because market was starting to govern the price, escalation of construction materials
is raised excessively. It was the crunch of financial investment, which was not able to
maintain. No one was able to stop it. Country was in transition period and
peoplehoped well that the constitution will allocate more power to state government.
People were confused weather to stay in urban area or move to native place?
Similarly, there was labor shortage in the market i.e., labor risk was increasing.
125
One of the respondents in the second layer of focus group discussion said,
Nepal Rasta Bank fixed the ceiling and instructed to commercial banks not to invest
more than 20 percent of lend or loan in real estate sector, increased the bank interest,
government's policies were not addressing to all issues and not consistent. Similarly,
instable political condition, one government endorsed one policy and another
cancelled it, no healthy professional's practice, etc. are main causes for stagnation of
housing-apartments and real estate after 2007"(FGD2, 15 July, 2012)
The government is unstable and Nepal being a budding democracy, comprise
of officials lacking a vision or commitment towards the improvement of housing and
infrastructure to meet present day needs or to cope with future growth (Mathema,
1999)
The people who have money were waiting and seeing because the transition
period becoming longer since the major political party that people made largest
(United Nepal Communist Party Maoist) in constitution assembly.The prime-minister
belonged to the same party. Later, the prime-minister dissolved the constitution
assembly without concerning public decision. Therefore, at present people are not
ready to buy the housing and land due to the long transition period. Particularly highlevel of income group family are thinking weather they can stay in the country or
should go our of the country Particularly the people of high-level or who have money
are trying to deposit their money out of the country wheretheir children are studying
due to insecurity physiology.
Table 23 Problems Related to Political Issues in the Projects
Political Risks in Housing
Frequencies
Mean S.dv.
CI
Rank
& Real
SD D
SA
15
20
4.25
1.03
0.85
16
12
3.90
0.98
0.78
Estate in Nepal
Undue pressure from sister
organizations, cadres of the
political parties including
donation
Political influence of trade
unions strike, lock out
126
Strike called by the
14
17
3.70
0.88
0.74
11
12
15
3.98
1.00
0.795 2
Total
36
60
54
15.83 3.89
Average
13
15
1.5 1.5
3.96
3.165
0.973 0.79
127
One of the respondents said, "Regarding the stagnation of housing and
apartment, the developers are facing financial risks. Before 2007, buyers had made
this sector as an investment for resell and earning the profit. In past the buying and
selling of housing was dramatic and artificial and was not for residential purpose.
Housing, apartment, and real estate position can be divided into two stages for
analysis purpose and it was before and after 2007"(Field Note, 10 May 2012).
Investors and lenders are aware of certain risks and willing to face it, in order
to gain the profit from their investment. The higher the risk, the higher the profit shall
be gained (Ahmad Bokharey et al, 2010).
Before 2007, professionals and business professionals promoted the housing
market. This was being watchedby the commercial banks. Due to civil insurgency and
security problems industries were shut down. Another reason was due to the billion
remittances receiving by banks from the Nepalese people working abroad, money was
deposited in the bank. The deposited moneyneeded to be invested and there was no
other sector for investment. That time the investment sectors were land housings and
vehicles like car, bus, motorbike. So that time people who had money were buying
land and flats even though it was not necessary for them. But some of them were
buying for their living. During this period, land and housing unit became hot cake and
bank's interest was low, construction material cost was low. The cost of US dollar was
consistent. Small and medium investors sold his cultivated land in rural, migrated to
urban area and started housing and plotting business in Kathmandu valley. Bankers
were not getting other sector to invest, and became competitive from one to other. It
was fault of bankers too to provide loan without studying the appraisal of the project
before investment. Naturally investor is bank so bank had to study with good project
appraisal particularly bank had to do analysis on demand and supply as well.
After 2007, land price excessively increased. People invested on an apartment
and housing projects without studying the supply and demand of the market, which
created artificial sale even market was not ready for the demand and became risks for
long time. Economic principle is according to demand of the product need to supply
in market. Market determine the price of the goods but in before 4 years there was
boom in housing market which was not for shelter but for to earn the profit which is
128
artificial sale. Housing or apartment units were not sold for their own use but resale
purpose due to civil war they could not invest in other sectors.
Meanwhile developers were anticipating for investment the market in the same
period even housing and apartments were not ready to sell. In the same period, the
interest of the Bank was also cheaper. In the market construction materials and labors
were cheaper, consequently, the product, the housing and joint apartment was
cheaper, and it was sold easily in the market.
Bank was investing some amount to one project and approached by other
banks to invest more money if needed to the developer, which was also a risk. Rastra
bank was observing such activities and tightened it in an appropriate time. If it would
have delayed then housing and real estate sector would have been further deteriorated.
The policy that was taken by Rastra Bank was good at right time, which stoppednew
investment but preserved the old investment.
During this period artificial land and housing owners were increased because
one was buying it and selling to others within few days. Subsequently buying and
selling was rapid with good profit consequently artificial owner were increasing and
created big risks. Developers were dependent on bank and if bank did not give money
then the project would be stopped.
Table -24 Problems Related to Financial Issues in Housing Projects
Financial risks in Housing &
Real
Estate in Nepal
Frequencies
SD D
Mean S.dv. CI
Rank
SA
21 12 3.98
1.03 0.795 1
24 5
3.65
1.00 0.73
10 18 9
3.80
0.94 0.6
3.95
0.90 0.79
6
1
25 9
129
In the tabulated datum, respondent identified the lack of budgeting and cash flow
management being the first rank problem followed by lacking of promoter's cash flow
management, high operation cost and high cost of project equipment as second, third
and fourth rank of problems respectively.
Housing projects are facing the problems of lack of budgeting and cash flow
management. Similarly, lack of promoter's cash flow management is another
problem. It seems that developer's equity and loan from financial institution were
being used for housing and apartment projects. Government change in its financial
policy and commercial banks change in their interest rates are some of the important
problems that could not be manged and it affected the promoters' cash flow
management. As interest being higher, machine cost increases and hence operation
cost becomes high. Commercial banks accept the proposals in one condition and
increase the rate of interest and other conditions to housing and apartment projects
before completing the project.
Economic Aspect: Housing Apartment and Real Estate Projects
Economic risk mostly related to facilitys operation, which consist of materials
supply, labour supply, equipment availability, inflations, tariffs, fiscal policies, and
exchange rates. Projects cash flow was affected by its financial aspects that relate to
the economic parameters. Increment in the supply and maintenance cost, eventually
will increase the operation cost, thus reduce the revenue. This could be seen as a
threat to the promoter (Ahmad Bokharey et al 2010),
Regarding the developers Risks, a respondent said, "We are facing financial
risk and economic risks due to government's financial policy instructing to the bank
that not to give loan to real estate sector more than 25% of total loan amount so
financial and economic policies became unfavor for housing. As per economic survey
of Nepal government, more than 5% GDP is contributed in average in the past five
years by housing and real estate sector"(FGD,15 july,2012).
Output of this sub-sector in FY 2011/12 is estimated to grow by 2.97 percent
as compared to 2.27 percent growth in the previous year. Since last few years, this
sub-sector has started experiencing lower growth rate due to policy adoption towards
restraining the possibility of unrealistic price rise and transactions in the real estate
130
business. In FY 2006/07, this subsector grew by 11.8 percent as compared to its
preceding fiscal year. This sub-sector averaged the annual growth rate of 5.9 percent
in the preceding five years. Growth of this sector in this sub-sector in this year is
attributable to adoption of some policy measures in the area of real estate transactions
(Economy Survey, 2012). Ultimately, it is linked with financial and economic issues.
From the supply side, the housing units were being built but from demand side no one
studied how many housing and their respective affordability were demanded in the
market. Developers do not have the idea of the law of economywhich says, if product
is excessive and then demand is less. Bypaying 15% interest, which is a big amount
how the middle class people can afford?
Another reason was that, it was due to excessive supply and less demand of
housing units, in which the demand-supply became imbalanced in the market.
Developers had to go out of ring road of Kathmandu Valley and build cost effective
houses and apartments. So, supply and demand became imbalance and being facing
the economic risks.
A respondent said, "It is theweakness of the government to discourage the
developers since the housing and real estate are giving the employment opportunity,
which contributes in national GDP. Why cannot they provide facilitation policy
framework? It is the government's attitude that does not seek solution."(FGD2, 15
July 2012).
Demand for housing in walkable neighborhoods has increased dramatically
due to demographic changes: people who prefer to live in suburbs having small
family size. Because of suburban zoning laws that have prevented building enough
housing to keep up with this demand, housing prices in walkable neighborhoods are
much higher than in sprawl suburbs. Decades ago, urban housing was cheaper than
suburban housing, but now urban housing in many metropolitan areas sells for 40
percent to 200 percent more per square foot than housing in sprawl suburbs (Siegel,
2008).
It is true that developers did not carry out the research work. If they had done
so then the supply and demand survey based on the income level of group demand
could have identified and then only required housing or apartment units would have
131
been designed. Developers were not making the houses and apartments especially for
medium income level group, which was the main problem. Developers were
implementing the projects targeting to high and upper middle level of income groups.
It does not mean that demand is saturated, demand is there, but affordability is not
maintained.
Table -25 Problems Rrelated to Economic Issues in the Projects
Risks in Housing & Real Estate
Frequencies
Mean S.dv. CI
Rank
in Nepal
SD D N A SA
2 16 17 4
3 2 25 9
2 5 23 9
Total
Average
2 9 19 9
the Supply/Demand
under constructing
132
development work. Housing sectors are important, in which they are contributing in
GDP as well as employment opportunity to the people and hence need to be facilitated
by the state.
Qualities in Housing and Real Estate Projects: Chalange
Quality is defined as distinguishing characteristic or property or attribute, in which
the basic character or nature of particular housing or apartment feature of
product need excellent degree or standard with the high profile and every item that
had worked out need to be perfect as mentioned in the working drawing, specification
of housing or apartment project. But the quality risk is uncertain to fulfill the above
condition. It means in the existed housing and apartment units of the particular project
there are questions in specifications regarding the readability of the executed work.
A respondent said, "Construction material risk, for individual housing, every
one ask which cement, rod, sand, bricks are good in quality but high riser building
developed by developers are using cheaper cement, rod, sand, bricks, which I do not
prefer due to the quality risk. Similarly, the quality maintained by Nepal standard
and how reliable it is also questionable" (FGD, 25 June 2012)
Reputation is an effective signal for quality information because it is firm
specific. It was gradually built up from the quality of the projects by a developer in
the past. This gives developers repeat business in real estate development as an
incentive to provide quality housing commensurate with buyers expectation instead
of providing minimal quality housing (Chau et al, 2005).
Regarding the quality of the housing apartment, after 2007 buyers were
becoming conscious of the quality. The buyers were getting multiple choices in
market. It was observed that more buyers were searching the design, specifications,
sample agreements between seller and buyers. This shows that quality and reliability
also play important role in housing and apartment business. During survey, it was
observed that still demand is there of housing and apartment produced by some
particular developers but some developers are not able to sale their product which
means due to their quality and reliability. The important problem was construction
material quality and reliability. No one monitoring, guaranteed about the materials of
the apartment and housing project what is the requirement and did developer fullfill
133
it? In this condition, even any buyers who come to purchase may get quite different
despite of the commitment. If the buyers object about the same issue, developers used
to answer that, the product price was in half that you are getting now. Such an
irresponsible commitment made to the developers non-ethics. Commitment is
commitment even the price of commodity might have doubled.
In this context, a respondent said, "In the past developers did not do research
for requirement of data that were searching by the customers. Developers need to
target certain income level of the groups and need to identify required quality for
them and resulting this condition of housing sector".(Field Note, 23 May, 2012)
The customer can checklist their requirement for their residential property,
whether the house that they have bought or going to buy meet their requirement or
not. So, it can encourage the customers to be more conscious and more concern when
make a choice before buying a new house or residential property in future (Kamsi,
2005),
If professionals were responsible, regarding their commitment and the quality
the problem would have solved and its private sectors responsibility government only
facilitates on their job, which will be the tracking risks and mitigate them.
In the second layer of focus group discussion a respondent said, It is said that
developers do not optimize the quantity, do not train the labor. They do not employee
experienced and skilled technical person but developers try to reduce the quantity of
construction materials, try to pay less to technical and non technical person, and they
think that they did cost effective, which invited various risks and need to pay much
more for mitigating the risks"(FGD2 15 july,2012).
The most significant problem related to labour and staff is devoted to be the
lack of skilled labour, poor quality of workers and technical staff. Ninty-five per
centof the respondents complain about difficulty of working with poor
quality/uneducated labour which significantly deteriorates the quality of final product
(Birgonul, M T and Ozdogan, 2001).
We compromise with quality and reduce the quantity whereas no one optimize
the quantity and reduce it. For example, let us take the plaster item. We do not
concentrate how to construct the wall so that plaster quantity would be reduced.
134
Similarly, we decorate clearing (decorated sheet) after plaster, without plaster also we
can put clearing. If we did clearing without applying the plaster price could be
reduced. Next example is, the size of doors-windows all had maintained the standard
size but not required size or demanded size by that particular room.
Table-26 Problems Related Qualities Issues in Housing and Apartment Projects
Risks in Housing & Real Estate
Frequencies
in Nepal
Mean S.dv. CI
Rank
D N A SA
SD
16 13 4 5 2
18 3 11 2
Total
Average
resources
9 4 12 9
135
Problems Related to Technical Aspects
No availability of technical expert, shortage of construction material, machine,
workers, project management, etc. are the technical problems in housing and
apartment projects. Similarly, financial, economic, good quality of construction
material, construction tools and equipment, machines andtechnology need to be
perfect. In absence of competent as well as skilled srchitects and engineers developers
would face the technical risks. It is fact that technically sound, experienced and
skilled engineer maintain good quality handle almost all the risk factors arising during
the project, but such things are ignored by the contractors and developers.
One of the respondents said, "Technical risks are also influenced by other
risks. For example, lack of financial and economic resources, available physical
infrastructure and human resources are the indirect causes including direct causes
like inaccurate design details and specifications of the projects".
Ofori (1994) points out that technology development requires financial
resources, conducive economic conditions, relevant administrative support, a physical
infrastructure, organisations that can apply the new technology and a supportive
culture. Unfortunately, most of these factors are weak in developing countries.
Another major cause of inaccurate design details occur when the consultants are
inexperienced, are not competent or do not have the structure to handle such complex
and high-risk projects (Chileshe & Fianko, 2011).
Technical risk is responsible for the indirect causes too.For example, if the
political influence is there, there will be high technical risk. If clients are ready to pay
for the risks, contractors and developers will not give efforts to save clients
expenditure as the expenditure is in clients part and hence let it be, which is
irresponsible and unethical. For example, a client was required the commercial
building, which have double basement.The contractor searched for low cost insurance
company so that the risk could be transferred. In this particular case, if client would
have committed to bear the risk contractor would say Ok go ahead, it was client's
money and the contractor did not care of it.
136
Table -27 Problems Related Technical Issues in Construction Projects
Risks in Housing & Real Estate
Frequencies
in Nepal
SD
D N A
7 3 21 8
4 5 24 5
2 10 18 9
3 7 21 7
6 8 20 4
Total
Average
4 6 21 7
it
High cost of project equipment( High
investment)
strata
137
A respondent said, "Human resource management risk is also existed in
housing, apartment and real estate project. Developers do not want to pay good
salary for the set of human capital and hence they do not empower construction
mangers and other staff, consequently skilled, experienced experts left the
organization"(FGD1, 25 June 2012).
At the team-level, empowerment climate also positively related directly to task
work and teamwork behaviours and partially through team empowerment. The results
suggest that empowerment climate and psychological empowerment play
complementary roles in engendering individual and team performance behaviours and
are therefore not mutually exclusive(Tuuli & Rowlinson, n.d.).
Human resource risks are also faced by the developers, since this sector is not
fully matured. Regarding the lack of competent and capable construction manager,
respondent said that the developers are managing the projects by assigning skilled and
competent construction managers when each projects are more than five billion
rupees. Some developers' projects were weak, deteriorating and they were convincing
them to sound reporting by maintaining the good project management. But some
developers had assigned skilled construction managers, well consultant, bankers, and
insurance was done. Always investors are thinking about how to execute the work by
paying less money. Therefore, developers' interest was always hiring unskilled and
non-qualified engineer by paying less money that is wrong assumption. Consequently
investors or developers were facing severe risks due to their wrong interpretation.
Table 28. Problems Related to Human Resource Management in the Site
Risks in Housing & Real Estate
Frequencies
Mean S.dv. CI
in Nepal
SD D N A SA
2 1 27 9
Average
Rank
138
Among various strategies of human resource management, some are tabulated here
based on respondents answer in field survey, which are mentioned above and based
on arithmetic means its rank has been decided.
From the above real facts it is clear that the private ventured projects were
handling more company by a single personin Nepal.The housing project
consequently facing risk is in first rank, followed by acquisition the human resources,
develop human resourcesand retain them for better human resources showing 2, 3 and
forth rank respectively. In our country, investors lookfor cheap human resources, do
not spend money to develop,and no program is there for retaining the human
resources as the investors choice being to get cheaper human resources, which leads
to risk.
Components of Nepalese Society: How Positive in Housing
Social risk being increased in latest days, particularly in housing, apartment, and real
estate projects. The perception of the local people is that the investors are cheaters
who come to their location to earn money. Naturally, if investors cannot earn the
profit they will be no more sustained. But local people do not think that the investors
are investing so much money and came for business. From their investment, so much
people are getting employment and contributing to the revenue in the form of GDP.
In this context a respondentrepresenting Kathmandu Town Development
committee said, "During the land pooling project society becomes the enemy.
Somebody run to the court to move the case, some come to fight for claim. The
housings, apartment and real estate projects behave in the same way. Hence the
implementation phase is more vital and there is more social risk. In this phase legal
risks we were facing as people filed cases in the court, local people were defending
to stop building saying that their society being affected in the name of sunshade,
rainwater and so on stopped the project by the society"(Field note, 25 April,2012).
Risk Acceptability, according to the Social Sciences (Douglas, 1985), Risk,
and Culture (Douglas and Wildavsky, 1982) have been influential in the creation of a
framework for understanding risk in contemporary society. In these works, Douglas
focuses upon the impossibility of a form of analysis, which does not take into account
the uniqueness of the community in which the perceived risk occurs. Each community
139
is typified by forms of authority, commitment, boundaries and structures that
determine the manner in which risk is constructed and acted upon (Denney, 2005, p22).
The attitude of some of the people of society is becoming devalues, immoral,
unethical. When anydeveloper who come to construct the infrastructures,
particularly housing, then the local people's attitude will be negative and there is need
of a big effort to make it positive.
Table -29 Social Problems in Housing Construction Projects
Risks in Housing & Real Estate
Frequencies
in Nepal
SD D N A SA
2 5 23 9
Mean S.dv. CI
Rank
under constructing
Non adherence of proper safety
Total
Average
2 3 20 14 4.1
0.95 0.81
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Culture of Consumers in Housing Projects
Cultural risk is uncertainty or unfavorable market condition created by culture of the
customers who require housing and apartment unit to suit for their own culture. The
majority of people inf Nepal are Hindu, followed by Buddhist, Muslim and recent day
Christian community is growing. Requirement of housing and apartment units are as
per own culture. Hindu community prefer a house surrounding by compound wall
with a kitchen garden and a Tulashi Math where Tulashi (a plant treated as God)
could be planted for worship. Similarly, people want the house and apartment units to
suit as per their own culture.
Cultural theory is a way of interpreting how and why individuals form
judgments about danger, pollution, and threat. The point of the theory is to show that
such judgments are not formed independently of social context. They are part of an
evolving social debate about rights to know, justice for those likely to be affected by
damage or loss of peace of mind, and about blame, responsibility and liability. In
order to understand why some risks become politicized and emphasized whilst others
remain latent, it is crucial to develop a framework that explains how risks are both
constructed and selected. Cultural theorists argue that social debates about risks
cannot be reduced to concerns about safety and demonstrate instead how they are
inseparable from issues relating to power, justice and legitimacy (Tansey &
O'Riordan, 1999).
A respondent said, "The people migrated from rural want similar house as
they were living - a separate house, small kitchen garden oriented in an appropriated
direction.Inn the same way Newari community wants as per their own culture and the
people who came from western want more luxurious house"(Field Note, 18
April,2012).
Many authors have described the architectonic works of Nepal by making a
typological classification of the principal monuments. It was only in 1905 that Lvi
clearly identified all the works that constitute the cultural patrimony of the country.
However, nobody has so far prepared a complete chronology of the arts and more
specifically of the architecture. The works analyzed by Lvi are linked to a system of
141
religious worship, a cult, and are described according to it (Bonapace & Sestini,
2003).
Some communities of Hindus are still conservative. In the morning they
worship sun treating as Brama, Vishnu and Maheshor, what they were learned from
their Hindu's school of thought. Some Newari communities are cultivating on their
land even in an area surround by housing and apartment. These communities were
learned that if they sell the land, they cannot survive. Business communities look the
housing and apartment as per their requirement. Therefore, cultural risk also plays a
major role along with other factors. The land development system in Nepal is crucial
and volatilize. Our society is culturally cultivated in the cultivated land and getting the
crops, vegetables, and fruits and passing the life. To develop the infrastructure land
must be taken from public, which is challenging job. In addition, there was no land
use and development act. The land belonging of citizen is free to utilize by doing any
profession, which is being problematic.
A respondent said, "One more thing is that our socio-economic status and our
culture are not yet developed to digest the joint apartment. Everyone citizen prefers
their own house built by themselves. Their interest is decorating garden and worship
room with cultural amenities. So cultural parameter of each ethnicity would be one
factor, which is a constraint for apartment"(Field Note 10 may, 2012).
Adobe architecture predominates along the Bagmati River and rural areas in
general. It blends in perfectly with the local environment, which is ecological and is a
part of the cultural patrimony of the Valley and should be conserved and protected in
the same way as the monumental architecture (Bonapace & Sestini, 2003).
Developers did not concentrate for research and development regarding the
perfect requirement of buyers. As incorporating cultural requirements with amenities
based on the research, product could be sold easily in the market. Therefore, the joint
apartment would not be appropriate as per their culture and religion compared to
individual housing. Next, the culturally matured citizen wants the modern amenities
as they are using.
142
Table 30. Problems Related Cultural Issues in Housing and Apartment Projects
Policy Risks in Housing & Real
Frequencies
Mean S.dv. CI
Rank
Estate in Nepal
SD D N A SA
2 5 23 9
14 14 7 1
Total
Average
143
contribute to the enrichment of the project risk planning (Farias, Travassos, & Rocha,
2003).
A respondent said no one developer was identifying, analysing, ranking, and
response plan in planning or pre-planning phase. Developers were not doing risk
identification and analysis. Whenever there is no analysis how to rank them and make
the risk response plan. If the developer felt to purchase the land plot for housing and
apartment, he uses to give the advance money to assure. Then his analysis process
starts about the legality on the mentioned plot. This is just opposite way. Similar is the
case of the housing and apartment projects. Developers were not taking risk analysis
during planning or pre-planning but started in implementation phase. That is why
developers are facing various risks due to organization cause (FGD2, 15 July 2012)
Due to organizational or Instructional weakness, it there werevarious risk
being faced. Team must have contained experienced, skilled, motivated, innovative,
and commanding leader. Decision power need to be quick and bold. Construction
manager need to be competitive, technically and experienced. Formally, housing and
real estate work started from around 2003 in Nepal. Therefore, every developer got
the experience of about one decade. They could identify particular problem in the
policy risk, approval risk, financial risk, political risk, labor risk, safety risk, and other
risks factors.
According to Paul C. Stern, (2000), at first step towards understanding the
complexities is to elaborate on the truism that behavior is a function of the organism
and its environment. In one formulation (Guagnano et al., 1995), behavior (B) is an
interactive product of personal-sphere attitudinal variables (A) and contextual factors
(C). The attitude-behavior association is strongest when contextual factors are neutral
and approaches zero when contextual forces are strongly positive or negative,
effectively compelling or prohibiting the behavior in question (an inverted U-shaped
function)
They do not keep in mind whatever risk they felt in previous projects. In the
current project when they feel, oh how to cross the particular risk just make
contingent plan and go away. This was the risk management system in Nepalese
144
housing and apartment, so no one adopted the systematically risk management
procedure.
Table- 31Organizational Problems in Housing and Apartment Projects
Risks in Housing & Real Estate
Frequencies
Mean S.dv. CI
Rank
in Nepal
SD
D N A DA
4 3 24 8
2 12 18 7
Total
Average
3 7 20 9
Director(BoD)
Structure HRM
145
Table32. Ranking of Risks in Housing, Apartment and Real Estate Projects
Risks in Housing & Real Estate
Frequencies
Mean SD
SD D N A SA
1. Social Risk
2 3 20 14 4.1
0.95 0.81 1
3 3 20 13 3.99
0.98 0.80 2
3. Political Risk
1 9 15 14 3.96
0.97 0.79 3
4. Financial Risk
3 5 22 9
3.85
0.97 0.77 4
5. Organizational Risk
3 7 20 9
3.81
0.98 0.76 5
6. Legal Risk
4 6 18 10 3.77
0.98 0.75 6
7. Cultural Risk
6 7 14 11 3.68
0.92 0.73 7
8. Technical Risk
4 6 21 7
3.66
1.01 0.69 8
9 4 12 9
3.22
1.11 0.64 9
4 6 15 13 2.24
1.07 0.63 10
2 9 19 9
0.91 0.43 11
2.16
CI
Rank
146
CHAPTER VI
RISK MITIGATION MODEL AND RISK RESPONSE PLANNING (RRP) IN
HOUSING, PROJECTS OF NEPALESE ENVIRONMENT
Introduction
In this chapter, I am going to discuss the risk mitigation model and risk response
planning (RRP) in housing, apartment and real estate projects. Under the mitigation
model, following topics are being discussed: Integrated Policy framework enhances
housing business, Legal polices need to guided by acts and developers friendly and
Developers need to carry out the risk management plan. Frequent development and
research work need to housing and real estate sector, Construction Manager including
human resource team must be experienced, skilled for risk mitigation. Similarly,
Work load in Implementation phase is more and need to be careful compared to other
phase by changing the uses is cosmetic treatment for mitigation but not permanent
solution and Developers product of Housings, apartments' must be Branded and
Qualitative. In the Same way, Risk response plan (RRP) is divided in four sub topics,
Risk Acceptance, Risk Reduction, Risk Transfer, and Risk Avoidance Finally I
summaries of this chapter is outlined.
In the table below, respondentsview on the Risk Response Plan is prepared and
implemented by Housing and real estate projects in Nepal are given.
Table- 33 Respondent Views weather Risk Response Plan Implemented in Nepal
Risk Response Plan is prepared and
Represented
Total
M/S
A/E
M/S
Developer
Consultant
Contractor
Strongly Agree
Agree
Neutral
10
14
Disagree
12
14
Strongly Disagree
Total
29
40
147
Source: Field Survey, 2012
Figure 23 Risk Response Plan Performed in Housing Projects?
Strongly Agree
1
2%
Strongly
Disagree
4
10%
Agree
7
18%
Disagree
14
35%
Neutral
14
35%
148
quality management, and loss occurs due to various adversities. This assessment is
enhanced by my research participants perceptions on these themes. After a thorough
study of exploring the risks factors with the research participants along with focus
group discussion, all the information are arranged into selected themes that either
reoccurred prominently or were emphasized during this process.
Risk mitigation is common of all risk handling strategies. Project manager
may have to be responsible and emphasize to reduce or minimize the expected
probability that the risk may suppose to occur from what the construction manager try
to reduce the negative impacts. The project manager must develop risk mitigation
plan from which trace the activities based on the proposed plan. In the policy
framework government need to break down different economic levels of income
group. Let it be four types, which are High economic level of income group, Medium
economic level of income group, Low economic level of income group and
Marginalized economic level of income group. Based on the above economic level of
income groups, for particular group government need to subside and rest economic
levels of income groups can go in open market.
Integrated Policy framework: which Enhance housing and real Estate
Policies are heart of the guided acts, which are the plans of action taken by
government, business organization, political parties, and multilateral investor
company to review or updatd as a restructured progress. Polices are endorsed by the
state or local government to determine the decisions. For example, ministry of
physical planning and works decided to subsidize amount to the developer who builda
house or an apartment cost of an amounting not more than some figures with a
minimum carpet area of some figure square feet. Planning commission, ministries,
organizations and local level government can endorse their strategies as per their
territory and implement the decisions.
A respondent said, Integrated polices framework need to endorse after
incorporating the problems and solution given by the stakeholders including the
professionals, developers, bankers, suppliers, insurers, contractors, and consultants
who are involved in this particular business (Field Note, 1 June 2012).
149
As used in this framework, a policy refers to an overall plan or course of action by
national or local governments. Specific legislation, regulations, or sectoral policies
should then be derived from the overall policy and should be enforceable in a manner
and style that conforms to the policy intent (Chen, Jhabvala & Lund 2001).
It is obvious that to maintain financial discipline, drive in legal track, an
integrated guided policy framework facilitates the contracted human services
including or excluding the technology. The discussed framework provides priority,
direction, recommendation, award process, which includes guided principle, funding
criteria, targeted income level of community and human services mechanism that
always mitigate by reducing the risk factors.
Respondents representing IEE/IEA said, Drawing the attention towards the
environment is a global issue,So in the entire life cycle of housing project
environment issues need to be addressed in the policy " (Field Note, April 18, 2012)
In fact, environment is an important element to live, work, progress, and
prosperity of the world. Every creature needs to have live in this universe and without
it no one can imagine of the other. It was observed, to construct or destruct
professionals need to careful about the environment degradation from which the
impact will be hazard. In the same way government of Nepal is taking initiative to
minimize environment degradation and its impacts.
Representative from Kathmanu valley development authority (KVDA) said
that before the implementation of housing, apartment and real estate project physical
infrastructures need to be developed according to building byelaws, 2007. In this
context he said, Wide road, floor area ratio (FAR), ground coverage, greenery, open
space Right of Way (Row), and height of building must be maintained in the proposed
project. Additional drain facilities, water supply, electricity, telephone line which are
others attractive features to value added along with the mentioned in the policy"(Field
Note, 25 April,2012).
Failure to regulate rapid urbanization and haphazard growth of settlement and
building transformation in the historic core and peripheral areas as well as numerous
weaknesses on different kinds of projects ranging from housing construction, land
pooling projects and other infrastructure projects under public private partnership in
150
the past clearly confirms the inadequacy and ineffectiveness of the existing legal and
institutional framework for urban development in the Kathmandu Valley.
First, five tiers of government organizations namely Ministry of Physical
Planning and Works [MPPW] at central level, Department of Urban Development and
Building Construction [DUDBC] and Kathmandu Valley Town Development
Committees [KVTDC] at valley level, Local Municipalities at city context and local
Ward Office and Village Development Committee [VDC] at local scale are yet to
prepare the detailed Master Plan for the Kathmandu Valley. The earlier five master
plans proposed in 1963, 1969, 1976, 1984 and 1991 were never implemented. There
is neither an urbanisation policy at national level not clear guidelines of land
development and infrastructure provision in the urban areas. Though the Town
Development Act 1988 empowers the KVTDC to prepare planning standards and
design guidelines, it has failed to fulfill its duty even after twenty years (Shrestha&
Shrestha, n.d.).
Developers must not concentrate to fulfill the condition of bylaws, but before
starting housing and apartment project an integrated physical amenities, which is
being essential for proposed project need to develop by either socially or privately.
During the project formulation period, research has to be conducted, which help in
planning and implementation phase. The above facts need to be included in the
integrated policy framework hence mitigate the risk.
Respondent represented from Minister of Physical Planning and Works
(MPPW), Department of Urban Development and Building Construction (DUDBC)
said, Some of the developers were taking enough money from the buyer. It was as an
advance but not handed over the housing unit, regarding the same application was
filed in this office from the buyers, and cannot take actions against in lack of related
act and policies. In the same way, without taking approval some developers
implemented the housing and apartment projects, for them commissioning and post
commissioning need to perform, the ownership of land provision need to address if
the building collapse, commercial buildings and units, recreation, corporate building,
parking, garage, industrial buildings, which should be included in the policy(Field
Note 23 May, 2012).
151
The developers of service apartments have good reason for attempting to
ensure that purchasers do not default under their contracts. A purchaser to do so, the
result could be very serious, significantly more so than in other types of
developments. Because of this, some premium in excess of the standard deposit of 10
per cent might well be acceptable to courts. However, while a deposit of 15 per cent
may well be successfully retained; there are no guarantees that even this amount
would have to face legal challenge. Any sum in excess of 15 per cent is very unlikely
to survive court action seeking relief from forfeiture (Flanagan, n.d.).
It is obvious in other countries if developers default to handover the house or
apartment units after taking the advanced money, the developers company might keep
in black list, canceled the license and promoter would have to go jail with big amount
need to deposit in the court. In the same way, in order to prevent such activities there
should be change in our policy.
The respondent representing Kathmandu metropolitan city (KMC) said that
the social problem should avoid with neighbors, notice giving to neighbor and society
from KMC are 7, 15 and 35 days against to claim and verify his own or public land
property must not limit in specific days. If anyone who is not doing his duty of care
then his neighbor or stakeholder can claim in any time (Field Note, 10 May 2012).
The social problems of noise pollution and disturbance from neighbors as well
as the timely maintenance of leakages and other defects are not clearly mentioned in
the act (Shrestha, 2010).
The proposed policy need to address the neighbors social problem, during
exercising own right or freedom that should not violate others right or freedom,
during using own ownership must not violation others ownership on the land asset.
Municipality or Village development committee inform to neighbor that in proposed
land apartment or housing project is going to built, so if anyone neighbor is affected
or replaced by other land owned by neighbor or public by the project, inform or claim
to the authority with legal documents within 7, 15 and 35 days. It is seriously
objectionable. Neighbors would have been out of country during informing or
information access would have not enough. In the property right s/he must be able to
claim his/her property in life time if the proposed project would have been used.
152
Similarly, the respondent from comfort housing commented about lengthy
procedural work for taking approval. He said, For the same type of approval, why
government does not approve from any particular place that is being demanded by
the developers, which is called "one door approval system". Developers are ready to
pay all the revenue in one place claimed by different authorities. Next, FAR, coverage
must be decided based on location, topography and orientation of the proposed
project.The access road must be 8metres wide whereaseven the main road is just 4
meters wide, which is unrealistic as per existing bylaws (Field Note, 1 June, 2012).
The bylaws and regulations in Kathmandu city are limited within plot
coverage, height of the building, minimum setback, and right of way. Besides, there
are no effective regulations, laws and policies regarding the housing development that
ultimately resulted in an improper and unplanned housing settlement. Very little effort
has been made on the urban form and its overall impact on the city (Shrestha,
2007).The approval of building plan is vested with the local authority where the local
authority shall ensure that the applicant-developer has complied with all necessary
rules and regulations, in particular the Uniform Building By-Laws (UBBL) (Sufian &
Rahman, 2008).
It is really, not enough the existing building bylaws which was initiated by
Kathmandu Valley Town Development Committee (KVTDC) for entire valley.
Almost all have formulated same model by other municipalities. Bylaws must address
the minimum requirement to build the house, apartment, commercial complex as per
its uses. Based on the uses the coverage, minimum setback, height, air circulation
area, open spaces and wide road at least water tank can enter to the street from where
fire could be controlled. Provisions of septic tanks are must for primary treatment
before disposal to drain and rainwater disposal. The impact from the structure to
periphery need to be carefully addressed. The one-door approval system is really
solution to the long procedural delay and it enhances to mitigate the risks.
One of the respondents said, Since developers are hiring the consultant
during entire project why to inform other authorities? If consultants and contractors
are not liable or responsible upon their duty of care, why need to employ them?
Representative from Department of Urban Development and Building Construction
153
(DUDBC) want to supervise and instruct developers to call for casting day informing
them before 1 week of casting date. Next DUDBC ask developers to determine the
height of building from civil aviation authority and renovation project and why not
they ask consultants for that? (Field Note, 1 June, 2012).
The Agreement will stipulate as the primary duty of the engineer that s/he
carefully observes the requirements of the employer in the realization of the project. It
is important to note, however, that the conditions of contract between the employer
and the ontractor stipulate that where, under the contract, any of the engineers duties
are discretionary, the engineer shall act fairly between the employer and the
contractor and apply the contract in an impartial manner. The conditions are based
upon this fundamental principle and this requirement applies even if the engineer is a
member of the employers staff (Guide to the use of FIDIC, 1989) (Usta, 2005).
It fact, in our projects there will be different vendars professionals are
employed like A/E consultant, M/S contractor, M/S suppliers and so on. Every project
expects their expertise and the professionals skill. According to their condition of
contract, they must be responsible. Therefore, based on document if the proposed
project has maintained the Nepal standard building code from the safety point of view
he can supervise or instruct, otherwise need not supervise by DUDBC, but others
professional must be responsible. A/E consultant can determine the height of the
building. Moreover, why to give other authority to make complication from others
nock and corners were existed and facing so many hurdles?
Respondent represented by developers and consultant said, Anyone company
registered with the ministry of industry and tax office is a developer and other side
anyone who do not register with authority is developer. Both are doing housing and
real estate business. If it is continuing why to register with government authority and
pay the tax when individuals are doing business without paying money as a
developer (Field Note, 1 June, 2012).
Validity for the democratic component of DLG (and much for its local
governance as well) deepen in the final analysis on participation and accountability
bringing as many citizens as possible into the political arena assuring that local
governs are responsible to the governed for their action. Fortunately, there is
154
considerable scope for enhancing both participation and accountability at the local
level (Blair, 2000).
Existing Legal Polices need to be Guided by Acts and Developers Friendly
A company is always a legal entity that is existed through incorporation or other legal
manner. Individual do not have to be a company to run a business. However,
individual people work and earn money without having a formal company.
Authorities had to make wide demarcation between the housing, apartments, Real
Estate Company, and individual who can do business and earn money. Therefore,
when government brings the different policies covering all issue as mentioned above
then housing apartment and real estate business will take one direction. In the same
way it was emphasized that the integrated government policy to uplift the housing
sector. Similarly, financial policy framework was really realized in this sector to
enhance housing, apartment and real estate sector. The policy need to cover land use
plan, which could cover zoning concept, develop the road and physical infrastructure.
It is said in focus group discussion (FGD) layer second, "Housing sector need
to be divided by targeting high, medium, low and marginalized level of income group.
Probably for high and medium level of income group, the existed developers or
privare sector may supply their demand. But for low and marginalized levels of
income group, either government have to supply the houses unit or some short of
subsidize need to give them so that they could be able to buy the housing unit by
developing good and easy payment packages. Let us say cooperative model or give an
employment to one family, which can afford one unit of their own housing within
certain time" (FGD 2, 15 July 2012).
According to the United Nations Center for Human Settlements (UNCHS),
access to housing is a basic human right that should be available to all individuals.
However no where would this be far from reality than in most cities of the developing
world where housing for up to 50 percent of city residents is commonly in squatter
settlements or in the slums. In the recent past, practically all authorities on housing
provision in developing countries agree that the vast majority of shelter and housing
for the middle and low-income groups is and will continue to be provided through the
individual effort of people to develop their own houses. According to Werna (2001),
155
in most developing countries, a huge shortfall in housing provision means that the role
of the individual housing development will continue to rise (Kamau, 2002).
Housing company is legal entity, where company exercise the profession as
per mentioned in the objective. Company need to submit the progress, balance sheet
to the authority monthly/quarterly/half yearly and yearly. However, individual need
not do so. Therefore, the freedom must not be given as to the company. That means
the individuals who are competitive with housing and real estate company need to be
brought within policy framework and let them carry out their job that mitigate the
risks. Policy need to adress all problems existing in the society. High-income group
and middle-income group might supply the housing, apartment units by private
sectors whereas, low-income group and marginalized-income group need to make
some subsidized mechanisim.Subsidized mechanisim would be in terms of revenue,
tax free and one family one employment so that s/he can be able to pay the instalment
or by making co-operative model of housing apartment.
Respondent representing from Town Development Fund said in Focus Group
Discussion second layer, "It is the responsibility of state to provide the shelter to the
citizens, for this integrated policy framework need to be endorsed by the government
stating that among high, medium, low and marginalized level of income group of
citizens. Which economic level of income group supply the housing by private sector
and which group with subsidize can construct and supply the housing by government
need to be clear in the policy in first part and must be implemented (FGD2, 15 July
2012).
Respondent represented by A/E architecture consultancy criticized
government in Focus Group Discussion first layer, "Government does need not to
construct the housing apartment for economically weak level of income group but can
facilitate and discount in taxes in terms of subsidize. Government can off the tax
during purchase of land, importing construction materials, transferring the
ownerships and some short of loan by establishing co-operative model or some other
mechanism, which need to be address in an integrated policy framework with access
of financial framework" (FGD 1, 25 June, 2012).
156
Finally, some efforts have been made to improve the targeting of assistance
for low-income groupsIt is well established that a cash subsidy such as housing
allowance is more efficient than a price subsidy. Although housing allowance has
been proposed as a means of reaching the poor, the main emphasis of government
policy for low-income households is placed on supporting the production of rental
units through National Housing Funds (Kim & Kim, 2002).
In different countries, shelter or housing to the people has been guaranteed.
Our interim constitution had also emphasized shelter to all citizens including
marginalized level of income groups. Private sectors had to earn profit, if not they will
collapse. Therefore, private sectors are supplying housing and apartment to high and
medium level of income group.Let it continue and ensure risks mitigate with
improvement in the policy. To uplift the weak level of income group, government
must have cooperation with private sectors and need to supply affordable houses,
apartments to those weak levels of income group in effective subsidized rate. In the
UK, the government can influence the housing market in a number of ways. In the
past, it has given tax advantages to owner-occupation (White & Allmendinger, 2003).
A respondent said, "Land use plan must be endorsed in the cities, land need to
supply to the market. Therefore, in the land pooling need to be further expanded and
public amenities need to develop. In cites owner built houses are unplanned and
unmanaged, which are scattered but state responsibility is to provide drinking water,
drainage, good road for the public. The mentioned work is continuously doing
through local development authorities. If it coordinates with local authorities and
urban development authorities and start housing and public infrastructure more
efficiency could be achieved "(Field Note, 1 June 2012).
In such an imperfect market, the government should intervene, although this
may have positive or negative effects. This intervention has largely been in terms of
planning. In order to protect the natural environment and to avoid uncontrolled
development, new housing can only occur subject to planning approval. Also as
industrial restructuring has left vacant and derelict land in many cities, urban
regeneration has become important in government policy and attracting new housing
development to brown field land has been given a central place with targets being
157
set for the proportion of new development allocated between brown field and green
field sites(White & Allmendinger,2003).
Previous policy was not interpreted and applying this is also a problem,
because if we execute the policy then only we can decide whether the policy is
successful or not? So integrated policies by combining all social, economical,
financial and other related problems need to be identified and addressed properly and
endorsed policies need to be implemented perfectly.
Developers need to carry out the Risk Management Plan in their projects
Housing, Apartment, and real estate projects risk management is treating as an
important process to enhance the project planning work, if it faced uncertainty of
adversity. It is observed that developers were not performing the risk management
plan and authorities were not asked the risk management plan during approval period
that denotes no conscious and ultimately create adverse affect in terms of monetary
lost and reduce the productivity of the industry. Nepalese housing and real estate
projects were lagging despite its schedule due socio-political, socio-cultural including
various problems with financial uncertainty.
In this context a respondent said, "Developers were not carrying out the risk
management plan during planning phase, which is a must to work out for productivity
of the company. Developers did not risk identify, risk analysis, risk ranking and no
risk response plan in Nepalese housing apartment and real estate sector"( Field Note,
10 May, 2012)
In a world where global competition and economic crises are frequently
experienced, it is necessary to establish intercompany risk management. Risk
management is a discipline that ensures efficient and effective utilization of project
resources, which supports decision-making based on information, and which aims to
reduce uncertainties and their negative effects to a more manageable level. Fikirkoca
(2003) suggests that risk management brings about two benefits. Firstly, performance,
cost and profitability targets of the company can be achieved by anticipating problems
before they arise or by minimizing the negative impacts of such problems; Secondly,
considerable gains can be made by preventing serious risks by defining their basic
causes (Demir & Bostanc, 2010).
158
Risk management is a vital work in developing countries. Even global
competition is not experienced because political instability, impunity financial crises
are frequently occurred and hence decision-making procedure takes more time.
Therefore, projects became more uncertain. Risk management is important in
housing, apartment, and real estate project for cash-flow management, by anticipating
loss or profit. Similarly, project can experience the mitigation if it occurred and for
future which is treating as an asset.
Frequent Development and Research work is needed in Housing and Real
Estate Sector
Research and development work enhance the productivity of the housing, apartment
and real estate sectors that is why in developed country they allocate certain fund for
research and development. Nowadays research and development work being
important in developing countries too. But in Nepal there has not been started the
research work particularly risks in housing, apartment and real estate work either
developers side or from government's side focusing on housing, apartment and real
estate.
In the focus group discussion second layer, respondent from Town
Development Fund said, "We are very weak in Research and Development work.
There are research conducted on new technology, new construction materials, new
construction equipment, new construction method, and risk management method even
in neighboring countries china and India they are continually concentrated on
research and development. Research and Development work enhance for risk
mitigation in housing, apartment sector in Nepal"(Field Note 15 July 2012).
The risks and corresponding action plans are brought together in a risk
management plan. In addition, in order to document the risk assessment results and
the outcome of the risk management session, the risk management plan states who is
responsible for each of the diagnosed risks, how much time and resources are needed
to deal with these risks, and how progress will be monitored and reported. This plan
enables management to decide upon the feasibility of the project and make a go/no
go decision (Keizer et al 2002).
159
It is quite true that reputed company allocate budget for research and
development. Research gives the direction weather to move ahead or stop it. In
Nepalese companies who are doing business were not conscious with research and
development about the risk and its consequences in the projects. It has to start the
research and development work as soon as possible in the housing and real estate to
mitigate the risk factors.
Construction Manger including Human Resource Team must be experienced,
skilled for Risk Mitigation
Developers are conscious about their profit, which is a positive aspect, whereas they
were always concentrated to employee cheap construction manager, engineer,
supervisors including all human resource team to save the profit, which is negative
aspect because experienced and skilled technical person expect good salary. It is
always true that experienced and skilled risk manager do better risk management than
inexperienced and unskilled risk manager.
In the focus group discussion of first layer respondent representing developers
said, Most of the developers were employing inexperienced and unskilled construction
manager including all human resources team.They were proud of themselvesfor
saving the overhead cost but they never thought the consequences due to risks factors
which may have adverse effect and big lost for company. (Field Note, 25 June, 2012).
Responses Based on their work Experience
In Nepal, most of the private ventures projects are controlled by single
person.Therefore workload posses and hence risk occur in venture project. This
theory is applicable to housing, apartment, and real estate projects.
Table 34. What are the Affects Controlled by One Person in Different Projects
Most of the Private Ventures projects Experienced in construction
Controlled by one Person so, Workload industries business
posses high Risks is in a venture, it is
applicable to Housing and Real Estate Less than 5-10 years More than
5 years
10 years
Projects
Strongly Agree
0
8
9
Total
Agree
15
Neutral
17
160
Disagree
Strongly Disagree
Total
Source: Field Survey, 2012
15
22
40
The private venture projects are controlled by one person, what is its implication?
Regarding the same respondents response have tabulated in table and based on same
data pie chart have been plotted as given below.
Neutral , 5%
Disagree , 13%
Strongly Agree
, 42%
Strongly
Disagree 3%
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and 2 respectively were disagreed and 3%, 1 respondent have work experience 5-10
years was strongly disagreed.
The findings of this study show that in some projects, project risk management
is conditioned by deliberate ignorance of project managers. The factors of
untopicality, undecidability and utility of risk-related information characterized by
taboos and suspension of belief appear to demote risk management to an
administrative exercise having no or only little impact on the project outcome. Indeed,
if irrelevance remains unattended by project managers, project risk management
might turn out to be not only ineffective but also counterproductive (Kutsch & Hall,
2010).
During assignment of project manager, several factors need to be considerd
and analysed. According to identified characteristics requirement need to be decided,
and he should be adjusting in particular project responsibility of the client with
guidance from advisors. According to Peter Fewings, (2005) requirement of project
manager need to list eight characteristics of the certified project manager. These are
an open, Positive, 'can do' attitude, common sense, open mindedness, adoptability,
invectiveness, prudent risk taker (weighing up the risk), fairness, and commitment.
Therefore project manager and entire human resources team need to assign to mitigate
the housing, apartment and real estate risks.
Work load in Implementation Phase is more and to be careful Comparef to
other Phase
As it was found that no one developers analysis the risks in housing, apartment and
real estate construction project consequences implement phase became more busy.
Because workload of construction manager and other team member would be more
since the risk identification, analysis, ranking and mitigation work concentrated in
implementation phase, which would be tedious and difficult.
Respondent representing TDC said, As our developers have no practice of
managing the risk during pre-planning and planning phase, naturally all risk factors
were concentrated on implementation phase. Local hooligans, club, tole , don, and
unethical group, sister organization of different political party's leaders, its cadre,
local people come to threaten to lock out, close-up and so on.If project deny to give
162
money consequently implementation phase become more risky and is mitigated in this
phase"(Field Note,25 April 2012).
As there does not clearly existed any universally accepted practice for dividing
the project life cycle into phases, it can be argued that several concepts central to
studies focusing on projects such as project implementation or project execution are
likely to hold different and potentially conflicting meanings for different individuals
(Ahola, 2009).
It is notuniversally true that among various phases of construction projects
which phase is more risky. But in Nepalese context it was observed that no developers
planned risk management during pre-planning or planning phase so all work load
concentrated in implementation phase. Hence it was more risky for mitigating same
phase taking as more important. It is being established from the civil insurgency that
local people are not doing hard work, which is unethical, and use to threaten the
project manager. In this case, project manager need to mitigatewhich is the only
alternative.
By Changing the Uses is Cosmetic treatment for Mitigation and no
Permanent Solution
Government of Nepal feel the risk that the developers are really faced problems and
some cosmetic package have been such as some apartment could be changed into
hotel.Staff provident fund authority is ready to invest as a soft loan to the staff who
wants to buy the apartment unit. It is said that some six thousand units of apartment
and individual houses were in stock during survey. I criticize the process to change
the uses the building made for one purpose to another purpose. It is agreed that
apartment and hotel both could be used for accommodation. But the pollution created
by hotel and apartment would not be the same, environmentally it has to perform IEA
or IEE for environment case, similarly other parameters need to commence to change
the uses.
Respondent representing from KMC said, Some apartments are being
converting into a hotel. Was this decision appropriate? It has also generated other
risks factors. If our authority allows changing the uses, would it not create other
risks? For example, the purpose was residency and it changed into hospital. When not
163
all guided by zoning and changing the uses, in that case the particular building use to
design based on what purpose? It is one of the design risks. For example, we were
designing for joint housing purpose and we changed it into cinema (theatre) then it
may be terrible risk having so many risks"(Field Note 10 May 2012).
Nowadays, recent real estate projects changed in what concerns to the relation
among developers and investors. Two different examples could be shownd: (i) in the
cane of apartment units served by a hotel operator, instead of selling apartment units,
the current products are hotel secured bonds. (ii) Banks do not finance residence
implementations any more, but once the enterprise achieved satisfactory selling
performance it becomes possible its financing through the generation of mortgage
backed securities, suitable to risk averse investors (Junior, Alencar & Monetti, 2003).
For mitigating the risk, users change will not give any concrete mitigation.
Developers of housing, apartment and real estate need permanent solution, which
could enhance the sector to give employment to the people to contribute for the nation
and continue to operate their profession.
Developers products of Housings, apartments must be Branded and
Qualitative
Another important characteristic is qualitative and branded product need not promote
the market. Always buyers' choice must be branded and qualitative. In the same way
housing and apartment applies the same principles.
Corporate brands need to be managed in relation to the interplay between
vision, culture, and image. Achieving this requires effective dialogue between top
management, external stakeholders, and members of the organizational culture.
Effective corporate branding will come with dedication to honest self-assessment,
responsive attitudes towards stakeholders, and respect for the values that attract all
parties to the corporation. In particular what is needed is to draw on the rich resource
that is the organizational culture and make it an integrated part of the effort to build a
corporate brand. This will bring the corporation into the corporate branding process
with all the competitive benefits that implies (Hatch & Schultz, 2003).
Respondent representingDUDABC said, "Customers are enjoying having
Toyota car made in Japan even not feeling the knot and bolt tightened. In the same
164
way developers should be competent, capable, and qualitative to make their own
branded product. Some developers were already established on their branded housing
and apartment units and they are not yet facing such worst risk. In the booking, the
products were selling. All developers needed to learn about their braned product
from the successful successors" (Field Note, 23 May2012).
Housings, apartments, and real estate business are huge money investing
industry, so need to be careful on their product. Buyers data need to keep in mind so
that what type of requirement were for them. If requirement of apartment units were
not affordable and developers are producing expensive product, then developers have
to face risks. The Nepalese developers were facing same problem. They did not make
research and development works, some product consumed in earlier days were
massively produced and market became saturated. However, buyers were searching
the housing units, which are yet to be implemented. So branded, quality and
affordability mitigate the risks.
Risk Response Plan
Risk response plan is an integral part of this research. It is being an important and a
critical element in the risk management, particularly in housing, apartment and real
estate project in Nepal. When we run our projects, always risk is being involved, we
must have formulated the risk response plan in which the process that have whatever
action (if any) would be taken to deal the risks evaluated in the identification,
analysis, ranking efforts in appropriate document.
Figure -25 Structure of Risk Response Plan
Risk Response
Risk Acceptance
Risk Reduction
Risk Tranfer
Risk Avoidance
The culture of our country is special in the sense that there are different languages
spoken by different ethnic groups. Therefore, risk is a cultural phenomenon too. Risks
165
thresholds frequently are being significant asthey establish basic probability and
impact for the risk. Therefore, the risks thresholds would become a component of the
risk management plan. Sometimes it would observe multiple risks that are created due
to one single cause or common cause.But sometimes-single risk is observed due to
multiple causes.
Risk Acceptance
If the impacts are not severe or fatal and if the cost of avoiding, reducing, or
transferring the risk exceeds the benefit then it is adviced to "leave it". Of course, this
response would not be chosen for risks where the impacts or consequences are more
severe. Acceptance is also known as retention and it is broken down in two types of
acceptance: one is passive and the other one is active. Passive acceptance is the
acceptance of risk without taking any action to manage it whereas active acceptance
acknowledge the risks as well but calls for development of contingency plans and
other special plan to mitigate.
Risk Reduction
One-way to reduce the risk exposure is to shear risk with other partners or parties. For
example, contractors will enjoy reducing the risk exposures by paying liquidated
damage for late completion by imposing liquidated damage clauses in domestic subcontractor agreements.
The following technique would reduce the risks factors; 1) by employing the
best technical team with adequate incentives for success based on the decision on
models and simulations of key technical parameters. 2) by using mature, computer
aided system-engineering tools; 3) by hiring outside specialists for critical review and
assessment of work; 4) by performing extensive test and evolution and 5) by
minimize system complexity and use design margins
Risk Transfer
Risks transfer does not reduce or solve its criticality of source risks but it transfers to
another party. Risk transference is the effort to shift responsibility or conveniences for
a given risk to a third party. "Risk transference requires shifting the negative impact
of a threat, along with ownership of the response, to a third party. An example would
be the team transfers the financial impact of risk by contracting out some aspect of the
166
work"(Caltrans, 2007). In the practice, risks can be transferred to the following
organization or individuals outside the project including but risks can transferred
partly or fully from the sub-contractors to customers as explained below.
The common and most popular to transfer risks is to do insurances (Including
warranty firms, guarantors and bondsmen), which changes an uncertain exposure to a
certain cost, Next is also popular method to transfer to the subcontractors, which carry
out the job and gives to the developer. The third one is by transfer to vendors, the
fourth method is transferring the risks to partners and last but not least one is to
transfer to customers.
Of course it was impossible to entirely transfer the risks to one party or
another even with the fixed price contract where the contractor was taking all the
risks. The customers still faced the damage or hardship should the housing project
exceeded the target schedule. Transfer of one kind of risk often means inherited
another kind of risks.
Risk Avoidance
This is the decision made not to accept the housing and apartment projects to proceed.
That means, avoidance is synonymous with refusal to accept the risks. Refusal to
implement of housing project is a simple example to risks avoidance. But simply
avoidance is not a way out, relevantly consider the specific risks, which cannot accept
is only the alternate to avoid.
Research projects and innovative, new product development projects are
usually inherently risky, but they offer potential for huge benefit later on. Because
potential benefits from the same projects were proportionate to the level of the risk. In
those cases better to reduce risk to an acceptable level in spite of completely avoid the
risks.
During execution, the essential process threat is that co-ordination and control
procedures prove inadequate. A common perceived threat in the execute stage is the
introduction of design changes, but these may be earlier sources of uncertainty
coming home to roost, including opportunities that should have been spotted earlier to
take full advantage of them. Consequent adjustments to production plans, costs, and
payments to affected contractors ought to be based on an assessment of how project
167
uncertainty is affected by the changes and the extent to which revised risk
management plans are needed(Chapman & Ward, 2003).
In every housing, apartments and real estate project communities' risks would
have split into two categories having opposite poles and it is risk or threat and
opportunity. Some riskfactors have potentially positive outcomes and it is believed
that there should be response outlined for both threat as well as an opportunity. To
construct the houses and apartment as per their fitness is challenging. In order to
convert the risk in an opportunity following are the strategies that are described into
four categories:
Table 35. Risk Management Plan Performed in Housing Projects
Risk Response Plan is
Represented
Total
M/S
A/E
M/S
Developer
Consultant
Contractor
Strongly Agree
Agree
Neutral
10
14
Disagree
12
14
Strongly Disagree
Total
29
40
projects in Nepal
168
Strongly
Disagree
10%
Agree
18%
Disagree
35%
Neutral
35%
169
risk mitigation. Similarly, Work load in Implementation phase is more and need to be
careful compare to other phase by changing the Uses is cosmetic treatment for
mitigation but not permanent solution and Developers product of Housings,
apartments' must be Branded and Qualitative. In the Same way, Risk response plan
(RRP) is divided in four sub topics, Risk Acceptance, Risk Reduction, Risk Transfer,
and Risk Avoidance.
In this part, I presented the Risk Mitigation and Risk Response Plan (RRP) in
Housing Projects in Nepalese Context based on available data. The next chapter will
be Summary, Conclusion and Implications which consist of Summary of entire thesis
and implications.
170
CHAPTER VII
SUMMARY, CONCLUSIONS, AND IMPLICATIONS
This chapter is the summary, conclusions and implications of the research study. In
this chapter I have briefly summarized the entire thesis from Chapter one to Chapter
six with all topics and sub topics as much as possible. Finally I have summaries of
this particular Chapter is outlined.
In this Chapter, I have included the major findings of the research on risk in
housing and real estate in Nepal. Housings and apartments give shelter to the citizens.
Shelter is the basic need after the foods and clothes. Thus, housings and apartment
units are important commodities developers need to construct the housing units and
supply in the market. Before supplying market, constructors are facing various
problems associated to cost, time and quality. Thus, this research is concerned with
inquiring the uncertain event in housing and real estate during pre-planning, planning,
and implementation phases in Nepal. Due to various risk factors housing, apartment
projects are being stagnated in Nepal. Different research scholars expose that risk
factors create constraint the productivity of investors as well as in the economy of the
country that affects the socio-economic status of its people of Nepal.
The housing market is made up of the production, buying, selling, leasing, and
renting of homes, and the financing for all such purposes. The value of homes and
neighborhoods when they are initially built attracts some kinds of residents more than
others, thereby influencing the demographic and socio-economic character of
particular neighborhoods (Hoffman, Belsky & Lee, 2006).
Research Summary
Ultimately, I achieve a target to my extensive expedition. Furthermore, the expedition
commences with course knowledge about the risk in housing, and real estate projects
in Nepal. I essentially started the expedition with the United Nations General
Assembly approval of the universal declaration of human rights (UDHR) by 48 votes,
with eight abstentions. The reworded Article 22, now Article 25 of the Declaration,
was adopted unanimously by states (UN General Assembly, 1948): Everyone has the
171
right to a standard of living adequate for the health and well-being of himself/herself
and of his/her family, including food, clothing and housing. Initially, I reviewed
journal articles and Economic Survey report, Social adaptation theory, real estate
theory, and management theory and learnt about risk in housing, apartment, and real
estate projects. It is through review I came to know that the stakeholders
(government's authority, the developers, and the clients) are not creating the industryfriendly environment. Hence, the research mostly argued the risk in housing,
apartment, and real estate projects in Nepal.
Housing sector is providing employment opportunity to the citizens as well as
contributing in national GDP. Therefore, if housing sector can survive they will
contribute their skill, knowledge, and revenue, if not no contribution. Every business
leads loss, profit, and every activity deal with positive and negative aspects.
Developers are not doing any research and development work for their professional
enhancement. Government's authorities are not cooperative with developers and they
are taking long time for the approval. On the other side the government does not
endorse the related acts and related policies to make transparent, responsible, and
competitive to the regulation procedure. Buyers are not enquiring the housing and
apartments about its quality, safety, and reliability.But they are running wherever the
housing and apartments units are cheaper. Stakeholders, government, developers, and
buyers all are from vicious circle and food, clothes and housing are the primarily
basic need to everyone.
Our culture is very different from east to west and north to south. Environment
from south to north is cold to hot. Migration from rural to urban and urban to
developed countries is the characteristics of the world. Nepal is not far from that
principle. According to Central Bureau of Statistics 2001, with an average annual
urban growth rate of 6.65% and as per national population censes survey 2011,
Nepals population is 2.66 million. There are more than seventeen thousand houses
and apartment units are needed every year. Thus, government, developers and buyers
all need to be cooperative, transparent and responsible to meet the challenge.
Chapter I directs complete picture of my thesis. I started with background
where it is mentioned that the housing is the human right and contribution of housing
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sectors in national economy and a real estate development project starts with an
opportunity to construct a new building in which people can live, work and shop.
According to the sociologist and anthropologist principle, the society was preindustrial societies in a hierarchy of three evolutionary stages, denominated
respectively savagery, barbarism, and civilization. I studied the urbanization in
regional context. In our Asian region China and India are fast economy growing
countries including existing Japan and South Korea, ehichare already established in
Asian Countries and well infrastructure were developed and, Indian Million -Plus
cities. In the article by Om Mathur, there is 2011 projection of urbanization growth of
four countries India, Pakistan, Bangladesh, and Iran that would accommodate an
overwhelming 95.4 per cent of the regions urban population in 2030 as compared to
97.3 per cent in the year 2000. The Tables on Urban Population and Rate of Change
in South Asia with the projection until 2030 done by (UN-HABITAT, 2007) is
included in this chapter.
Urbanization in Nepalese context is the base point for construction housing
apartment. Nepal's urbanization was accelerated by the migration from rural to urban.
In the study of past fifteen years, migration was due to civil insurgency, war, not
maintaining law and order, security problem, impunity and employment problem in
the rural area. Since 1962, urbanization took place where government located the
administration place, where business and employment opportunity can be easy access,
where peace and security have been maintained. The urban planning during Malla
dynasty incorporated the necessary amenities considering planned cohesive
community living. A strong sense of togetherness, which was represented in its,
courtyard design for common houses, temples and baha- bahis in the proximity, well
planned Dhungedhara (Stone carved spout), Sattal and Patis (Public house) for rest
and recreation, Dabalis as open air ampitheaters, which could be observed in Darbar
square of Patan and Bhaktapur. Nepali Architects had developed two main types of
style: one is the Chaitya style and other one is Pagoda style. According to Nepal
Labor Force Survey (NLFS, 2008), projected data 81.2% of rural people migrate and
7% people migrate from urban. Similarly, 11.8% people migrated to outside of Nepal
isn 2010/2011.
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According to Ministry of Local Development (MoLD), there are now 99
municipals including the new 41 that were declared in the fiscal budget in 2010/2011.
Of the 99 municipals, there are four sub-metropolitan cities Lalitpur, Pokhara,
Biratnagar and Birgunj, and one metropolitan city Kathmandu. There are about 3,770
village development committees (VDC) and 99 municipals under the 75 district
development committees across the country. The municipalities' urbanization need to
start with housing and apartment program.
I have described why the housing, apartment and real estate in Nepal? What is
the role of it in Nepal? Housing, apartment and real estate is for giving the shelter to
the people, which is a human right. Housing sectors are giving employment to the
people and contributing national economy. According to NLSS III (2011), house
owner ware 91.6% in 2003/2004 and it is 89.7% in 2010/2011. Similarly, House
renter was 5.4% in 2003/2004 and it is 7.8% in 2010/2011. The data means that
demand of housing is there in the market. More than seventy percent of construction
materials are locally made which pumps the money into the domestic economy
through employment and taxes. To start housing and apartment industries some basic
needs must be maintained by the government. Those are Building or Apartment act
that need to be updated, policy of government need to be industry friendly, political
stability is important, instable political damage the industries system in the name of
donation, trade union problem, strike, lockout, bandha and so on. Finance for the
project need to be perfect, quality should be optimized, country's economic condition
need to be satisfactory in which demand and supply principle must be maintained.
Cultural parameters need to be managed, organization must be perfect and human
resource management needed to be sound.
In housing, apartment and real estate projects several problems exist. In the
past decade, Maoist's civil insurgency had badly damaged the socio-economic
condition in rural areas and hence people were leaving their property and houses.
They went out of the country, earned from labor work, and sent the money as a
remittance. That money was invested on buying the housing and apartments units.
Developers were selling their product and constructed buildings more haphazardly
without research and development. In the someway, those who came by migrating due
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to civil insurgency bought small plot of land in 3' width road and built house
haphazardly, which made Kathmandu city ugly compared to other cities in Nepal.
In the different cities of Nepal agricultural land has been fragmented to suit for
constructing individual private housing. The government authorities are not
controlling. Another important factor is legality issues, as per building bylaw, floor
area ratio (FAR), coverage, height of building, open spaces, greenery offset are basic
issues that developers have to maintain. It is not practical in the basis of empirical
formula but need to maintain as per orientation of the proposed land. Political issues
like donation in the name of meeting, conference and conventions are also other
problems created by different political parties, their sister organization and
cadre.Therefore housings, apartment, and real estate projects in Nepal is very
important. Housing, apartments and real estate projects can be divided into four
phases from the strategy point of view, which are formulation or pre-planning,
planning, implementation and handover or close-up phases. Housing, apartment
strategy is very vital in pre-planning, planning, and implementation phases. From the
civil engineering point of view, more, detail planning in pre-planning, and planning
phase, let us say fifty percent work of implementation phase is said to be over.
However, developers are not doing so and hence implementation phase became more
tedious and challengeable consequences projects run behind the schedule and cost
resulting quality cannot achieved. So to run the project comfortably, risk management
need to be carefully done from pre-planning, planning and implementation phase.
Political system is unstable and there is no clear policy from the government to
monitor and control the unmanaged land polling (plotting) and housings, apartment
system. Dispute has been arising about the ownership within the neighbor because of
the lack of open space. Safety and security to the citizens has become big problem
during construction and maintenance period. The GLD (Guided Land Development)
also creating problem, it is perfect in paper but in practice it is overlapping on
buildings and others property. Land pooling projects from government also no plenty
of water, drain facilities, and running until one decade. Housing, apartments
developers are being focused on construction for middle and higher-level economic
level of group. However, neither government nor private company constructed
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housing for low level and marginalized economic level of income group. Government
wants to distribute land in the name of landless people but they do not want to
construct house or apartment units and handover it to the landless people is main
problem.
The main purpose of the study was to focus on risks in housing and real estate
in Nepal, especially in the construction projects that it occurs. The three main research
questions developed are in the periphery of risk in housing and real estate.
Usually, a good thesis is the mixture of extensive and unique knowledge.
Extensive knowledge is formed by literature review while unique knowledge is
discovered by primary data. In the Chapter two, I walked around the knowledge
through literature review.
In the Chapter two, I reviewed different literatures on various topics related to
housing, apartment and real estates. Apart from that I reviewed some theories and
principles related to my research. In the starting, I set up questions like, what is the
risk in housings, apartments, and real estate. I cited different definitions of risk
defined by various scholars followed by why housing and apartment and real estate
projects were needed. Housing and real estate gives shelter and basic need after food
and cloths. Next, I described the features of housing, apartments, and real estate
projects. Under this, following six sub-topics are described. Housings, Apartment
projects are Uniqueness and pose high risk. Housing and Apartment are High
Complexity. Construction project are high risky; high professional involvement in
housing and real estate projects; Construction Projects are always a Input to a another
Industry or a Project; High resource involvement, Duration of a construction project is
very high in housing projects. In the other topics, Phases of the Housing and Real
Estate Project incorporated in the Study, under this topic, different four sub-topics are
described which are pre-planning, Planning, Designing and Constructing phases are
described briefly.
Similarly, the construction excellence features are explained with the
literature. In the next topic I raised the questions stating "Why does Risk occur, who
face the Risk and when does Risk active"? Risk occurs in every business the quantity
would be more or less, risk faced by the stakeholders, risk occurs at critical time are
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the answers of the topics. In other section, I asked the question how does Risks factors
affect in the life cycle of project? I described the real estate theory, Theory of project
management and Social adaptation theory. The above-mentioned theories give the
suitable knowledge and philosophy structure for the use of available means with high
rate of returns.
Chapter three is research methodology. It begins with nature of study. I
adopted the data collection and analysis in two different phases. Qualitative data had
been collected in first phase followed by quantitative data collected and analysis. Its
logic is that investigation is improper until explanatory quantities methods have built
a better foundation of understanding. Neatly, I described with research philosophy
with Ontological and epistemological parts of my research. This chapter displayed the
tool making and tool using mechanism in my research. I mentioned clearly the
research expedition of two year's thesis writing duration. In reality, I used my whole
time only for thesis writing. Concept paper writing was the entrance expedition
followed by synopsis writing and numbers of progress report writing to the thesis
writing. Then I have discussed on mixed method research paradigm where qualitative
data were dominated with quantitative data. Among the various philosophical
worldview, I chose the Pragmatic worldview for mixed method research design,
which I adopt in my research work. I tried to brief discussion among various
paradigms of the philosophical worldviews. I described the nature and source of data
where qualitative, quantititative data were collected from housing-apartments and real
estate projects, and related stakeholders were my respondents. I explained the area of
study rationale for selection. I chose the population and sampling under which, I set
the census sampling. That was 146 Housing and real estate company were associated
with Nepal land and Housing Developers' Association (NLHDA), out of which only
50 housing developers company were running, other were closed which verified by
telephone contact. So I conduct pre-test with 5-companies and I took sample with 45
but successed with 40 company for quantitative survey. There were 5 respondents for
in-depth interview. I took one respondent from each government's authorities who
give approval for housing projects one from developers for in-depth interview.
Similarly, two layer of focus group discussions were conducted, one of them was
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housing builders group, and another was consultant of housing apartment projects in
Nepal who were treating as expertise.
Data collection expedition was very unforgettable in my life. The primary data
werecollected through in-depth interview and focus group discussion in Kathmandu
and the quantitative data were collected from Biratnagar, Pokhara, Sunsari and
Bhairahawa including different projects running in Katkandu valley. I felt the data
collection process is time taking, difficult to arrange the interview schedule, to
conduct focus group discussion and questionnaire distribution and colleting them are
challengeable job. Therefore primary and secondary data were collected from diffirent
sources. For primary data collection, I spent seven months to execute the job. I
employed and trained a person as my ennumerator, for distribution and collection of
data for quantitative part. I myself went to all section-head, department-head and
directors to take interview and focus group discussion. I carefully collected primary
data taking into concern the issue of trustworthiness and accuracy. Finally, I set the
method of data analysis, ethical consideration of validity, reliability, as well as
trustworthiness.
The Chapter four is for exploring the risk and implication in housing,
apartment and real estate projects. The entire chapter four, five and six are based on
the primary and secondary datamixed with qualitative and quantities data
In chapter IV, V and VI I tried to explore micro level of uncertainties or
problem during conceptual or pre-planning, planning and implementation phases. I
developed thesechapters based on the interaction with developers, consultants and
contractors. I included the qualitative as well as quantitative data to explore the risk
factors or problems in the projects. Before starting pre-planning work, legalities issues
can be the constraint, because to start an apartment project basic things are land,
before buying the land need to found weather the proposed land for project is clear or
questioning in the court within the owners/locals? I mentioned it in the name of
planning permit approval from TDC. They will take the time in the name of FAR,
Open Space, Height of Building, ROW (right of way), greenery, set-back and number
of stories and basement layer. Next authority was EIA/IEE. EIA is for small project
whereas IEE is for big project. For EIA it takes about 4 months and for IEE it takes
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about 2years if things have gone well. After getting all documents, developers need to
go DUDBC for approval of safety and bylaws verification. Next municipality or
village development committee or local level authority need to take approval for the
same thing. For the same approval work with same document developers need to go
different authority in the name of legal parameter so developers are facing hurdle,
which I explained from different respondents' voice.
Developers were facing the problem to give money in the name of donation
for organize the program like the political rally, protest and so on, if not they will be
threatened to close up or lock out the project which is severe. On the other hand the
act and polices were not implemented and not endorsed due to political dead lock in
Nepal. Next is due to financial policy of government as well as the cash flow problem
of developers that the financial problem existed in housing projects. It was found that
some developers were not able to give the prograss report to the authority due to their
technical and management weaknesses, which created the problem.
Social problems also becoming an important, this created others risks. Local
people of proposed project always think that the developers must have developed all
amenities surrounding of the locality. If not, the relation cannot maintain good.
Peoples attitude will be always negative towards developers. Developers are hard
working. S/he is investing money for profit. I found culture also plays some role in
the project. Buyers want the house to suit as per own culture. Finally, to manage it
depends upon the organizational/ Institutional capacity. If organizational capacity is
strong with skilled and experienced team, then they can find the solution as well.
Chapter five is for analyze and ranking the risk factors. I developed this
chapter based on eleven topics for analyzing and ranking propose. I discussed about
legal problems under which following sub topics are managed like ownership of joint
housing, planning permit from TDC, building bylaw, environment issues and local
level authorities and related problems. Next topic was policy framework related
problems. It was due to not updating the housing related act and not formulating
related polices housing sector was stagnated in recent years. Then I discussed the
political problems. In the name of political parties, its sister organizations and trade
unions supported by political parties were the problems for developers. The other
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topics were financial problems, economic problems, technical problems qualities
related problems, human resource, social problems, cultural problems, and
organizational or institutional problems. I mixed all these themes in one basket, which
for analyzed and ranked to get best result.
Chapter Six concentrated on the risk mitigation model and risk response
planning (RRP) in housing, apartment and real estate projects. Under the mitigation
model Integrated Policy framework enhance housing business, Legal polices need to
guided by acts and developers friendly, Developers need to carry out the risk
management plan, etc. were discussed. Frequent development and research work need
to housing and real estate sector, Construction Manger including human resource
team must be experienced, skilled for risk mitigation. Similarly, Work load in
Implementation phase is more and need to be careful compared to other phases by
changing the Uses is cosmetic treatment for mitigation but not permanent solution and
Developers product of Housings, apartments' must be Branded and Qualitative. In the
Same way, Risk response plan (RRP) is divided into four sub topics, Risk
Acceptance, Risk Reduction, Risk Transfer and Risk Avoidance.
Chapter Seven is focused on the overall discussion about the risk in housing,
apartments, and real estate study in projects in Nepal. Housing is basic commodities
and third basic needs in life after food and cloths. Government, investors, housing
professionals, consultant, and expertise need to work out and based on supply demand
principle housing project need to be started in different parts of Nepal. Targeting high,
middle, low and even marginalized economic level of income groups there is need to
identify and supply the housing or apartment units.. But my concern in this research
was that during project conceptualization, planning and implementation phases of
housing, apartments and real estate projects need to manage risk so that project will
not be of wastage.
Research Findings and Discussions
How did the housing, apartment and real estate projects are affected in Nepal was the
main question in my thesis. Almost all the research was done concentrated on this
question. In order to focus on this question I had divided the main question into three
parts. How to explore the risks in Housing and real Estate construction projects with
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its implication on the project cycle? How to analyze the risk factors in housing and
real estate projects according to their magnitude? What will be the Risk Mitigation
model and Risk Response Planning (RRP) for housing and real estate project
particularly Nepalese environment? Findings of all questions are discussed reflecting
on appropriate theoretical perceptions.
Nepal had announced a Shelter Policy in the year 1996 (MHPP 1966).
According to this policy, the objective was to fulfill the needs of housing by the year
2006 in two phases. The first phase spanned from the year 1996 to 2001 and the
second from 2001 to 2006. Accordingly, some 2.5 million dwelling units had to be
constructed, 17 per cent of them being in the urban areas (Pokhrel, 2006). Due to
Maoist civil insurgency, more people migrated from rural to urban, additional housing
apartments units were required, and developers made up the housing units. Since the
1997 Apartment Ownership Act promulgated, there has been a gradual increase of
companies entering the market. However, in last few years, housing units were not
sold and it was stagnated.
The Centre for Integrated Urban Development (CIUD), 2010 householdsurvey suggests that the annual production has almost doubled in recent years. Based
on the number of building permits issues in the urban areas that were subject to the
survey, the estimated average production has reached 21,346 houses per year (UNHABITAT, 2010). Demand is there, housing stock is there, and why apartment,
housing units are not being trading? From my research, From my research, it is found
in risk explored regarding to legalities and policies issues. In the existing Joint
Ownership Act, 1998, ownership of land is not clear, if the building demolished due
to disaster who will be owner. In existing housing act, not addressed the commercial
and factory space like commercial complex and its ownership has mentioned only
residential propose. The existing Act had not yet updated to make friendly policies are
not initiated. Time takeing by planning permit becoming lengthy. For Initial
Environment Examination (IEE), authority takes at least 4 months. Environment
Impact Assessment(EIA), large amount of human judgments, which increase the
complexity and difficulty in the EIA process they take not less than one year after
getting planning permit. Developers cannot take the approval simultaneously, because
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without planning permit cannot apply for other approval. It was found lot of hurdles
to get the approval from VDC/Municipality, Town Development Committee, IEE
Authority, Air Traffic Controller, and Department of Urban Development and
Building Construction (DUDBC). Developers were given hidden money to make
somewhat easy
It is found that social cause was in fist rank. There are different levels of
income group in Nepali society, whichis multidirectional having many ethnicities and
their own custom and behaviours. If any investor started, a business and start to earn
other investor also jump to follow it without research and development. Housing
sector was also affected by same incident. Almost all the housing and apartments
units were made for higher and middle levelincome group. Lower and marginal levels
of income group were not able to afford the housing units. This was the social cause
that, if any project started thenmore peoplewere having negative attitude and their
intention will always disturbed the projects.
In Nepal there has not been any research and development work conducted
before entering into housing and apartment sectors. The developers are loaded with
the idea that others are doing this business and why not me? Others are earning and
why not me? This created the problem and many companies were closed. Another
cause was due to human resource management, as discussed above, that our human
resources are not involved for research and development work. They are not able to
make cost effective project by optimizing the construction materials. In the same way
the proponent are not willing to pay attractive benefit and facilities for the best
technical team. Developers always think that when they are getting less money then
why to pay more for the engineer? This attitude is being facing risks.
Next problem is associated with politics. Industries were badly affected due to
donation to political parties and their sister organizations. (Bandhs) and strikes like
problems have delayed in achieving the expected results from projects (Economy
Survey, 2012). There were trade union problems, in which they lock out, strike to
fulfill their demand. In the same way, political instability created unstable situation.
Buyers were waiting and watching the situation, they were not able to decide whether
to stay in Nepal or go abroad? Next was financial problem - the industries were
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stagnated due to cash flow problem of developers and the bank from where they
borrow the money. Nepal Rastra Bank had endorsed the policy to regulate housing
and real estate sector.
In a bid to curb the speculative tide Nepal Rashtra Bank (NRB) directed all
commercial banks to bring down the share of housing and real estate loan to 15 per
cent and 10 per cent respectively as per the monitory policy of NRB (July 2010) of
their total loan from the 2009 levels of over 25 per cent on average (UN-HABITAT,
2010). The organization problem also existed.Since housing is a new sector in
Nepalese contextit was slowly growing and there were the problems within the
organization or institution. The chairpersons were handling more company possessing
the problems. Due to having weak decision, power they could not employ competent,
skilled and experienced technical person.It was also due to the legal constraint that
harassed developers. During approval time TDC, EIA/IEE, DUDBC, VDC or
municipalities in the name of regulation, developers were being discouraged. Cultural
problem was also a barrier for the developers. Every buyer wants the housing units to
suit as per their own culture. They worship to sun treating as Brama, Vishnu and
Maheshor what they were learned from their Hindu's school of thought. The Hindu
community wants one temple near their house and Buddhist want a stupa. Similarly,
technical problems were other problem. Better team can judge in a better way. As I
mentioned developers, want cheaper technical team, which creates quality problem
and leads the organization towards unproductivity
Similarly research and development work need to achieve the quality. A
majority of Nepali developers are not able to make their own branded quality, which
is important and recognized from their product itself. Policy problem is from
government and developers too. In some cases, new policy had not been introduced
and old policies are not being functioned or implemented, which is creating the risk.
Next is economic related problem that is, developers were not maintained the supply
and demand principle of economy, which is determined by the market. From the
supply side, the housing units were built but from demand side no one studied how
many housing and their respective affordability were demanding in the market. It was
a serious problem and most of developers are not being concerned about it.
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Conclusion
This research mainly argued the impression of the risk in housing and real estate of
construction projects in Nepal. The research explored the risk factors based on its
implication in the projects, analyzed and ranked them based on survey and mitigation
of the risk factors in the construction projects according to developers, authorities
represented and the professional and experts of housing and apartment sector. The
housing, apartment and real estate being the newly developed sector in Nepalese
context, it is facing various adversities from which housing sectors are losing its
productivity. Housing, apartment, and real estate projects are more risky since it has
to invest a huge amount to get return. None of the developers were starting housing
business with appropriate research and development. The buyers were medium level
of economic income group. Due to civil insurgency, this sector became somehow
secured and now people are not able to decide wither to buy or not to buy, stay to this
country or move abroad. But it is because of instability and impunity even housing
and apartment are essential commodities to the citizen.
This research shows that risk management mechanism is not carried out
systematically in the conceptual or pre-planning, planning and implementation phases
in housing apartment and real estate projects. Systematic risk management is
important in pre-planning and planning phases.Anyone developer who wants to carry
out in more detail risk management plan and works as per plan, half of the project will
complete during planning phase. Some social risk can be mitigated by awareness and
cooperation with good behaves. The projects and quality management processes
areimportant aspects of housings, apartments, and real estate projects of civil
engineering and construction management, which make intact with time schedule and
the cost of the projects and can maintain with systematic and proper documentation.
The government need to update the acts or endorse to new acts related to housing,
apartments and real estate.
Law need to be likely fairer for long-run housing business.Law can provide
certainty to uncertainty. The act could not be for benefit of developers but for all.
Government need to endorse the appropriate polices to maintain minimum level of
regulations or to maintain standard, which could effectively address concerns of
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affordability and access to housing to the people. The mitigation framework also
could help to minimize the detail risk management system. The only permanent
solution in which risk identification, risk analysis, risk ranking, and risk response plan
can give the integrated package.
Implications
In reality, everyone believes the truth that housing is a basic need of all people
weather it is affordable or not. If not affordable then rent the small room and fulfill
our basic need, which is dependent on the accessible of resources. Our population is
growing and migration is taking place from rural to urban and urban to developed
countries. Housing and apartment units provide for shelter to people, employment to
unemployed and contributs in national GDP.
For Government
Of course, government is the responsible body to provide shelter to all its people. In
developed countries, shelter is peoples human right. In our country, the government
need to responsible to provide the houses and apartment unit for each family.
Government need to make the policy framework to provide the housing by means of
providing employment or cooperative model. Economically high level of income
group and medium level of income group they can afford themselves. Normally
during construction period electricity and fuel need to be provided to the industries in
the case ofshortage. Reward for good work and penalty for carelessness enhance
economic growth. There is also need of transparent act and policies related to housing
and apartment. The Joint Apartment Act, 1997, building by-laws must be
restructured.The policies need to be formulated and implemented with the help of
developers and private sectors like consultants, contractors, investors and suppliers.
For the low level of income group and marginalized level of income group,
government can subsidize tax and land could be provided freely. Local materials, cost
effective and purpose for fitness might make up these types of houses. Political
consumes is needed for this work. Some of the representatives who gave the approval
were taking hidden (covert) money from the developers for such work who violets the
rule of law, need to be punished.
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For Developers and Experts
Naturally, Housing, apartment and real estate business are more risky compared with
other business. Risk management need to carry out properly during the pre-planning
and planning phases, which enhance in project implementation. Nepalese housing
apartment and real estate projects are changing on existing work plan and priorities
cause the lost of the productivity. Tight project schedule creates risk because of
uncertainty of implementation. The output of cheaper technical team cannot expect
sound risk management so developers are advised experienced, skilled and hard
working technical team to assign the projects. It is said that this time is for quality
work so carefully quality need to be achieved.
Developers invest their skill and experience with necessary equity. They must
be responsible, accountable, and transparent with their client. Organization of the
project should be effective and should haves decision-making capacity for
overcoming the risk. Inadequate specification creates terrible risk in the project.
During survey in projects, developers were taking advance money with their clients
and did not hand over the housing units on time. Such works is not fair and does not
maintain reputation.
For Further Research
Nepal is a poor country and Nepal Living Standard survey, 2010 shows that many
people do not have their own house. But there aremore than 20,000 houses are
needed every year in Kathmandu valley only. The research on construction
management sectors is limited. In the same way, infrastructure has not been started
the development works. The risk of metro railway, highways, run way and many more
is serious matter for urbanization development works, infrastructures development,
housing, apartment and real estate. I suggest proper risk policy with mitigation. Risk
during project hand over could be the other topic for research. Critical risk in housing
and real estate, and risk in infrastructures could be the topics for further research..
186
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Appendixes
P.Bo.Box 11430, 1st Floor, JDA Building, Sundhara. Tel: 4262619, Fax: 4262168,
SN
Company
Address
Tel.
Bagbazar, Ktm.
4254181
border@wlink.com.np
Sundhara, Ktm
4242628
emperorhotel@hons.com.np
Jawalakhel
5000223
dthousingco@yahoo.com
43311484
info@luckystar.com
Ltd.
Satungal,
4
Kathmandu
Balaju,
Property Dealers
Kathmandu
Koteshwor,
Pvt. Ltd.
Tinkune
4351079
2140080, 663834
bagmatihomes@wlink.com.np
excelp@wlink.com.np
Swoyambhu,
7
Kathmandu
4279333, 4670027
Sukedhara, Ktm
4375022, 4430257
Tripureshwor,
9
C. D. Developers P. Ltd.
Ktm
4229714
5553568 (O),
10
5532196
11
9851020439
Bouddha -6,
12
Kathmandu
4471640, 4352004
dipak_niru@hotmail.com
206
13
New Baneshwor
4783224, 4111751
support@progression.com.np
4030623/24/26/27
civilhomes@wlink.com.np
Soltimode,
14
Kathmandu
Satungal,
15
Kathmandu
427637
info@roadshowhousing.com.n
Ltd
Sundhara, Ktm
4243224
mahimahousing@yahoo.com
Nayabazar,
17
Kathmandu
4363135
Bagdurbar,
4250744, 4261038,
18
Co. P. Ltd.
Sundhara
4267977
19
Sundhara, Ktm
4259906
Lazimpat,
Ltd.
Kathmandu
4439960
info@thecomforthousing.com
Sundhara, Ktm
4228570
homeland2007@yahoo.com
20
uniontravel@wlink.com.np
Ltd.
Chaktrapath,
22
Kathmandu
4720535, 4721044
Ltd
Kantipath
4419800
Minbhawan,
P. Ltd.
Ktm
Katunje 8,
25
Services
26
Rivansu Housing
24
4482018
guna@guna.com.np
Bhaktapur
6615677
6615677
Kalanki
4289139
eaglehc@mail.com.np,
4278825
sinha@mail.com.np
Kuleshwor, Ktm
Prayagmarg,
28
Developers P Ltd.
Shantinagar
4107523
Dhobighat,
5550800/900,
29
Lalitpur
4241504
suntower@wlink.com.np
Kathmandu
4412261, 4416742
euro@wlink.com.np
oriental.builders@hotmail.co
m
Thamel,
30
31
House
New Baneshwor
9851034434
32
Teku, Ktm
4310866, 4262078
reenu_maharjan@yahoo.com
207
adhikaribuilders@enet.com.n
Dhumbarahi,
33
Kathmandu
34
4432954
9851033484
Hama Housing &
Teku,
35
Development P. Ltd.
Kathmandu
4261148, 4261716
hamasteel@info.com.np
36
Sifal -7 , Ktm
4482688
lpnischal@enet.com.np
Tinkune,
Ltd.
Kathmandu
37
9851025060
5011660/61/62/63/6
info@princevisionrealestate.c
38
Builders P. Ltd.
Sundhara, Ktm
4/65
om
39
Lagankhel
5523864
valleyhomes@wlink.com.np
40
Sundhara, Ktm
2344344
homeland2007@yahoo.com
4330797, 4332046
pmcon@enet.com.np
Balkhu 14,
41
Kathmandu
Maharajganj,
42
Kathmandu
4720372
Syuchatar,
43
44
Kathmandu
Nayabazar,
Kathmandu
9851094003
4357774
Jhamsikhel,
45
Lalitpur 3
4259906
Tinkune,
2054000, 4111776,
Ltd.
Kathmandu
4111616
admin@continental.com.np
Balaju,
P.O.Box 2969,
chhetri_rajendra@hotmail.co
Ltd.
Kathmandu
4385718
Bhainsepati,
016206592,
48
Ltd.
Lalitpur
4432088
mass@sns.com.np
49
Shivako Construction
Babarmahal
4258493
scpl_sbs@yahoo.com
46
47
4261373, 4261592,
50
Tripureshwor
2020677
write@wlink.com.np
Kalanki, Kharel
51
Lekhapadhi
9851092801
Thapathali,
52
Kathmandu
4219454, 4215975
atozconsultant@yahoo.com
208
Buddhabari,
53
Teku
Balaju,
54
Construction
Kathmandu
55
Ktm
4104601, 4104520
2175021
Maharajganj,
Maharajganj,
56
Lte.
Ktm -3
57
Brahmatole
58
C. M. Developers P. Ltd.
59
C. E. Construction P. Ltd.
4370531
srijana_531@yahoo.com
4371531
sddevkota@yahoo.com
Ktm 12,
4257167
Tripureshwor,
Ktm
4233662
cmdeveloper@mail.com.np
4252124, 4243120
cecon@mail.com.np
Tripureshwor,
Ktm
info@roadshowhousing.com.n
Kathmandu 11,
60
9851046997
Gongabu
4381401, 4364672
Bhaktaraj
Baneshwor
4783224
Kalanki
4301285
Sundhara
Kathmandu 23,
61
62
P. Ltd.
Milestone Developments P.
63
Ltd.
Trust Me Land
64
Developments P. Ltd.
Kalanki
4301285
65
Hetauda
42112279, 80
Engineers
sunwood@wlink.com.np
4469808, 4484072,
Battisputali
4436328
habitat@ccsl.com.np
4030623/24/26/27
civilhomes@wlink.com.np
4030623/24/26/27
civilhomes@wlink.com.np
4030623/24/26/27
civilhomes@wlink.com.np
civilhomes@wlink.com.np
Soltimode,
67
68
69
Kathmandu
Soltimode,
Society Ltd.
Kathmandu
Soltimode,
P. Ltd.
Kathmandu
Soltimode,
70
Kathmandu
4030623/24/26/27
71
New Baneshwor
4477809
Balkhu 14,
72
Kathmandu
P.O.Box 2940
urgn@enet.com.np
209
Bhaktapur,
73
Sallahghari
6618736
74
Kathmandu
9851017807
75
Baneshwor
9841298160
76
Bhaktapur
9851020094
Tinkune,
ihumagain@hotmail.com
bktamrakar@yahoo.com
Developers P. Ltd.
Patan, Lalitpur
9851085192
78
Bhaktapur
9841225669
79
Bhaktapur
6612112
80
Bhaktapur
6618736
81
Baneshwor
9851024868
bashup@gmail.com
Kathmandu 11,
82
Tripureshwor
4264428, 4245546
rakesh@krishipremura.com
Kathmandu 11,
83
Tripureshwor
4264428
rakesh@krishipremura.com
84
Sundhara, Ktm
4228570
homeland@wlink.com.np
85
Dillibazar 32
4423212
bijay777@hotmail.com
Kathmandu 7,
86
P. Ltd.
Chabahil
87
88
9851073055
Kathmandu 7,
Chabahil
4460869
Dhumbarahi,
Kathmandu
Developments P. Ltd.
4371359
4990761, 4990762,
Koteshwor, Ktm
4990207
Balaju,
90
91
Kathmandu
Ekantakuna,
Estate P. Ltd.
Lalitpur
4361398
9851033887
Jawalakhel,
92
Bagdol
9851081732
Kamaladi
9851107981
Ltd.
Thapathali,
94
dainikee.com
Kathmandu
9841857147
lohanigovinda@yahoo.com
210
Anamnagar,
95
Jaleshwor Housing
Ktm
4102566, 4218525
Saket Complex,
96
Tripureshwor,
Ltd.
Ktm.
astra@vianet.com.np,
4269257, 4269525
astradevnet@gmail.com
4345393/94
sales@horizonsnepal.com
4107523
orientalbuilder@gmail.com
4227441/6
bajragroup@wlink.com.np
4468329,
developers.prestige@gmail.co
Baneshwor, Ktm
9841646242
Lagankhel
5004010
Gongabu 6, Ktm
4366390
Narayan chaur,
4443513,
Naxal
4418987,2291943
Koteshwor 35,
97
98
Ktm
Shantinagar,
Ltd.
Ktm
Sherpa Mall 2nd
99
Floor Ktm
Ltd.
Sakura Real Estate Services
101
P. Ltd.
Dhaulagiri Development Co.
102
103
P. Ltd.
info@cleandevelopers.com
Itahari -1,
104
105
Sunsari
9852020546
Milan Marg
4240429, 4224762,
info@lifestyle.com.np,
Teku
4246316
ssgn@godia.com.np
5546221, 4250493
mdo@chaudharygroup.com
Sitapaila
4282086
info@brihatinvestments.com
Lalitpur 14
5544058
Ltd.
Dillibazar 32
4424932
Ranamukteshwo
P. Ltd.
r 23, Ktm
Chaudhary
Tower,
Jhamsikhel,
106
C. G. Properties P. Lt.d
107
Lalitpur
info@cityscapenepal.com,
R.K. Complex,
Menchhyayam Property
108
Dealers
Kachhyapati Developers P.
109
Ltd.
Maharjan Land Developers P.
110
111
9851020716
211
112
Chabahil
443407
Ltd.
Gothatar
9851045263
Sorakhutte,
Ltd.
Ktm.
Hattisar 1,
Ltd
Kathmandu
Siddharthanagar,
Kendra P. Ltd.
Rupandehi
114
115
116
4386588
GJM_3888881@163.com
4434722
greencity@mail.com.np
9857020340
P.O.Box 21389,
117
Kathmandu Property
Northface, 4th
Floor Thamel,
Ltd.
Ktm.
info@kathmanduproperties.co
4419781
4230847
drnoverseas@hotmail.com
4100530
sunita_shesh@hotmail.com
Mahabauddha,
118
Ktm
Milestone
119
Complex, Teku
Chakrapath,
120
121
122
Ktm
Katunje 6,
Bhaktapur
Mitranagar 29,
Kathmandu
brunei_real@live.com,
4373522
brunei_real@hotmail.com
6618970
property.cd@gmail.com
4381174
info@vvhousing.com
5541163
silautihousing@yahoo.com
Building.Pulcho
5549035, 5549038,
info@classicdevelopers.com.n
k, Lalitpur
5524245
Putalisadak,
P. Ltd.
Ktm
4425335
info@shahgroup.com.np
Bauddha 6, Ktm
2071241
friendshipco@live.com
Satdobato,
123
Lalitpur
Classic
124
125
P. Ltd.
Bouddha -6,
127
Kathmandu
4469465
Sital Marg,
Maharajganj
128
Ktm
2064050
tashiheli@yahoo.com
212
262 Bishal
bazar,
129
130
Kathmandu
Balkumari,
Developers P. Ltd.
Lalitpur
4232592
ppsltd@wlink.com.np
5535896
P.O.Box 1991,
131
Charkhal,
4443738/39,
klresidency@kldugargroup.co
Ltd.
Dillibazar
4437991
Ktm
4465931
haribol_parajuli@yahoo.com
Koteshwor 35,
132
133
Ltd.
Chabahil
4463033
134
Kantipur Multiplex
Maharajganj
4374161
Sundhara, Ktm
4265100
4380636, 4383528
tah-nima@ntc.net.np
Shubharambha Holdings P.
135
Ltd.
Smart Spaces & Houses P.
136
Ltd.
137
Dhumbarahi,
Kathmandu
4008523
Sukedhara, Ktm
984174814
arun@thesuperbuilders.com
Housing P.
Soltimode,
139
140
141
Kathmandu
Civil Infrastructure
Soltimode,
Developers P. Ltd.
Kathmandu
Thapathali,
Ltd.
Kathmandu
4030623/24/26/27
4030623/24/26/27
4101564
chanddharm@gmail.com
Harisiddi,
142
Lalitpur
9802025682
Baneshwor
4780969
P.Ltd.
Tahachal
4275296/4277536
crystalcitynepal@gmail.com
Kirtipur-1,
Pvt.Ltd.
Amritnagar
4301785
manjilss@yahoo.com
4284477
er.sharadchenka@gmail.com
Dealers P. Ltd.
Crystal City Developers
144
145
Ravi Bhawan,
146
Platinum Developers
Kathmandu
213
Appendix B: General Information of Research Participant
1. Interview Guideline-Minister of Physical Planning and Works (MPPW),
Department of Urban Development and Building Construction (DUDBC)
Background/current situations
Awareness to Developers
Background/current situations
214
Background/current situations
215
Awareness to Developers
Awareness to Developers
216
Background/History
Developers Ethics
Awareness to Developers
Land Development
Introduction
217
Town Development Act, 1990/ Joint Apartment act 1996/ Existing building
bye-laws/ Initial Environment Examination/entire Governments Policies
Awareness to Developers
Town Development Act, 1990/ Joint Apartment act 1996/ Existing building
bye-laws/ Initial Environment Examination/entire Governments Policies
218
Awareness to Developers
219
A/E Consultant
Q2.
M/S Contractor
Project
Others
Manager
Chairman
Director
Engineer
Supervisor
35 to 45
45 and above
5 to 10
10 and above
certificate level
level
certificate
level
level
level of study
220
SA-Strongly Agree, A-Agree, N-Neutral, D-Disagree and SD-Strongly Disagree
(Section-B)
SN Description
1
EIA/IEE Authority
Department of Building(DoB)
SA A N D SD
Remarks
221
B
222
8. Following activities have impact of
housing and real estate in minimizing SocioPolitical risk?
223
D
Check list
Physical inspection
224
D
Brainstorming
Delphi technique
Expert interviews
PERT technique
SWOT analysis
12
13
225
Appendix D: Photo Gallary
226
Civil Homes
Comfort Housing
227
Down Town
Area of Study
228
Bhaktapur
Lalitpur
Kathmandu
Nawalparasi
Biratnagar
Pokhara
Sunsari
229
230