The Application of Risk Management in

Thesis
on
THE APPLICATION OF RISK MANAGEMENT IN
BUILDINGS PROJECTS IN LIBYA
Submitted for partial fulfillment for award of degree of
Ph.D
in
Civil Engineering(Construction Engineering & Management)
by
HASSAN MOHAMED ABUDULNABI
(ID NO. : 13PHCVE101)
Under the Supervision of
Dr. V.C. AGARWAL

Prof.& HOD (Civil Engg.)
Department of Civil Engineering
Shepherd Institute of Engineering & Technology,
SAM HIGGINBOTTOM UNIVERSITY OF AGRICULTURE,
TECHNOLOGY&SCIENCES
ALLAHABAD-211007, (U.P), INDIA
2018
IN MEMEORY
To My Father: Mr. Mohamed
To My Mother: Mrs. Najma
To My Wife: Mrs. Hanan
To My Kids: Mohamed, Ahmed, Najma, Mansour
To My Best Friend: Mr. Bright
To My College and My Country

SELF ATTESTATION
This is to certify that I have personally worked on the research work entitled “The
Application of risk Management in Buildings Projects in Libya” The data mentioned in
the thesis have been generated during the investigation and are genuine. Data/information
obtained from agencies have been duly acknowledged. None of the findings /informations
pertaining to the work results embodied in the thesis have been submitted to any other
university or Institute for the award of any degree or diploma.
Place:-Allahabad Hassan Mohamed Abdulnabi Ahmed
Date: - I.D.13PHCV101
ABSTRACT
Risk has a great impact on the performance of residential projects in Libya in terms of cost,
time and quality. It has increased the size and complexity of the projects and has become the
ability to manage risk in all phases of the construction process a central element to prevent
unwanted consequences. The risk management process between the actors in the project is
governed to a large extent to know the importance of risk management as well as documents
related to the content of the contract. Therefore, the experience in the risk management of the
project is the main issue for the actors of the project. This research aims to deepen
understanding of risk management and its application during the construction period in Libya
and know the reasons that led to the delay in the completion schedule and as well as finding
suitable solutions. The study includes ten projects including (27,571) housing units recently
carried out in Libya. This includes the questionnaire and a series of interviews with clients,
contractors, and consultants involved in these construction projects.It has been prepared in a
form to determine and identify the risks facing the housing projects in Libya and then
distributed to a number of companies that implement these projects. After it has identified
risks that these projects faced by questionnaire and interviews form with engineers and
project managers, these data were analyzed qualitatively, and then a checklist of the risks one
may be facing in the projects in Libya was prepared.
This research aims to let everyone understand the risks management in Libya ,and a deep
study on the procedure of risks management in the projects. Especially, since the prime
minister of the Libyan government, issued a decision in 2005 to build 200, 000 thousand
housing units and should be delivered to citizens in 2011, but most of these projects are
delayed. The study involved will take ten large projects all over Libya .
The results of this study present the effect of common and major risks on construction period.
Keywords: Risk management, construction, projects, implementation, housing.
I
ACKNOWLEDGEMENT
This thesis is a representation of the combined efforts and invaluable contributions of a large
number of individuals and it is my great pleasure to acknowledge them with due obligations.
First of all, I would thank the Allah Almighty who has always blessed me by granting His
kindness to complete the task.
I acknowledge my sincere thanks to Rt. Professor (Dr.) R. B. Lal, Hon’ble Vice Chancellor,
Sam Higginbottom University of Agriculture, Technology and Sciences, Allahabad for
granting me the opportunity to obtain my doctorate degree for the betterment of my academic
career.
I am heartily Grateful to, Prof. (Dr.) Mohd Imtiyaz, Shepherd Institute of Engineering and
Technology, Sam Higginbottom University of Agriculture, Technology and Sciences,
Allahabad.
I would like to express my special appreciation and thanks to my advisor Prof (Dr).V.C.
AGARWAL Head of the Dept. of Civil Engineering, Shepherd institute of Engineering and
Technology, Sam Higginbottom University of Agriculture, Technology and Sciences,
Allahabad. You have been a tremendous mentor for me. I would like to thank you for
encouraging my research and for allowing me to grow as a research scientist. Your advice on
both research as well as on my career have been priceless.
I would like to thank all for acting as members of my thesis committee and giving me
excellent suggestions.
A special thanks to my family. Words cannot express how grateful I am to, my mother,
father, brothers and sisters for all the sacrifices that they’ve made on my behalf. Their
blessing and moral support to achieve this goal. I would also like to thank my country
LIBYA for continuously supporting me even in these difficult times, and incented me to
strive towards my goal. At the end I would like express appreciation to the patience and the
generous sacrifices of my better half my Wife and my lovely children Mohamed, Ahmed and
Najma who often missed my presence and affection at home and when at home allowed me
to work continuously with the smile on their faces. I offer my regards and blessings to all of
those who supported me in any respect during the completion of the project.
Hassan Mohamed Abdulnabi Ahmed.
II
TABLE OF CONTENTS
Title page No.

Abstract i
Acknowledgement ii
Table of Contents iii
List of Figures VIII
Chapter I: Introduction 1
1.1. Risk Management Process 4
1.1.1. Identification 4
1.1.2. Assessment 6
1.1.3. Potential Risk Treatments 7
1.2. Limitation 10
1.3. Project Management 11
1.4. Objectives 12
1.4.1Research Questions 12
1.5. Statement Of The Problem 13
1.6. Significance Of The Study 13
1.7. Scope Of The Study 13
Chapter II: Literature Review 14
2.1 .Preliminary Remarks 14
III
Chapter III: 33
3.0 Material & Methodology 33
3.1. Case Study 36
3.1.1. Construction of (1612) housing units in Wadi AlshaticityBrak "LIBYA” 37
3.1.2. Construction of (128) housing units in Akhlafe Ubari city "LIBYA” 40
3.1.3. Construction of (140) housing units in El Houamed city "LIBYA” 43
3.1.4. Construction of (341) housing units in Elmahrougha "LIBYA" 46
3.1.5. Construction of (2000) housing units in Ghadames city "LIBYA” 49
3.1.6. Construction of (3050) housing units in Sabha city "LIBYA ". 52
3.1. 7.Construction of (130) housing units in Wanzureik "LIBYA" 56
3.1.8. Construction of (60) housing units in Tamzawh "LIBYA” 59
3.1.9. The construction of twenty thousand housing units in Benghazi city “LIBYA” 62
3.1.10. The construction of 110 housing units in Almansoura city"LIBYA” 65
3.2. Libyan Audit Bureau and Construction projects. 68
3.3. Project managers response to the real reasons for delays in the housing Projects 69
Chapter IV: Results and Discussion 71
4. Questionnaire survey 71
4.1 Questionnaire distribution and respondents profile 71
4.2 Questionnaire response & abstention 73
4.3 years of experience in the line of work 73
4.4 Executive situation for the project 74
4.5 Studding risk management and project management courses 75
4.6 Knowledge of Risk Management 76
IV
4.6.1. Evaluating the project implementation in terms of Time, cost and Functionality 77
4.6.2 The participating in project phases 78
4.6.3 The risk management processes that are carried out systematically in the projects 79
4.6.4The phases of the project where the risk management processes performed 80
4.6.5The participation in risk management . 82
4.6. 6Construction Risks that face the projects in Libya 83
4.6.7 The Influence of project actors on risk management. 84
4.6.8 The collaboration between the actors in the project 85
4.6.9 Delay in payment of the work invoices and the increase delay and the cost of the
project. 86
4.6.10 Option time extension and Impact on risk management. 87
4.6.11 Impact decisions of Change Orders in contract on risk management . 88
4.7 The risks in construction projects in Libya 89
4.8 Identifying and assessing the risks before and during construction period 90
4.9 Control of risks during construction period 91
4.10 Risk management and construction companies’ management systems in Libya. 92
4.11 Impact time extensions option in contracts on risk management 92
4.12 Impact of the decisions of Change Orders in contract on risk management 93
4.13 Effects of the project risk 93
4.14 Risk management 94
Chapter V: Recommendations, future scope and project work 98
Conclusion 99
V
References 103
Questionnaire survey 107
List of publications 114
VI
LIST OF FIGURES
Figure No Title Page
Figure3.1.Construction of (1612) housing units in Wadi Alshati city Brak 39
Figure 3.2.Construction of (128) housing units in Akhlafe Ubari city 42
Figure 3.3.Construction of (140) housing units in El Houamed city 45
Figure 3.4.Construction of (341) housing units in Elmahrougha 48
Figure 3.5.Construction of (2000) housing units in Ghadames city 51
Figure 3.6.Construction of (3050) housing units in Sabha city 55
Figure 3.7.Construction of (130) housing units in Wanzureik 58
Figure 3.8.Construction of (60) housing units in Tamzawh 61
Figure 3.9. The construction of 20 thousand housing units in Benghazi city 64
Figure 3.10.The construction of 110 housing units inAlmansoura city 67
Figure. 4.1. Questionnaire distribution and respondents profile figure 72
Figure. 4.1. Questionnaire (response & abstention) 73
Figure. 4.2. Years of experience in the line of work 73
Figure. 4.3.the executive situation for the project 74
Figure. 4.4. Studding risk management and project management courses 75
Figure.4.5. Values versus project, contractor and consultant 76
Figure.4.6. Values versus fuctionality, cost and time 77
Figure 4.7.The participating in project phases 78
Figure 4.8. Values versus identification, assessment and response 79
Figure. 4.9. Values versus risk identification, assessment and response 81
Figure 4.10.Values versus risk management 82
VII
Figure 4.11.Construction Risks that face the projects in Libya 83
Figure. 4.12. Frequency versus project actors 84
Figure.4.13 Frequency versus collaboration between actors in the project 85
Figure.4.14. Delay in paying work invoices versus frequency 86
Figure. 4.15. Values versus impact on risk management 87
Figure 4.16.Frequency versus impact decision 88
VIII
LIST OF TABLE
Table No Title Page
Table. 4.1.Questionnaire distribution and respondents profile figure 72
Table. 4.2 Study risk management or project management courses 75
Table. 4.3 Values versus project Manager, contractor and consultant 76
Table. 4.4 Values Versus Functionality, Cost and Time 77
Table. 4.5 The participating in phases of the project 78
Table. 4.6 The risk management processes that carried out 79
Table. 4.7 The phasses where the risk management processes performed 80
Table. 4.8 The participation in risk management. 82
Table. 4.9 Construction Risks that face the projects in Libya 83
Table. 4.10 The Influence of project actors on risk management.
Table. 4.11 The collaboration between the actors in the project 85
Table. 4.12 Delay in payment of the work invoices and the increase in the cost
of the project 86
Table. 4.13 Option time extension and Impact on risk management. 87
Table. 4.14 Impact decisions of Change Orders in contract on risk management. 88
IX
CHAPTER I
Introduction
Today, economic growth has led to the demand for infrastructure facilities, residential and
commercial buildings, and parks. This has given rise to a high volume of development
activities and as the most frequent and typical project types have several characteristics such
as time limit, financial constraints and monetary requirements, personal organizational and
legal conditions, complexity and methodical characteristics, so each investment project itself
is sophisticated system, there are many risk facets and complicated relations, which will
affect it.
Risk management is the identification, assessment, and prioritization of risks followed by
coordinated and economical application of resources to minimize, monitor, and control the
probability and impact of unfortunate events or to maximize the realization of opportunities.
Risk management’s objective is to assure that uncertainty does not deflect the endeavour
from the business goals.
Risks can come from various sources including uncertainty in financial markets, threats from
project failures at any phase in design, development, production, or sustainment life-cycles,
legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an
adversary, or events of uncertain or unpredictable root-cause. There are two types of events:
negative events can be classified as risks while positive events are classified as opportunities.
Several risk management standards have been developed including the Project Management
Institute, the National Institute of Standards and Technology, actuarial societies, and ISO
standards. Methods, definitions and goals vary widely according to whether the risk
management method is in the context of project management, security, engineering, industrial
1
processes, financial portfolios, actuarial assessments, or public health and safety. Risk
management is also defined in ISO 31000 as ‘the effect of uncertainty on objectives’.
Risk sources are identified and located in human factor variables, mental states and decision
making as well as infrastructural or technological assets and tangible variables. The
interaction between human factors and tangible aspects of risk highlights the need to focus
closely on human factors as one of the main drivers for risk management, a "change driver"
that comes first of all from the need to know how humans perform in challenging
environments and in face of risks (Trevisani, 2007).
It is an extremely hard task to be able to apply an objective and systematic self-observation,
and to make a clear and decisive step from the level of the mere sensation that something is
going wrong, to the clear understanding of how, when and where to act. The truth of a
problem or risk is often obfuscated by wrong or incomplete analyses, fake targets, perceptual
illusions, unclear focusing, altered mental states, and lack of good communication and
confrontation of risk management solutions with reliable partners. This makes the Human
Factor aspect of Risk Management sometimes heavier than its tangible and technological
counterpart.
Strategies to manage threats (uncertainties with negative consequences) typically include
avoiding the threat, reducing the negative effect or probability of the threat, transferring all or
part of the threat to another party, and even retaining some or all of the potential or actual
consequences of a particular threat, and the opposites for opportunities; that is uncertain
future states with benefits).
Certain aspects of many of the risk management standards have come under criticism for
having no measurable improvement on risk; whereas the confidence in estimates and
decisions seem to increase.
2
In ideal risk management, a prioritization process is followed whereby the risks with the
greatest loss (or impact) and the greatest probability of occurring are handled first, and risks
with lower probability of occurrence and lower loss are handled in descending order. In
practice the process of assessing overall risk can be difficult, and balancing resources used to
mitigate between risks with a high probability of occurrence but lower loss versus a risk with
high loss but lower probability of occurrence can often be mishandled.
Intangible risk management identifies a new type of a risk that has a 100% probability of
occurring but is ignored by the organization due to a lack of identification ability. For
example, when deficient knowledge is applied to a situation, a knowledge risk materializes.
Relationship risk appears when ineffective collaboration occurs. Process-engagement risk
may be an issue when ineffective operational procedures are applied. These risks directly
reduce the productivity of knowledge workers, decrease cost-effectiveness, profitability,
service, quality, reputation, brand value, and earnings quality. Intangible risk management
allows risk management to create immediate value from the identification and reduction of
risks that reduce productivity.
Risk management also faces difficulties in allocating resources. This is the idea
of opportunity cost. Resources spent on risk management could have been spent on more
profitable activities. Again, ideal risk management minimizes spending (or manpower or
other resources) and also minimizes the negative effects of risks.
According to the definition of the risk, the risk is the possibility that an event will occur and
adversely affect the achievement of an objective. Therefore, risk itself has the uncertainty.
Risk management can help managers to have a good control for their risk. Each company
may have different internal control components, which leads to different outcomes.
3
1.1 RISK MANAGEMENT PROCESS
According to the standard ISO 31000 Risk management Principles and guidelines on
implementation, the process of risk management consists of several steps as follows:
1.1.1 Identification
After establishing the context, the next step in the process of managing risk is to identify
potential risks. Risks are about events that, when triggered, cause problems or benefits.
Hence, risk identification can start with the source of our problems and those of our
competitors (benefit), or with the problem itself.
Source analysis: Risk sources may be internal or external to the system that is the target of
risk management (use mitigation instead of management since by its own definition risk deals
with factors of decision-making that cannot be managed).
Examples of risk sources are: stakeholders of a project, employees of a company or the
weather over an airport.
Problem analysis: Risks are related to identified threats. For example: the threat of losing
money, the threat of abuse of confidential information or the threat of human errors, accidents
and casualties. The threats may exist with various entities, most important with shareholders,
customers and legislative bodies such as the government.
When either source or problem is known, the events that a source may trigger or the events
that can lead to a problem can be investigated. For example: stakeholders withdrawing during
a project may endanger funding of the project; confidential information may be stolen by
employees even within a closed network; lightning striking an aircraft during takeoff may
make all people on board immediate casualties.
4
The chosen method of identifying risks may depend on culture, industry practice and
compliance. The identification methods are formed by templates or the development of
templates for identifying source, problem or event. Common risk identification methods are:
Objectives-based risk identification: Organizations and project teams have objectives. Any
event that may endanger achieving an objective partly or completely is identified as risk.
Scenario-based risk identification: In scenario analysis different scenarios are created. The
scenarios may be the alternative ways to achieve an objective, or an analysis of the
interaction of forces in, for example, a market or battle. Any event that triggers an undesired
scenario alternative is identified as risk – see Futures Studies for methodology used
by Futurists.
Taxonomy-based risk identification : The taxonomy in taxonomy-based risk identification is a
breakdown of possible risk sources. Based on the taxonomy and knowledge of best practices,
a questionnaire is compiled. The answers to the questions reveal risks.
Common-risk checking: In several industries, lists with known risks are available. Each risk
in the list can be checked for application to a particular situation
Risk charting :This method combines the above approaches by listing resources at risk,
threats to those resources, modifying factors which may increase or decrease the risk and
consequences it is wished to avoid. Creating a matrix under these headings enables a variety
of approaches. One can begin with resources and consider the threats they are exposed to and
the consequences of each. Alternatively one can start with the threats and examine which
resources they would affect, or one can begin with the consequences and determine which
combination of threats and resources would be involved to bring them about.
5
1.1.2 Assessment
Once risks have been identified, they must then be assessed as to their potential severity of
impact (generally a negative impact, such as damage or loss) and to the probability of
occurrence. These quantities can be either simple to measure, in the case of the value of a lost
building, or impossible to know for sure in the case of an unlikely event, the probability of
occurrence of which is unknown. Therefore, in the assessment process it is critical to make
the best educated decisions in order to properly prioritize the implementation of the risk
management plan.
Even a short-term positive improvement can have long-term negative impacts. Take the
"turnpike" example. A highway is widened to allow more traffic. More traffic capacity leads
to greater development in the areas surrounding the improved traffic capacity. Over time,
traffic thereby increases to fill available capacity. Turnpikes thereby need to be expanded in a
seemingly endless cycles. There are many other engineering examples where expanded
capacity (to do any function) is soon filled by increased demand. Since expansion comes at a
cost, the resulting growth could become unsustainable without forecasting and management.
The fundamental difficulty in risk assessment is determining the rate of occurrence since
statistical information is not available on all kinds of past incidents and is particularly scanty
in the case of catastrophic events, simply because of their infrequency. Furthermore,
evaluating the severity of the consequences (impact) is often quite difficult for intangible
assets. Asset valuation is another question that needs to be addressed. Thus, best educated
opinions and available statistics are the primary sources of information. Nevertheless, risk
assessment should produce such information for senior executives of the organization that the
primary risks are easy to understand and that the risk management decisions may be
prioritized within overall company goals. Thus, there have been several theories and attempts
to quantify risks.
6
Likewise, the impact of the risk is not easy to estimate since it is often difficult to estimate
the potential loss in the event of risk occurrence.
Further, both the above factors can change in magnitude depending on the adequacy of risk
avoidance and prevention measures taken and due to changes in the external business
environment. Hence it is absolutely necessary to periodically re-assess risks and
intensify/relax mitigation measures, or as necessary. Changes in procedures, technology,
schedules, budgets, market conditions, political environment, or other factors typically
require re-assessment of risks.
1.1.3 Potential risk treatments
Once risks have been identified and assessed, all techniques to manage the risk fall into one
or more of these four major categories:
 Avoidance (eliminate, withdraw from or not become involved)
 Reduction (optimize – mitigate)
 Sharing (transfer – outsource or insure)
 Retention (accept and budget)
1.1.3.1 Risk avoidance
This includes not performing an activity that could carry risk. An example would be not
buying a property or business in order to not take on the legal liability that comes with it.
Another would be not flying in order not to take the risk that the airplane were to be hijacked.
Avoidance may seem the answer to all risks, but avoiding risks also means losing out on the
potential gain that accepting (retaining) the risk may have allowed. Not entering a business to
7
avoid the risk of loss also avoids the possibility of earning profits. Increasing risk regulation
in hospitals has led to avoidance of treating higher risk conditions, in favor of patients
presenting with lower risk.
Hazard prevention refers to the prevention of risks in an emergency. The first and most
effective stage of hazard prevention is the elimination of hazards. If this takes too long, is too
costly, or is otherwise impractical, the second stage is mitigation.
1.1.3.2 Risk reduction
Risk reduction or "optimization" involves reducing the severity of the loss or the likelihood
of the loss from occurring. Acknowledging that risks can be positive or negative, optimizing
risks means finding a balance between negative risk and the benefit of the operation or
activity; and between risk reduction and effort applied. By an offshore drilling contractor
effectively applying Health, Safety and the Environment Management in its organization, it
can optimize risk to achieve levels of residual risk that are tolerable.
Modern software development methodologies reduce risk by developing and delivering
software incrementally. Early methodologies suffered from the fact that they only delivered
software in the final phase of development; any problems encountered in earlier phases meant
costly rework and often jeopardized the whole project. By developing in iterations, software
projects can limit effort wasted to a single iteration.
Outsourcing could be an example of risk reduction if the outsourcer can demonstrate higher
capability at managing or reducing risks. A company may outsource only its software
development, the manufacturing of hard goods, or customer support needs to another
company, while handling the business management itself. This way, the company can
concentrate more on business development without having to worry as much about the
8
manufacturing process, managing the development team, or finding a physical location for a
call centre.
1.1.3.3 Risk sharing
Briefly defined as "sharing with another party the burden of loss or the benefit of gain, from a
risk, and the measures to reduce a risk."
The term of 'risk transfer' is often used in place of risk sharing in the mistaken belief that you
can transfer a risk to a third party through insurance or outsourcing. In practice if the
insurance company or contractor go bankrupt or end up in court, the original risk is likely to
still revert to the first party. As such in the terminology of practitioners and scholars alike, the
purchase of an insurance contract is often described as a "transfer of risk."
. Risk retention pools are technically retaining the risk for the group, but spreading it over the
whole group involves transfer among individual members of the group. This is different from
traditional insurance, in that no premium is exchanged between members of the group up
front, but instead losses are assessed to all members of the group.
1.1.3.4 Risk retention
Risk retention involves accepting the loss, or benefit of gain, from a risk when it occurs. Risk
retention is a viable strategy for small risks where the cost of insuring against the risk would
be greater over time than the total losses sustained. All risks that are not avoided or
transferred are retained by default. This includes risks that are so large or catastrophic that
they either cannot be insured against or the premiums would be infeasible.
9
Risk management planning selects appropriate controls or counter measures to measure each
risk. Risk mitigation needs to be approved by the appropriate level of management. For
instance, a risk concerning the image of the organization should have top management
decision behind it whereas IT management would have the authority to decide on computer
virus risks.
The risk management plan should propose applicable and effective security controls for
managing the risks. For example, an observed high risk of computer viruses could be
mitigated by acquiring and implementing antivirus software. A good risk management plan
should contain a schedule for control implementation and responsible persons for those
actions.
1.2 Limitation
Prioritizing the risk management processes too highly could keep an organization from ever
completing a project or even getting started. This is especially true if other work is suspended
until the risk management process is considered complete.
It is also important to keep in mind the distinction between risk and uncertainty. Risk can be
measured by impacts and probability.
If risks are improperly assessed and prioritized, time can be wasted in dealing with risk of
losses that are not likely to occur. Spending too much time assessing and managing unlikely
risks can divert resources that could be used more profitably. Unlikely events do occur but if
the risk is unlikely enough to occur it may be better to simply retain the risk and deal with the
result if the loss does in fact occur. Qualitative risk assessment is subjective and lacks
consistency. The primary justification for a formal risk assessment process is legal and
bureaucratic.
10
1.3PROJECT MANAGEMENT
Project risk management must be considered at the different phases of acquisition. In the
beginning of a project, the advancement of technical developments or the response to threats
presented by a competitors projects, may cause a risk or threat assessment and subsequent
evaluation of alternatives. Selection of a response presented by technology options, or
competitor threats are important applications of risk management. Once a decision is made,
and the project begun, more familiar project management applications can be used
Planning how risk will be managed in the particular project. Plans should include risk
management tasks, responsibilities, activities and budget.
 Assigning a risk officer – a team member other than a project manager who is responsible
for foreseeing potential project problems. Typical characteristic of risk officer is a
healthy scepticism.
 Maintaining live project risk database. Each risk should have the following attributes:
opening date, title, short description, probability and importance. Optionally a risk may
have an assigned person responsible for its resolution and a date by which the risk must
be resolved.
 Creating anonymous risk reporting channel. Each team member should have the
possibility to report risks that he/she foresees in the project.
 Preparing mitigation plans for risks that are chosen to be mitigated. The purpose of the
mitigation plan is to describe how this particular risk will be handled – what, when, by
whom and how will it be done to avoid it or minimize consequences if it becomes a
liability.
11
1.4 OBJECTIVES:
The objectives of this study are as follows:
 To study the impact of risk factors on the projects in Libya .
 To identify risk and study their management in construction in Libya.
 To formulate strategies for optimizing risk management in Libya .
1.4.1 RESEARCH QUESTIONS
To realise these aims, the following research questions have been formulated.
1. What is the process of risk management?
2. How to apply risk management in construction projects?
3. What risks are there in construction projects in LIBYA?
4. How can the risks be identified and assessed before and during construction period ?
5. How risks can be controlled during construction period?
6- What kind of risk management is applied in the construction companies’ management
systems in Libya?
7- What impact does the chosen time extensions option have on risk management?
8- What impact does the decisions of quantities adjustment in contract on risk management?
12
1.5 STATEMENT OF THE PROBLEM
Risk has a great impact on the performance of residential projects in Libya in terms of cost,
time and quality has increased the size and complexity of the projects and has become the
ability to manage risk in all phases of the construction process a central element to prevent
unwanted consequences. Since the prime minister of the Libyan government, issued a
decision in 2005 to build 200, 000 housing units to be delivered to citizens in 2011, most of
these projects have delayed and have not been delivered in Libya, after several years ).
1.6 SIGNIFICANCE OF THE STUDY
This research aims to let everyone understand the risks management in Libya , through a
deep study procedure on the application of risks management in building projects in Libya,
especially since the prime minister of the Libyan government, issued the decision in 2005.
Moreover,
 This study will enable the researcher to discuss some of the risk factors affecting
building projects.
 It also aims at bringing into clear focus the benefits and importance of applying
risk management processes to achieve best results in Libyan projects.
1.7 SCOPE OF THE STUDY
The scope of this study basically focuses on risk assessment of building projects in Libya for
both clients and contractors. Thus the study includes ten projects which will comprises of
about (27,571) housing units having been carried out in Libya, since the prime minister of
the Libyan government, issued a decision in 2005 to build 200, 000 thousand housing units
to be delivered to citizens by the year 2011.
13
CHAPTER II
LITERATURE REVIEW
2.1 Preliminary Remarks
The following researchers have carried out study on the delay of construction projects:
Ali (2006), carried out a field study of the main reasons for delay in construction projects in
Saudi Arabia and the results of the study, indicated 56 reasons for the delay. The main
reasons are listed below: -
1- Authentication of maps.
2- Delays in certificates of payment during the implementation period.
3- Change in engineering designs.
4- Conflicts due to the Schedule for the subcontract.
5- The slowing in decision Making
6- Mistakes in designs
7- Lack of expertise
Jaser (2006), analysed 44 project risks factors in Palestine, and found that the most
dangerous factors from the point of view of construction companies are: Contractor failed
financially, and the vicinity of the project from dangerous areas, the blockade, the wrong
design, and delayed payments. But the most dangerous factors from the point of view of
owner were: the wrong design, accidents at work, and access to the site, and the lack of real
quantities.
14
The results showed that there are a large number of risk factors in the construction companies
and project owners cannot identify these risks. Also, the contractions companies still rely on
direct assessment based on experience and have neglected the modern methods of risk
analysis and estimate the time needed for the project and cost.
Kajsa (2006) found that, small projects in Sweden lack systematic risk management. In a
business where the core value is to handle continuously arising uncertainties, the small
projects rely on the experience and personal judgments of individuals to do their risk
management continuously throughout the project life cycle. Timetables, quality surveillance,
and detailed work plans are common methods used. Tools are either checklists or blank
pieces of paper. This way of controlling risks and uncertainties are not to be regarded as
systematic risk management.
Mohamed (2006), observed that, the construction projects in Egypt cause many difficulties
during the implementation and unexpected problems at the design stage. In some cases, these
problems are the result of the same design. In most cases, the consulting engineer or
supervisor resort to diligence in solving these problems through the instructions issued to the
contractor by a simple change orders. In both cases these problems concern the engineer.
And usually it leads to the claims of the contractor which finally lead to an increase in
unforeseen cost of the project and its duration. The purpose of research is to study the types
of claims and sources that occur in construction projects mainly as a result of design.
Samir (2006), aimed to apply critical path method (CPM) and technology of Earned Value
Management System (EVT) to avoid delays in construction projects. The researcher found
through his studies that the most important reason for delays in construction projects is the
technique applied i.e., critical path method (CPM).
15
The primary objective of this (EVT) is the conclusion of any negative deviation from the plan
as early as possible and carry out corrective actions. The timeline for the project network
schedule is basically to do comparisons with the actual performance of the project. (GANTT)
charts can be used to represent this scheme graphically on a time axis, and especially when
the results are shown to senior management in the organization.
Hindawi (2007), designed a questionnaire including (78) causes of project delays. It was
classified into four items (categories) and offered to form in multiple courses with the method
of the Delphi ( Delphi method). Variance was used to check the sample answers. ANOVA
was also used to calculate the arithmetic averages for each of the occurrence and importance
of the causes then determine the number of points within the moral scale score. The use of
regression analysis (regression) was done to investigate the relationship between the number
of years of experience and the rate of ratio of the delay by the respondents.
It was concluded that the most common reasons for delay in projects occurring and strongly
influential are:-
1. Delay in laboratory tests of materials
2. Business transfers
3. Inefficient financial Contractor
4. Abnormal rise in the prices of materials
5. Miscalculation by the contractor at the time of implementation of the project.
16
Maher (2007), This study carried out in Lebanon showed that most of the causes of delay in
construction projects in Lebanon are: Factors relating to financial problems, contractual
relationships and project management.
Mohamed (2007), disclosed in Tunisia that the main aim from definition of risks, is to
identify appropriate strategies to confront them or avoid them at least to reduce the severity
or transfer to the other. The most important conclusions are the following:
1-Studying the risk in the project seriously and not to start the implemention of the project
until there is a management or specialized risk management working team .
2- The risk management team will continue its work on the project and do not stop until the
end of the project because the risks may appear at different stages of the project life cycle.
3- Develop the capacity of a team of risk management in the project, whenever skill required
was high, results were more accurate and therefore can overcome the risk or reduce the
severity at least.
Salih (2007), carried out in Syria addressed the fundamental problem faced by all projects in
any of the phases where the risk leads to additional costs or require the allotment of
additional resources such as time and labor as these are all additional costs. What explains the
importance of the subject is the large number of projects that fail either in construction or in
the development of information systems and new solutions. The study indicated that only
30% of organizations conduct a risk analysis in information technology projects.
Seung (2007), carried out this study in Indonesia and revealed that, methods relating to
decisions in the international construction markets include all cases of anxiety and
uncertainty in the local construction projects in addition to the risks of international
transactions. A comprehensive approach to take decisions about international projects was
17
developed by using the method of analysis of the impact - the intersection (Cross - Impact
Analysis) in order to predict future events through activities between variables.
Yarab (2007), In this research conducted in Jordan, there has been the development of risk
matrix and the expected yield which can be identified on the organization's position in the
environment in which it operates and identify what are the most important factors which
could occur in the performance of the organization and get an ongoing assessment of the risks
and how those risks affect performance in general through the study of joint relationship
between risk and yield.
Adnan (2008),Concluded in Palestine that, the supervision of subordinates in order to
minimize faulty work and good coordination with subcontractors are considered to be the
most effective risk reduction method used in the construction industry. It is recommended
that bids should be awarded to true estimated cost bidder and not necessarily to the lowest
bidder. Exchange rate fluctuations should be considered as a risk factor for owners and
donors and they should offer a compensation mechanism if there was any damage due to this
risk. The process of design is the most important phase in the construction steps. Design
products should be the highest level of quality and should have more focus by owners.
Almwmany (2008), The researcher studied more than 130 projects records in Jordan and
tried to design a mathematical form of the relationship between the schedule and
implementation. The study results showed that the designer is the first reason, climate and the
different work site conditions are the second reasons. He designed a mathematical form
(linear simple) of the relationship between the expected time to finish the work and real time
project by a degree of 99 % .
Enshassi (2008),The researcher found in Palestine that, the most important legal risks are
legal disputes during the construction between the parties of the project. According to him,
18
they are of medium importance of risk because the probability of occurrence average are
close to low, because they understand the importance of solving problems between the parties
before it reaches the judiciary. The consequences of their arrival at the judiciary have
redundant costs and takes time to be resolved judicially.
Political risks that cannot be controlled such as bribery and corruption are at the forefront of
political risk. But it is important medium, and the results showed that the probability of
occurrence of these risks are medium and has a medium impact. Therefore, it is necessary to
address them and not to be neglected. The rest of the political risks are the risks of low
importance such as the political risk all of which have a low probability of occurrence due to
the stability of the country's politics and security .
Hafez (2008),Identified in Iraqthat,the risks of fluctuating supply and demand of materials,
equipments or labour and changes in government policy are more prominent than the risks of
qualitative assessment hand and risks of changes in government policy. Fluctuations of
demand on the material and internal factors are more prominent from the terms of relative
importance. A management system could be adopted in the qualitative assessment of the risks
and the simulation of this evaluation using a technique for quantitative assessment. In order
to benefit from the advantages of software program it can also adopt administrative principles
to design the proposal system.
Namara (2008),Revealed in a study conducted in Malaysia found that, risk management is
an attempt to identify potential threats to the project and the probability of risk occurrence
must take appropriate actions to address these threats and verify the probability of their
occurrence. This must include risk management process definition and identify risks, mitigate
and reduce risks, and follow-up risk.
19
Amal (2009),Results of the study conducted in Syria found a set of recommendations
including:
- Raising awareness of the role of strategic factors in project management performance,
especially private ones.
- Adopting the entrance of "total quality management" standards as a strategy, based on a
deeper awareness of the role and importance of quality.
- Dealing with the case study can be applied to any project planned strategically as it needs to
improve the effectiveness of the Calendar action through comprehensive and competitive
quality standards.
Mustafa (2009 ),This study in Libya aimed to teach the owner, consultant and construction
companies in the public and private sectors of the importance of apply methodology
(Understanding the Time Delay in Libyan's Construction Projects using Lean Six Sigma
DMAIC Methodology) , known as ( DMAIC) to avoid delays across projects construction in
Libya.
The researcher found that most of the problems are concentrated in the definition
methodology ( DMAIC) stage, known as phase planning project by 28%, then assess phase
at 20%, then the analysis phase by 19%, then the control and surveillance of 18% stage, and
finally found that the delay problems due to lack of follow-up improvement operations of
15%.
The results also showed that the most important factors of the delay are:
1- Bad planning of the project
2- Schedule and financial problems of the contractor.
3- The project cost estimate, poor site and supervision management.
20
4- The work team is not qualified for the project.
5- Lack of equipment, labor and construction materials.
6- Miscalculation timeline for the project.
7- Difficulties in monthly payments.
8- Change in the workplace.
9- Sub-contractors are not eligible.
Oday (2009), Identified reasons for the delay of project construction in Jordan. Seven main
groups were related to the owner and each group included the following reasons such as late
payment certificates, intervention of the owner in the work, slow in adoption of decision,
wrong estimate for implementation of the project, factors related to contractor in the
management of the work site, construction methods , planning unsuitable for the project and
the mistakes in the implementation period, lack of experience of the contractor, and included
factors related to consultant quality control, and the time of waiting for the results of
materials tests.
Samira (2009),This study recommended reasons for delay in construction projects in Libya
to the necessity and cooperation in the study phase and design phase to avoid problems
before they occur and to improve the performance of projects in Libya.
The researcher found that the problem of delayed bank credit and non-payment of payment
certificates are the most important reasons for the delay in critical Path Method. , where at a
value of 90.6% , the responsibility of these problems occur on the owner as he determines
the degree of influence. The reasons of delay of the main objectives of projects are duration,
cost, and quality while the most common reasons are the duration of the project due to central
administration and instability in administration.
21
Suad (2009),Studied in Saudi Arabia that the cost and risk assessment during the
implementation phase of the project is a key factor for success and control of cash flows
through that stage.
The things affecting increased cost of risks are the impact the creation of designs, drawings
and methods of contracting and other factors and their impact for the formulation of cash
flows and avoid disputes that often occur due to lack of understanding or confusion
regarding cash flows or Payment certificates. The research showed that there are a lot of
factors that have an impact in increasing the cost of risk. Design requirements is one of the
most important factors that influence (80%) the cost overrun of the project, followed by other
factors with less impact.
Adel (2010),Observed in Iraq that, project risk management process helps project owners and
project teams make decisions regarding alternative plans to achieve their objectives and the
risk involved in each item. In order to increase the likelihood of success of meeting the most
important objectives is the time. Sometimes at the expense of other objectives , risk
management encourages the project team to take appropriate measures to reduce adverse
effects to the project such as cost, schedule, and quality to maximize opportunities to improve
the project’s goals with lower cost, shorter schedules, enhanced scope and higher quality and
minimize management crisis.
El-Sayegh (2010),This study carried out in Kuwait identified that designers generate risks
such as defective design, deficiency in drawings, changes in design and documents not issued
on time. Design risk arises when there are design errors and omissions as well as design
change. This source of risk includes defective or incomplete design documents,
inconsistencies, and flaws among the plans and specifications. Design errors could be due to
defective design, and unavailable or inappropriate design detail. These happen due to:
22
incomplete design scope; incomplete or erroneous geological and geotechnical exploration;
and inadequate interaction of design with methods of construction.
Nasser (2010),This study identified the reasons of delay in construction projects in the city of
Benghazi, Libya. The necessity to solve the problem of delays in the implementation of
projects and taking tough administrative steps to reduce this phenomenon through suitable
planning and good control to the activities of design and construction works. The study
recommended the necessity to follow the planning phase , and coordination and work on the
reorganization of oversight of government enterprises .
One of the main reasons for delay in construction projects in Libya delays are: -
1- .Mistakes in the estimate of the project in terms of money and time
2- Lack of good study projects.
3- Instability of Administration.
Salem (2010), Identified cash flow and financial difficulties and transfer to lower bidding
work form the most important reasons for the delayin construction projects in Iraq. The
contractor is primarily responsible for the delay, followed by the owner and consultant.
Compensation claims resulting from causing delay, change orders and additional work are the
most important causes of conflicts.
Zakria (2010), Study carried out by him in Libyarevealed that the Audit Bureau report on the
supervisory and operational performance assessment in the municipality for the low
percentage of cash flow on projects extending implementation for several years during the
year 2009/2008 was 3.9% only.
23
The report criticized the delay in the termination of some building-operation transfer and
dates of projects, due to the slow pace of the proceedings and delay in the handing of
locations of the companies executed.
The report included the lack of proper planning of the labor force in the municipality and the
lack of clarity of the functions assigned to the heads of branches of the municipal sectors and
the lack of standard rates for employee performance by each administration.
Fouzi (2011), found that valuation of companies in Libya is a key factor for the success of
the project by making sure the financial, technical and administrative ability and its expertise
in the construction. The field study created a form to test construction companies before
contracting with them. The aim of this form is to ensure the ability of financial, technical and
administrative capacity of companies. Companies that don’t possess the conditions in the
form cannot be contracted.
Herroelen (2011),Observed in Ireland that, risk management is generally a part of other
management systems such as quality, environmental or work environmental management
systems. Some of the core values are environmental management systems, the pledge of all
employees, customer concentration, management commitment, focus, continuous
improvement, and fact-based decisions. These basic values are closely connected and could
easily be found in the theoretical framework of risk management.
Sajida (2011),This study conducted in Palestine aimed to evaluate the applications of
projects management pursued by different departments in the public sector in Palestine,
particularly in the Ministry of Public Works and Housing, as well as aiming to explore
effective techniques in project management within the public sector as well as to understand
the main factors that prevent the achievement of goals of the project.
24
In order to achieve the objectives of this study, a survey was conducted on a questionnaire
between the general managers, department heads, and project managers from various
departments in the Ministry of Public Works and Housing. Results of the study demonstrated,
that there was lack of efficiency in the application of the project management in the public
sector in Palestine, compared with the recommended international practices. Project
management in the Ministry of Public Works and Housing practices was seen as a medium
compared to global standards, poor follow-up and not to disseminate the lessons learnt from
previous projects. There was lack of effective communication between the project team, and
lack of intensive planning, the failure to adopt a clear methodology was such major factors
that impeded the achievement of project objectives.
Waji (2011),Identified how to face the crisis in construction projects in Malaysia: -
1 - Adoption of early warning systems and good planning to contain any crisis before they
happen to develop scenarios and solutions appropriate to each what is expected of crises
before they occur and the training of workers, and to provide data of all the information
necessary to manage the crisis and prevent or get out with minimal losses base.
2. Readiness and speed of dealing with the crisis: Time is a factor of great importance for
both individuals and institutions, the more the individual or institution is ready and and has
the ability to deal with the event with all the needed things possible to control the crisis and
contain it and get out with minimal losses.
3 - An important factor to deal directly from reassured factors and a reflection of confidence
in the ability to deal with the crisis, and helps to know the magnitude of the crisis.
4 - Transparency in dealing with the crisis play an important role in dealing with the crisis
both for the states or organizations or individuals must put the full truth in a timely manner so
25
that the concerned authorities understand the crisis and provide a helping hand to solve or
reduce their impact.
Faisal (2012), revealed that projects in Saudi Arabia require a feasibility study to be carried
out by the Project Management Office and documented before presenting the project based
on the following steps:
1. Identify the need to work and show the actual need for a new project
2. Conduct a study of the need to work in coordination with the relevant departments and
estimate the cost and then submit to the Dean of Information Technology for approval.
3-If approved, the project idea is based on the Project Management Office to prepare the bid
requirements and specifications of the project externally.
4- Procedures are followed in competition law within the Kingdom of Saudi Arabia in order
to launch a new project.
5- The Office of Project Management share the study of the technical offers for the selection
of the contractor depending on technical standards prepared for the project.
6- If awarded the project, the contractor is assigned an engineer supervisor of the Project
Management Office or one of the relevant departments for follow-up with the contractor at
the beginning of the project.
Karim (2012),Observed in Iraq that more awareness is required about risk management with
respect to insurance, organizational policy planning and implementation, project management
and general management skills , finance, economics, law, and accounting. Construction
organizations need to define well-organized responsibilities and authorities for all
26
stakeholders, by which risk management processes can be established for senior engineers
working in construction projects.
Mohammed (2012), Identified that in Syria, people must know the degree of risk before the
start of any project to achieve goals. The project manager must know what will happen and
what should be done in the event of any change to find support for the project plans such as
transferring resources from inside the project.
He must know the likelihood of changes because he must continue the project without delay
and have justification for that. Other costs or extra time or slow performance would weaken
the project and these are exposed to costs He should develop a plan for the unexpected and
speculate time and budget.
Mona (2012), carried out a study in Syria found that the risk of inflation and price
fluctuations and differences between actual and contractual quantities are one of the most
important risks.
Assaf (2013),Observed that there are fifty-six reasons for the delay of projects in Palestine
and puts it in nine items and found an agreement between the owner and the contractor
consultant in arranging importance of the reasons. Financial matters ranked first between the
items.
Defrawy (2013),The researcher studied in Egypt thatdelay in projects can be grouped into
two main reasons as justified and unjustified reasons:
First justifiable reasons:
-Emergence of risks during the project implementation as subjected to weather conditions
such as floods and damage part leads to the contract extension, sudden loss of material
27
associated with implementation of the project by force majeure as close factory ... leading to
the contract extension, and restoration and maintenance of projects because of the uncertainty
of some of the items hidden .
Second unjustified reasons:-
-Reasons related to the source of the study, lack of investigation, errors in the design of
various specializations, errors in the estimation of quantities, and errors in the book of
conditions and technical specifications, such as lack or multiple possibilities of interpretation.
Haitham (2013), According to him, the main challenges facing management are to estimate
the level of risk by the position holder, to estimate whether management is aware of the risk
and are implying their knowledge in avoiding risks. Top management should investigate
various types of risks facing the business , and how to manage the risk via education or past
experience and other sources.
Hussein (2013),This study in Libya found construction projects with risk and uncertainty of a
special nature because of length of the implementation period that lead to changed
circumstances making it contain multiple risks. The most important risk facing projects is that
companies are unable to implement projects in time with the required quality and budget and
specifications agreed upon.
The assessment of companies is a key factor in the success of projects by ensuring financial
and technical capacity and managerial experience in the previous risk management.
Jaser (2013), Reported that the contractors and owners still depend on traditional approaches
to managing risk factors and their consequences in Kuwait.
28
The use of direct judgment to control risk factors was the most applied method used to
control risk events and these results assure the need to develop the used methods for
managing risk factors.
Use of quantitative methods, computer systems or sensitivity analyses were not practiced by
respondents, they also depend on direct judgment and comparing analysis to analyze risk
consequences .
Sameh (2013), Concluded that the construction sector is facing two main reasons relating to
production, and information infrastructure and that the construction sector in Dubai, is one of
the basic employment and income growth in the emirates. The sector faces five major
challenges which need immediate attention to help the construction sector to face the
economic crisis and recession. The study revealed that the first of those risks, i.e the supply
of inputs and inflate costs, which impacts on the profitability levels, as the lack of
infrastructure to provide that information leads to the risks, due to a significant imbalance
between supply and demand. The global financial crisis has caused a slowdown in the
construction sector, but a correction that has occurred in this sector succeeded compared to
the economies of other countries with large contracting sectors.
Ali (2014),Observed in Tunisia that contractors want owners to accept and share more risks
with them. This can be attributed to two factors; first, owners have some control over some of
the risks, for example, the payment on contract, changes in work, and scope limitations and
work definition.
Second, because the high competition in the market has slowed the economy in recent years,
the surveyed risks have the highest impact on the schedule of a project while the same risks
affect the safety of the project. Most of the risk categories affect schedule and budget more
than other project parameters.
29
Aouda (2014),Carried out in Iraq, the study identified the preliminary study for the
implementation of projects of great importance in estimating costs and provide financial
surplus after running the project and invest in direct need of infrastructure projects and the
employment of local labor, training and exploitation of income in raising individual and
household level.
This is able to reduce unemployment and optimization of staff (technical, administrative) and
dispensing import of many products as long as it can be produced locally.
Heba (2014), This recent study in the Emirates, Dubai, showed that a lot of insurance
companies in the Arab region and the Arab Gulf face some challenges when they are
submitted to insurance services associated with some major projects in the world. This has
spread dramatically recently, and has become so much representing distinctive landmarks in
the cities and the Gulfian states.
The study included a survey of the views of officials in the local insurance industry to know
if the local insurance companies suffer from these challenges, and whether they are capable
and qualified as required to insure this type of project as well as various mega big financial
value in state projects. Most insurance companies at the moment do not have the
qualifications and no possibilities to deal with this major development projects, and to be able
to do so, it must combine the efforts of local insurance companies to work together with each
other as joint coordination will increase the financial capacity and the exchange of
experiences and competencies through work joint committees between these companies. In
addition to bringing in expertise from abroad to assist in the work on such projects.
30
Muhammad(2014),Observedin Algeriathat, in order to minimize the chances of failure or
under performance of a partnering, risk management techniques must be introduced into the
construction industry. Critical risk factors must be identified before making any meaningful
Partnering agreement. The critical risk factors can be systematically studied based on
internal, project-specific, and external risk groups.
Shenila (2014),This study revealed that 90% of companies in Saudi Arabia do not use
enterprise management system while companies that do not use the administrative and
financial resources planning system are more than 60%. Project delays due to many reasons,
including the financial, technical and administrative reasons.
Competencies in civil engineering and planning are available and the numbers are good but
there are shortfalls in specialized competencies in the fields and administrative micro-projects
such as risk management, scheduling, and quality management. Government agencies lack
the understanding of the obligations of the contracts because the multiplicity officials
responsible for the contract are transferred to work on others. More importantly, some of
them lack experience in the subject of the contract.
Alexander ( 2015),This study carried out in Egypt revealed that,risk management is a
complicated process that interrelates with many other processes in the construction industry.
Investigating project risks includes studying potential events that may affect the scope, cost,
time, or performance of the project's objectives. Investigating potential risks requires the
collaboration of all disciplines contributing to the project. Technical, managerial, financial,
and administrative departments of the participating firms. Organization’s risk management
policy should set out its approach to risk management. The policy should also set out
responsibilities for risk management throughout the organization.
31
Eriksson (2015),In Sweden, the construction sector at some time suffered from poor
performance and lack of control in most steps of the execution process due to the sector’s
problems with many faults and increasing buildings costs.
The government initiated and assigned a commission whose assignment was to concentrate
on where are the problems and how to increase the effectiveness instead of the costs. They
found amongst other things the cost and the construction faults, risks and other uncertainties
can cause losses leading to increased costs, delay in construction period and lack of quality
during the implementation of the projects.
Falqi (2015),The researcher did not find any similarity in the reasons for the delay between
the two countries and that the factors related to contractors emerged first, and then the special
factors that is, the owner, and that there is an agreement between the project team members
in Saudi Arabia. He tried to find mathematical relationship between the causes of delays in
various stages of the project but did not receive any important correlation between them.
Gunhan (2015),Observed that in the Philippines, international projects are generally more
difficult to manage due to conditions such as multiple ownership, elaborate financial
provisions, and different political ideologies.
32
CHAPTER III
MATERIAL & METHODOLOGY
Research Design
This study was a descriptive study for collecting information about risk factors associated
with building projects in Libya.
Study area
The study was conducted in the major cities and towns in Libya where housing projects for
Libyan citizens were being constructed.
Study Population
The study includes ten projects for a total of (27,571) housing units been carried out in
Libya, a decision by prime minister of the Libyan government, issued in 2005 to build two
hundred thousand housing units to be delivered to citizens by 2011 but most locations with
the lack of sufficient labor and funds have led to delayed delivery in Libya.
Sample size
The study considered ten large projects in the major cities in Libya. Data was collected from
10 sites visited to know the dangers and difficulties facing the implementation of housing
projects during the implementation period, which led to delay completion, and the risks faced
by them.
33
Sampling procedure
The main sampling technique employed in this research are the simple random sampling
Simple random sampling was used to select the various project managers and staff at the site.
It gives each respondent an equal opportunity of being selected.
Tools and Technique for data collection
 There was interview schedule prepared for the project managers and contractors.
 All the respondents were questioned about the main factors causing the delay of the
 project at the various sites and locations in Libya.
Methods of data collection:
Data was collected through Questionnaire and face to face interview with the respondents at
their convenient times.
Management and Analysis of data
Data collected was analyzed using the SPSS(StatisticalPackage for the Social Sciences)
software version 20. Furthermore, the analysis and interpretation of data was done in
diagrammatic form, tables, and graphs using frequencies and percentage analysis.
34
Ethical Issue
1) Before the collection of data from the respondents, they were fully informed about the
overall aims and objectives of the study and verbal consent will be taken from them.
2) Project managers and site contractors’ privacy and confidentiality was maintained in the
process of the data collection.
3) Respondents were not forced to participate in the study without their interest.
4) Data was collected at the convenient times of the respondents when they are available for
best results.
35
3.1 Case Study :-
In order to get a more realistic data, the sites of projects in many cities were visited. In all, 10
sites containing 27,571 housing units where working projects have temporarily stopped
because of lack of sufficient labor and funds. The author met with the project managers at
various locations, talked to them at length about the dangers and difficulties facing the
implementation of housing projects during the implementation period, which led to delay in
completion.
Due to security disturbances in Libya since 2011, some the foreign companies that
implement thousands of housing projects were forced to evacuate staff from Libya. The
successive regional security unrest sparked fears in the foreign companies because of the
possibility of exposure of human and material assets to more vandalism and destruction
pushing some of them to stop all their activities and withdraw from Libya.
Moreover, the researcher also met with some of the Deans of Municipalities at locations
where work on housing units have stopped for some time to figure out the reasons.
The project risk associated with each housing unit and their details at various locations have
been classified below according to the answers provided by the project managers:
36
3.1.1. Construction of (1612) housing units in Wadi AlshaticityBrak
"LIBYA " Implementation By "Rawaws" company of Investment
Contracting and Real estate .
Background of the Project:-
The project area is located in the west of the city about 3 km from its centre. This area lacked
large residential projects which will bring with it a large number of the population of the
region, and cover the pressing demand for housing in the area and its environs. The 1612
housing units project in " Wadi Alshati" which was one of the projects that have been
selected. Each unit consists of three rooms , two bathrooms and kitchen.
Project name:- Construction of (1612) housing units in Wadi Alshaticity.
Contract number: - 571/2007.
Contractor: -" Rawaws" company of the Investment Contracting and real estate .
The contract value of the Libyan dinar :- 174,731,032.000 LYD
Site handing over date: - 26-10-2008
Period of implementation: - 30 months.
Duration of the extension of the contract to the contractor: - 22 months
Date of work on the project stopped: - 17-02-2011.
The date of the resumption of work on the project: - 14-07-2013
Percentage of execution: - 57%
37
Construction Related Risks
Meeting with the supervisor of this project engineer " Rashid Abdul Rahman" and
discussing with him about some of the most important risks that face the project, his response
included the following:
1- Legal risks:-
The project manager reported that legal risk is one of the significant risks faced by the project
before and during the construction period due to the lack or absence of a legal vision of the
requirements or possible modifications in the project in terms of legislation related to the
environment, urban planning, real estate purchase and compensation of owners and initiating
legal proceedings before the courts. All of these risks delayed the implementation of the
project for a long period of time.
2- Financial Risk:-
Financial risk is one of the most important risks that have affected the progress of work on
the project altering the prices of construction materials and non-payment of the work invoices
executing exchange in a timely, as well as the change in exchange rates all this led to the
delay in the project.
3-Technical risks:-
There are many technical errors encountered by the project and caused delays in its
implementation for a period of time including the lack of monitoring in terms of studies,
maps, architectural and construction, which made them resort to modifying designs by work-
site requirements and this requires additional work added to the original value of the contract
this needs the approval of the Housing Infrastructure Board and facilities additional works all
of which need a long time for approval of the amendments.
38
4-Security risks:-
Security risks in Libya have had a negative impact on the implementation of the project. Most
workers returned to their home countries because of the security situation in Libya since 2011
and we are facing a problem in convincing them back to work.
Figure3.1:Construction of (1612) housing units in Wadi AlshaticityBrak
39
3.1.2. Construction of (128) housing units in Akhlafe Ubari city "LIBYA "
Implementation By "Wadi Alfouz" company of Investment Contracting
and Real estate .
This project is located in the municipality of Ubari "Okhalif" area and is one of the largest
housing projects, which will be dedicated to young people. The housing which is a ground
dwelling consists of a lounge and three bedrooms, two bathrooms, a kitchen and a room for
guests with an area of 220 m2. In addition to the many facilities attached to this project, is a
school and mosque compound, a hospital and the administration .
Project name:- Construction of (128) housing units in Ubari city "Akhlafe"
Contract number: - 208/2008
Contractor: - "Wadi Alfouz " company of Investment Contracting and Real estate .
The contract value of the Libyan dinar: - 15,027,200 LYD
Period of implementation: - 450 days
The date of signing of the contract: - 17-05-2008
Date of work on the project stopped: - 24-07-2015
40
Construction Related Risk:-
Meeting with the supervisor of this project engineer " Mohamed Ramadan " and asking
him about the most important risks that face the project, his answers were as follows: -
1-Legal Risks:-
Shortages or lack of legal vision requirements or potential adjustments where there are no
additional work on the project for taking a long time to be approved by the infrastructure of
the Housing Council and also there are legal proceedings for taking a long time in the Libyan
Audit Bureau when examining contracts. All this these have contributed to the project delay
and why it is not completed in time schedule.
2-Technical Risks:-
Special project new amendments are made during the implementation resulting in improper
estimation of the quantities necessary for the implementation of the project materials, as well
as having a lot of technical errors in the maps, architectural and construction of the project
causing the work to stop until it is corrected.
3- Financial Risks:-
Higher prices for materials used in the implementation of the project as well as the increase
of the daily cost of labor and the currency exchange rate changes, as well as non-debt
companies paid by the Libyan government.
4-Security risks:-
The security risks in Libya has a negative impact on the implementation of the project since
2011 and now face a big problem where people live in these housing units before completion
and still to this day in the apparent absence of the police, cannot intervene to get them out.
41
Figure 3.2:Construction of (128) housing units in Akhlafe Ubari city
42
3.1.3.Construction of (140) housing units in El Houamed city "LIBYA "
Implementation By" Almodrjat" company of Investment Contracting and
Real estate .
This project is located in Aljabel Algarbi "El Houamed" area and is one of the largest housing
projects, which will be dedicated to young people, the housing is a ground dwelling
consisting of a lounge and three bedrooms, two bathrooms, a kitchen and a room for guests
with an area of 220 m2 .
Project name:-Construction of (140) housing units in "El Houamed" city
Contractor: - " Almodrjat " company of the Investment Contracting and real estate .
The contract value of the Libyan dinar: - 14,896,000 LYD
Period of implementation: - 30 month
Duration of the extension of the contract to the contractor: - 22 month
43
Meeting with the supervisor of this project engineer "Tariq Ahmed" and asking him about
the most important risks that face the project, his answers were as follows:-
1-Legal Risks:-
Delayed delivery of the project after the signing of the contract agreement leads to legal
action which may take a lot of time between the infrastructure of the Board of Housing and
the Office of the Libyan accounting, as well as having a lot of disputes over land and
compensation of ownership before the courts. This may cause delay of the implementation of
the project on time.
2-Technical Risks:-
Wrong estimate in calculating the amounts in the project, requires modified and the presence
of a lot of technical errors in the specifications agreed to the contract, which requires orders
to modify and increase the value of the contract and requires approvals from several entities
related to the project.
3. Financial risk: -
Delays in invoices of executed works, causes delays in the completion of works items in the
next stages of the project and this makes the contractor lose confidence in the owner of the
project and therefore will delay the work in site. In addition to the change in prices of
construction materials and the difficulty in obtaining them in Libya.
4-Security risks :- The security risks in Libya has a negative impact on the implementation
of the project since 2011 and now face a big problem where people live in these housing units
before completion and still to this day in the apparent absence of the police, cannot intervene
to get them out.
44
Figure 3.3:Construction of (140) housing units in El Houamed city
45
3.1.4. Construction of (341) housing units in Elmahrougha "LIBYA"
Implementation By "Fangah" company of Investment Contracting and
Real estate .
Background of the Project:-This project is located on the main road west of Barak city
about 30 km away from the city, which is a residential units with a ground floor area of each
225m2 contains three bedrooms, two bathrooms, a living room and an outdoor fence
surrounds the building, and there is in this project, a school garden and a hospital.
Project name:-Construction of (341) housing units in "Mahrougha "
Contractor: -"Fangah " company of the Investment Contracting and real estate .
The contract value of the Libyan dinar :-49,823,600,000 LYD
Period of implementation: - 18 months
46
Meeting with the supervisor of this project engineer "Khamis Hassan" and asking him
about the most important risks that face the project, his answers were as follows: -
1-Legal Risks:-
Delay in the site handling of the company after the signing of the contract agreement may
take a lot of time before the legal proceedings between the infrastructure of the Council and
the Office of Housing Libyan accounting. Also, the period for taken decisions of quantity
adjustment in the contract getting approvals from several government offices takes a very
long time.
2-Technical Risks:-
The presence of lots of technical errors in the specifications and quantities agreed in the
contract, as well as technical reports recommends the removal of the surface layer of the soil
depth of 1 meter with the settlement area of the site in accordance with the level design.
Amendments require the contract is of financial worth of the value of the original contract for
the project and therefore will take a long time to be approved and thus delays the completion
of the project.
3. Financial risk: -
Rising prices of construction materials (such as wood, steel and cement) also the transport
prices and the costs of the maintenance and also the increase in fuel prices a result of
continued unrest, non-payment of work invoices executing exchange in a timely manner
leads to the stop of work at the site.
47
4-Security risks:-
The company now face a big problem in terms of these conditions which prevent workers
from continuing to work and cause frequent escape, as well as difficulty in bringing other
workers to the site because of the slowdown in the Foreigners Registration Office.
Figure 3.4: Construction of (341) housing units in Elmahrougha
48
3.1.5. Construction of (2000) housing units in Ghadames city "LIBYA " .
The project is located in the city of Ghadames, western Libya away from the city centre about
5 km away. From the ground floor by and first floor, each of That room has two bathrooms,
and a kitchen. In addition, the ground floor has a fence, and designed to fit with the traditions
of the population city. The total area of the building is about500000m2 .
Project name:-Construction of (2000) housing units in "Ghadames "
Contract number: -502/2007
Contractor: -Chaabane and Co. company general enterprise for building and public works.
The contract value of the Libyan dinar: -277,356,800 LYD
Site handing over date :- 09-09-2007
Period of implementation: - 30 months
Duration of the extension of the contract to the contractor: -22 months
The date of the resumption of work on the project: -20-3-2012
Percentage of execution:-65%
49
Meeting with officer of Housing Infrastructure Board Ghadames "Tawfiq " and asking him
about the most important risks that face the project, his answers were as follows: -
1- Political Risks:-
The collapse of the political system in Libya has resulted in the collapse of the security and
economic level and the absence of the rule of law making Libya unable to fulfil its
contractual obligations, as well as the failure to obtain approvals or allow to do some work
necessary at the appropriate time.
2-Financial Risks:-
Non-payment of work invoices executing exchange in a timely which would lead to stop the
work the site, as well as not to limitation the damage to the work of the project and the assets
and property of the company.
3-Technical Risks:-
Erroneous assessment of the required technology and methods of construction phases of the
project where there were amendments to the designs and construction methods and execution
during the implementation, in addition to the wrong estimate of amounts necessary to
implement the project materials.
4- Security risks: -
Security risks in Libya have a negative impact on the implementation of the project, the
company is now facing a big problem and cannot return to Libya because of security
conditions and the political instability in Libya prevented the company from returning and
completes its work on the project.
50
5-Legal Risks:-
There are always many legal risks facing the project especially between the company and the
Board of infrastructure for housing where the work stalled since the year 2011 to today and
there are many issues before the courts to seeking compensation for the losses suffered by the
company in Libya.
Figure 3.5: Construction of (2000) housing units in Ghadames city
51
3.1.6. Construction of (3050) housing units in Sabha city "LIBYA ".
The project consists of a number of 3050 housing units full facilities of infrastructure,
services, roads, lighting and gardens all other needs of the project and the port of the project
so far gain of 40%, which is integrated in all its service facilities project, the project is located
on 456 hectares of land working with the company before 17-02-2011 toward 1400 workers,
technicians, engineers and administrative staff, as well as many of the Libyan workers and
employees.
Project name:-Construction of (3050) housing units in "Sabha " city .
Contractor: - D. S. Construction Co. Pvt. Ltd
The contract value of the Libyan dinar: -719,965,465 LYD
Site handing over date: -02-09-2007
Duration of the extension of the contract to the contractor: -15 month
Date of work on the project stopped: -17-02-2011
Percentage of execution: - 40 %
52
By meeting with officer of Housing Infrastructure Board Sabha city "Mohamed Ali " and
asking him about the most important risks that face the project, his answers were as follows: -
1- Zoning Risks:-
The existence of obstructions to work in the place of execution columns of power lines and a
gas station as well as the existence of a building for the electricity company of all these
obstacles have delayed work on the completion of the housing units.
2- Political Risks:-
One of the main risks faced by the construction of this 3050 housing units in the city of
Sabha is political instability in Libya which has resulted in the collapse of the security and
economic level and the absence of the rule of law, making Libya unable to fulfil its
contractual obligations, as well as the failure to obtain approvals or allow to do some work
necessary at the appropriate time.
3- Financial Risks :-
Non-payment of work invoices executing exchange in a timely and the absence of cash flow
which would lead to stop the work the site, as well as assault and theft of equipment and
machinery assets and property of the company, estimated in the millions, and contractor
delay in the payment of workers' salaries .
4-Technical Risks:-
project where there amendments to the designs and construction methods and execution
53
during the implementation, for example Cancel kindergarten building model B29 and B30,
and also cancelled the gas network in the project, which caused a change of the project costs.
Security risks in Libya have a negative impact on the implementation of the project, the
company left Libya since the start of the security unrest in Libya in 2011, in addition to the
entry of people into residential units before they are completed, and some of the buildings
exploited by armed military.
6-Organizational Risks:-
Shortage of technical staff and the number of workers on site caused a delay in bringing the
employment of finishing the project as well as the instability of the contractor in the work
plan.
7-Legal Risks:-
There are always many legal risks facing the project especially between the company and the
Board of infrastructure for housing where the work stalled since the year 2011 to today and
there are many issues before the courts to seek compensation for the losses suffered by the
company in Libya.
54
Figure 3.6:Construction of (3050) housing units in Sabha city
55
3.1.7.Construction of (130) housing units in Wanzureik "LIBYA" .
This project is located in the Wanzureik city in south western Libya, which is a residential
unit designed according to the latest models and the largest space. There are three bedrooms,
a guest room, a kitchen and three bathrooms in addition to the front fence. The project also
contains several service facilities and infrastructure.
Project name:-Construction of (130) housing units in "Wanzureik " .
Contractor: - "Joharat Al moden" company of the Investment Contracting and real estate .
The contract value of the Libyan dinar :-15028000 LYD
Cite handing over date: -16-08-2008
Duration of the extension of the contract to the contractor :-48 month
Percentage of execution: -45%
56
Meeting with the project engineer, "Tariq Mohammed " and asking him about some of the
most important risks that face the project, his answers were as follows: -
Non-payment of work invoices and executing exchange in a timely manner has led to the
stop of work at the site, as well as the accumulation of debt on Housing Infrastructure Board
which undermines trust between the executing company and the state.
2-Technical Risks:-
project where there amendments to the designs and construction methods and execution
during the implementation, in addition to the wrong estimate of quantities necessary to
implement the project materials.
Security risks in Libya have had a negative impact on the implementation of the project, the
company is now facing a big problem in terms of the inability to bring in workers from
abroad to work on the project, as well as security concerns as a result of the wars in Libya.
4-Legal Risks:-
There are always many legal risks facing the project between the company and the Board of
infrastructure for housing and foreigners registration office where there are legal and
administrative measures to prevent complicated bring laborers to Libya , the existence of
several legal problems about land ownership and the compensation caused a delay in
57
completing the project on schedule, in addition to the period you take decisions of quantities
adjustment in the contract and that need approvals from several government offices which
for take a long time.
Figure 3.7:Construction of (130) housing units in Wanzureik
58
3.1.8.Construction of (60) housing units in Tamzawh"LIBYA" .
The project is located in a town in the south of the Libyan Tamzawh away from the city
centre and about 3 km away. The project is the creation of 60 residential units with an area of
230m2 model and includes the finishing of a three-bedroom and a living room, kitchen and
two bathrooms.
Project name:-Construction of (60) housing units in " Tamzawh " .
Contractor: - "Aljebal Alafrikia " company of Investment Contracting and Real estate
The contract value of the Libyan dinar: - 6,936,000.000 LYD
Period of implementation:- 540 day
Percentage of execution:-79%
59
Meeting with the project engineer "Massoud Ali " and asking him about the most important
risks that face the project his answers were as follows: -
Non-payment of the work invoices has delayed executing exchange in a timely which has
also led to the slow progress of work at the site.
2-Zoning Risks:-
The inability to connect power supply to the project site since the handling of the site till
today has led to problems that still hamper the work site. The lack of a favourable
environment for the implementation of high temperatures up to 47 ° C as well as sandstorms
that last for a long period of time.
3-Technical Risks:-
Amendments to the designs and construction methods of execution during the
implementation, in addition to the wrong estimate for quantities necessary to implement the
project cause project delays.
Security risks in Libya have a negative impact on the implementation of the project. The
company is now facing a big problem in terms of the inability to bring in workers from
abroad to work to the project, also exposure to the project site theft and vandalism has led to
the killing of two workers leading to the escape of a majority of workers out of Libya.
60
4-Legal Risks:-
There are always many legal risks facing the project from foreigners registration office where
legal and administrative measures prevent the bringing of laborers to Libya .
Figure 3.8:Construction of (60) housing units in Tamzawh
61
3.1.9The construction of 20 thousand housing units in Benghazi city
“LIBYA”.
The project consists of 20 thousand housing units full facilities of infrastructure, mosques,
markets, schools, roads, lighting, parks. The project is divided across two major locations in
Benghazi. The first consists of 15 thousand housing units in the west of Benghazi " Qnfodh"
area, and the second city is made up of five thousand housing units in " Jardina", about 30 km
from Benghazi.
Project name:-The construction of 20 thousand housing units in the city of Benghazi.
Contract number:-120/2007
Contractor: - the National Company of China Construction Engineering Co., Ltd.
The contract value of the Libyan dinar: -Three billion Libyan dinars
Period of implementation:- 36 month
The date of the resumption of work on the project:12/5/2013
62
Meeting with the municipality member of Benghazi, "Saad Saaiti" and asking him about
the most important risks that face the project, his response was as follows: -
The Chinese company, which implemented the project was forced to suspend its operations in
the city of Benghazi, eastern Libya, since 17.2.2011 due to security problems, where
thousands of Chinese laborers returned to their country to escape the fighting, which led to
theft the contents of the company's tools and & Heavy Equipments and machinery belonging
to the Chinese company.
Dated 12-5-2013 after two years as agreed to resume the project which is a 20,000 housing
units in the city of Benghazi after the municipality of Benghazi meeting with the Chinese
company and the Housing Minister, an interim government proposed a solutions for the
return of the Chinese company to resume work in the project .
The municipality member of Benghazi, "Saad Saaiti" said that the company has not been able
to work again because of the attacks on the headquarters of the company in addition to
repeated attacks on its staff and the takeover of citizens. Also, after the murder of the project
manager of Chinese company executing in Benghazi Mr. " Hoang Chi chang" dated
20/05/2014 , the project site turned into a battleground between armed militias in Benghazi
who destroyed the buildings .
Mr."Saad" said, summed the risk in the project to the security situation, compensation of
executed projects by the Chinese company and the increased prices of materials.
63
Figure 3.9:The construction of 20 thousand housing units in Benghazi city
64
3.1.10. The construction of 110 housing units in Almansoura city"LIBYA "
This project is located in the Almasoura" city in Libya, which is a residential units designed
according to the latest models and the largest space. There are three bedrooms, a guest room,
a kitchen and three bathrooms in addition to the front fence. The project also contains
infrastructure.
Project name:- The construction of 110 housing units in "Almasoura" city
Contractor: - "Aslween " company of Investment Contracting and real estate
The contract value of the Libyan dinar: -12,716,000.000LYD
Period of implementation: - .
The date of the resumption of work on the project :-25-11-2013
65
Meeting with the project engineer "Hossam Eddin" and discussing with him about the most
important risks that face the project, his answers were as follows: -
Non-payment of the work invoices has led to slow progress of work at the site.
2-Technical Risks:-
Amendments to the designs and construction methods of execution during the
project cause project delays.
The security risk in Libya has a negative impact on the implementation of the project. Also,
the exposure of the project site to theft and vandalism because of insecurity in the country
since the year 2011 has cause a slow in work progress.
4-Legal Risks:-
There are always many legal risks facing the project from foreigners registration office where
legal and administrative measures prevent the bringing of foreign laborers to Libya .
66
Figure 3.10: The construction of 110 housing units in Almansoura city
67
3.2 Libyan Audit Bureau and Construction projects.
Lots of contractors and owners of projects believe that one of the reasons for delays in
projects construction in Libya is the Libyan Audit Bureau that audits and stops several
contracts and administrative procedures and finance for projects as well as the slowdown in
the ratification of the payment certificates.
The researcher held discussions with the Director of Contract Management in the Audit
Bureau of Libya on some of the reasons behinds their operations some of which contribute to
the delay of construction projects. According to him, the Audit Bureau reviews contracts
valued at 500,000 Libyan dinars or more and ensures accountability. Contracts worth 500,000
Libyan dinars are reviewed and the bureau is entitled to legally stop any financial or
administrative proceedings considered to be illegal as in the case of the following:-
1- Some of the contracts prior to submission to the Court of Audit show a violation of
the law No. 19 of 2013 on the organization of the Audit Bureau and amendment.
2- A Slowdown to provide the necessary documents for the purpose of study and review
contracts, and non-compliance of some parties to respond to the observations of the
Audit Bureau when studying for contracts, leading to delays.
3- Proceeding to enter into contracts with companies without specifying their legal
status and evidence of registration in the Commercial Register of the state.
4- Payment of the value of some payment certificates without the display on the Court
of Accounts on the basis of violation issued by the executive authority decisions.
5- Differences between vouchers and payment certificates for many of the payments
sent to the Audit Bureau .
6- Non-renewal of insurance policies and letters of guarantee for some of companies.
7- Payment certificates without Stamp of the Comptroller of the Housing Infrastructure
Board.
68
8- Refusal to submit executive maps of projects, and in which quantities are reviewed.
9- Time lag between the date of the adoption of some of the payment certificates, and
the date of preparation of payment authorization and the date of referral to review
the Audit Bureau.
10- Sending supplements of contracts, and change Orders proved to be unwarranted , as
the original contracts cover the work required in accordance with the original terms
of the contract, but the interpretation of the original contracts for the benefit of the
contractor or consultant, was not prepared.
11- Extension of the implementation period in the minutes of the activation of contracts,
and for a period beyond the original execution.
3.3 Project manager’s response to the real reasons for delays in the housing
Projects in Libya:-
According to the project manager, the most important reasons for delay in the housing
projects in Libya are due to financial, political, security, legal and technical reasons. These
issues are significant factors affecting clients, contractors and project owners.
Problems in projects risk management:-
1- Failure to prepare for a good contract before contracting quantities , designs, integrated
technical drawings and this calls for Change of Orders to correct the conditions of the
contracts when implemented.
2-Contracting with local and foreign companies who are unable to implement resulting in the
delays of many projects .
3-Delay of Housing Infrastructure Board in payment of the work invoices for the companies
executing for years.
69
4-Many projects broken by people but were not taking any measures against them so far.
5-Amendments to the designs and construction methods execution during the
project .
6-Security risks in Libya have a negative impact on the implementation of the project.
7-Complicated legal and administrative measures which prevent bringing foreign laborers to
Libya .
70
CHAPTER IV
RESULTS AND DISCUSSION
4. Questionnaire survey
Survey is a good method of data collection for descriptive purposes. As one of the study’s
objectives was to analyse how risk management worked in the projects during construction, a
questionnaire survey was chosen as one of the methods of data collection.
There are four steps in the performance of the questionnaire:-
1-Obtain the views of the different actors in the projects.
2- Selected questions were formulated in a way where it could help to answer research
questions.
3- The survey sample comprised of projects manager, the contractors , the consultants and
the persons who worked with risk management in the project.
4- A Total of 52 questionnaires were sent to the contracting companies undertaking the
housing projects which include the 16287 housing units. The questionnaires were filled and
supported with personal interviews. Some difficulties that emerged in the course of the data
collection include the delivery of the questionnaire in hand andthe difficulty in having access
to the corporate managers and officials because of the limited time they have.
Table. 4.1 Questionnaire distribution and respondents profile.

The study sample included 32 persons holding qualifications such as graduate and
postgraduate programs. Table 4.1 summarizes the number of respondents, abstainers and
scientific expertise and qualifications.
71
Table. 4.1.Questionnaire distribution and respondents profile figure
project Contractor Consultant Total

manager
Number of questionnaires
sent 30 16 6 52
Number of usable
responses received 18 12 2 32
Response rate (%)

60 75 33 56
Experience in the work.

11.17 18.9 21 -
Education (number of
respondents)
University 10 5 2 17
High Institute 3 8 2 13
Vocational training 0 2 0 2
72
Fig. 4.1 Questionnaire (response & abstention)
Fig. 4.2 Years of experience in the line of work
73
4.4. Executive situation for the project
By checking the documentations for the project samples, it was revealed that the average
Completion percentage in the projects are (48.83%), and that the work in (43.75%) of the
projects are Continuously slow and (56.3) have stopped working.
Figure 4.3 summarizes the executive situation for the project
Fig. 4.3 the executive situation for the project
74
4.5. Studying risk management and project management courses
Considering respondents on their views on the study risk management or/ and project
management courses, their answers were: (75%) of them they didn’t study risk management
, and (25%) of them studied risk management . Figure 4.4 summarizes the answers of
respondents.
Table. 4.2 Study risk management or project management courses
Fig. 4.4 Studying risk management and project management courses
75
4.6 Knowledge of Risk Management
Figure 4.5 summarizes the respondent’s knowledge of Risk Management, who was project
managers.
Table. 4.3 Values versus project Manager, contractor and consultant
Fig. 4.5Values versus project Manager, contractor and consultant
76
4.6.1 Evaluating the project implementation in terms of the Time, cost and
the Functionality
Considering respondents on their views on evaluating the project implementation in terms of
the Time, cost and the Functionality, their answers were:
Table. 4.4 Values Versus Functionality, Cost and Time
Fig. 4.6: Values Versus Functionality, Cost and Time
77
4.6.2 The participating in project phases
Considering respondents on their views on the participating in project phases , their answers
were: production (46.9%) , procurement (28.1%), design (9.4%), programme (15.6%).
Figure 4.7 summarizes the answers of respondents.
Table. 4.5 The participating in phases of the project
Fig. 4.7: The participating in project phases
78
4.6.3 The risk management processes that are carried out systematically in
the projects
Considering respondents on their views on the risk management processes that carried out
systematically in the projects , their answers were: Risk Identification (22) yes ,(10) no , as
for Risk Assessment their answers were (17) yes and (15) no , while their answers for Risk
response (15) yes and (17) no . Figure 4.8 summarizes the answers of respondents.
Table. 4.6 The risk management processes that carried out
Fig. 4.8 Values versus identification, assessment and response
79
4.6.4The phases of the project where the risk management processes
performed
Considering respondents on their views on the phases of the project where the risk
management processes performed, their answers were: Risk Identification (7) for
programme ,(19) for design and (6) for procurement , also in risk assessment were their
answers (8) for design, (16) for procurement and ( 8 ) for production , while their answers
for risk response (15) for procurement and (17) for production , Figure 4.9 shows the
answers of respondents .
Table. 4.7 The phasses where the risk management processes performed
80
Figure 4.9 Values versus risk identification, assessment and response
81
4.6.5 The participation in risk management.
Considering respondents on their views on their participation in risk management, 21 of them
responded yes, and 11 of them responded no, and it can be considered a sign of their limited
awareness of risk management, Figure 4.10 summarizes the extent of their participation in
risk management in the project.
Table. 4.8 The participation in risk management.
Figure 4.10 Values versus risk management
82
4.6.6 Construction Risks that face the projects in Libya
Considering respondents on their views on the Construction Related Risks that face the
projects in Libya, their answers were: Legal risks (6.3%) , Financial Risk (21.9%),
Technical risks (18.8%), Security risks (34.4%), Political Risks (12.5%), as for
Organizational Risks and Zoning Risks (3.1%) . Figure 4.11 summarizes the answers of
respondents.
Table. 4.9 Construction Risks that face the projects in Libya
Figure 4.11: Construction Risks that face the projects in Libya
83
4.6.7 The Influence of project actors on risk management.
Considering respondents on their views on the Influence of project actors on risk
management, 31.3% of them responded that project manager has this Influence , the
contractor’s Influence of 53.1%, 16.5 % Influence of consultant , Figure 4.12 summarizes
Influence of project actors no risk management.
Table. 4.10 The Influence of project actors on risk management.
Figure 4.12 Frequency versus project actors
84
4.6.8 The collaboration between the actors in the project
Considering respondents on their views on the cooperation between the actors in the project,
15% of them responded that this is not important, 50% of them responded that the importance
is medium, 34% responded that it is very important, and it can be considered as a sign of their
limited awareness of the importance of cooperation between the actors in the project, Figure
4.13 shows the extent of their knowledge of the importance of cooperation between the actors
in the project.
Table. 4.11 The collaboration between the actors in the project
Table. 4.11 The collaboration between the actors in the project
Figure 4.13: Frequency versus collaboration between actors in the project
85
4.6.9 Delay in payment of the work invoices and the increase delay and the
cost of the project.
Considering respondents on their views on the delay in payment of the work invoices and the
increase delay and the cost of the project, 78% of them said that this Always cause the
increase in delay and the cost of the project while 21% of them supported that it increases
delay Often. Figure 4.14 summarizes the extent of knowledge on the impact of the delay.
Table. 4.12 Delay in payment of the work invoices and the increase in the cost of the project
Figure 4.14 Delay in paying work invoices versus frequency
86
4.6.10 Option time extension and Impact on risk management.
Considering respondents on their views on the option time extension and its impact on risk
management and increase delay and the cost of the project, (31.3%) of them said that it has
limited impact on risk management , (68.8%) of them said that it’s a large impact.
Figure 4.15 shows the extent of option time extension and its impact.
Table. 4.13 Option time extension and Impact on risk management.
Figure 4.15: Values versus impact on risk management
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4.6.11 Impact decisions of Change Orders in contract on risk management.
Considering respondents on their views on the impact decisions of Change Orders in contract
on risk management and increase delay and the cost of the project, (25%) of them said that it
has a limited impact on risk management while (75%) of them said that it has a large impact.
Figure 4.16 shows the extent of impact decisions of Change Orders in contract.
Table. 4.14Impact decisions of Change Orders in contract on risk management.
Figure 4.16 Frequency versus impact decision
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4.7 The risks in construction projects in Libya
The projects include several risks such as financial, political, security, legal and technical.
These five facets together have an effect on the construction projects in LIBYA.
The following are the description of the major risks influencing the construction projects.
(1). The financial risk: Delay of Housing Infrastructure Board in payment of the work
invoices for the companies executing for years, results in rise of prices of construction
materials , the transport prices and the costs of the maintenance and also the increase in fuel
prices ,Libyan currency change against the dollar , so this the risk plays an important role on
the construction period .
(2). The risk of politics is one of the main risks faced by the construction of housing units
because the political instability in Libya has resulted in the collapse of the security and
economic level and the absence of the rule of law. Libya is unable to fulfil its contractual
obligations. The failure to obtain approvals or allow to do some work necessary at the
appropriate time, so this is the risk which played an important role on the construction period.
(3).The risk of security in Libya have a negative impact on the implementation of the
projects. The companies are now facing a big problem in terms of the inability to bring in
workers from abroad to work for the project. Also exposure to the projects sites, theft and
vandalism and also occurrence of murders of director of Chinese company in the city of
Benghazi and some Laborers. This led to the escape of a majority of workers out of Libya.
Also many of the projects turned to a military barracks of the armed forces and some
subjected to breaking in from the citizens.
(4). The legal risk facing the projects between the companies and the Board of infrastructure
for housing and foreigners registration office where there are legal and administrative
89
measures to prevent complications to bring laborers to Libya. The existence of several legal
problems about land ownership and the compensation caused a delay in completing the
projects on schedule. In addition to the period you take decisions of quantities adjustment in
the contracts and that need approvals from several government offices which take a long
time.
(5). Technical risks are the risks which are caused due to amendments to the designs and
construction methods, execution during the implementation, in addition to the wrong estimate
for quantities necessary to implement the projects.
(6) Zoning Risks:-
The existences of obstructions and obstacles at work place of execution have delayed work
on the completion of the housing.
4.8. Identifying and assessing the risks before and during construction
period
Most of the risk occur in the construction phase and the main contractor bear its results and
he must manage it . Usually the owner "Housing Infrastructure Board " bear the risks on the
responsibilities of Contractor. Risks have been identified based on a rating reference and
study, and interviews were conducted with experts in the field of construction industry in
Libya.
Risk identification requires knowledge of project situation i.e legal, financial, political, and in
addition strategic objectives, Process of identifying risks continues and must be initiated
before starting the implementation of the project. There is need to involve the project team to
define the risks and must feel everyone responsible for their risk identification and inform the
project manager.
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There are many statistical methods which can assess the degree of risk, but the simplest and
most effective is to describe the degree of danger as very high, high, medium, low, very low.
The degree of risks depends on the impact of the risk and the likelihood of occurrence of the
risk .
4.9 Control of risks during construction period
The process of risk control begins to specify a list of risk and assess the probability of impact
of each risk. Then identify the control tools and how to implement each one.
There are four types of risk control:
(1). Acceptance of risk: The contractors and project owners can choose to accept some risk.
And in this case the damage risk is not large or strongly influential. This does not mean that
in case of their occurrence that is not addressed, but are dealt with afterwards, because the
cost of dealing with it is less than the cost of the investigation and pre-planning.
(2). Mitigate risk: Where to take action to reduce risk to an acceptable limit.
)3(. Risk removal: For reducing the risk to zero, for example, sell a project which contains a
proportion of risk which will wipe out this menace on them.
(4). Risk transfer: Risks can be transferred to another organization or even to one of the
individuals, for example insurance against fires transfers the risk of losses resulting from the
fire to the insurance company.
91
4.10 Risk management and construction companies’ management
systems in Libya.
In Libya, most companies do not apply Risk Management. Also they have to know the
appropriate software’s or models to use in this field, and they have to understand
Occupational Safety and Risk Management. Some large companies use risk management in
projects program such as Project Management Professional (PMP) .
4.11 Impact time extensions option in contracts on risk management
Extension of the extra time for projects in Libya happened for reasons beyond the will of the
parties to the contract. A contractor and the Housing Infrastructure Board who gets
contractors on duration to extend the contracts according to the recommendations of engineer
of the Housing Infrastructure Board sometimes up to 33 months without reducing the risks in
the project, such as the employment and salaries, cost of materials, machinery and equipment
costs, health insurance, the costs of extra time. The extension of the project period is a
positive thing for the contractor and the owner, but it does not mitigate or eliminate the risks
resulting from this extension, but increase it.
4.12 Impact of the decisions of Change Orders in contract on risk
management
There are many complex and interlocking problems that cause obstruction of the
implementation of Housing projects, including the overlap between the executive agencies
and the lack of efficiency. The preparation of technical specifications, and the growing
phenomenon of decisions of quantities adjustment, and the change is due to the desire to
92
modify some of the Items in addition or deletion, modification or replacement of some of the
design elements of the project, leading to an increase in the amounts or change in the nature
of the work that often changes. Whether direct or indirect, it has side risks on the rest of the
project work and these risks both in the cost of works or delay of implementation , labor
productivity and efficiency it , but exploited in order to raise assessments for project fund.
4.13 Effects of the project risk:
1- Often the housing units that execute work are stopped and some of them work go
slowly. This result of the political and economical situation in Libya due to Events in
2011 has effect on the construction field in the last few years.
2- The executed projects linked with high level of risk was found to have a direct
correlation between the probability of occurrence of most of the risks, and that the
occurrence of some of the risks cause other risks, because the length of the
implementation period that lead to changed circumstances making it contain multiple
risk .
3- Search Results showed that "decisions of change orders, inflation, price fluctuations"
and "the difference between actual and contractual quantities," is one of the most
important risks.
4- The low percentage of completion of projects in spite of giving companies extra time
of extensions several times.
93
5- Leave most foreign companies from project sites in Libya due to security concerns.
6- Contractors and owners in Libya still depend on traditional approaches to manage risk
factors and their consequences; the use of direct judgment to control risk factors.
4.14 Risk Management:

1-Legal risk management:- Legal risk management refers to the process of evaluating
alternative regulatory and non-regulatory responses to risk and selecting among them. Even
with the legal realm, this process requires knowledge of the legal, economic and social
factors, as well as knowledge of the business world in which legal teams operate.
In an organizational setting, risk management refers to the process by which an organization
sets the risk tolerance, identifies potential risks and prioritizes the tolerance for risk based on
the organization’s business objectives, and manages and mitigates risks throughout the
organization.
Legal risk covers all areas of business where regulation and the law impact on operations and
decisions. From risks arising from contract drafting and management, through to regulators'
new focus on conduct, as well as compliance, regulatory and dispute risks, the effective
management of legal risk is key for organizations that want to maximise value while
minimizing cost and exposure to legal losses. The Legal Risk Management Handbook is a
practical guide to making sure your business is legal, protected and making the most of its
opportunities.
2-Financial risk: - Financial risk and construction goes hand-in-hand, and the further away a
company is from the project developer, the more risk it shoulders. The scope of financial risk
94
on a construction project is a huge topic contemplating under-funded or underbid projects,
contractor default problems, misappropriation of project funds and more.
Financial risks to consider when planning a large construction project is the fluctuation
of the currency, especially in the case of international projects. Recently in many countries
the construction of privately financed infrastructures has been based on foreign capital,
thus running the risk of devaluation of local currency. International lenders rarely take that
risk, preferring to have their payments in foreign currency. In the past, public companies
or governments have accepted the currency risk, but now, with the growing demand
for private financing, the risk of depreciation of the currency often lies in the promoter of the
project and, ultimately, on he financial risks almost always result in lose of money. The risks
in this sector depend heavily on countries or regions in which the projects are to be
built, and it is totally different to implement those projects in areas of political stability
such as Europe that performing them in countries where political conflicts are usual.
Therefore, when establishing which are the most important risks in a certain project it should
be taken into account in the first place where they intend to build. From there, the risk
analysis must be performed.
3- Technical risk management:-Working through the potential project and technical risks
can be rewarding process; the end result will open the project teams' eyes and prepare
everyone for the potential pitfalls ahead.
Types technical risk management
- Design process
1- Owner involvement in design
2- Inadequate and incomplete design
95
3- Change in seismic criteria
4- Errors in completion of structural / geotechnical / foundation
5- Wrong selection of materials
6- Take off data (traffic demand, water consumption demand, etc.)
7- Need for design exceptions
-Construction risks
1- Inaccurate contract time estimates
2- Construction procedures
3- Construction occupational safety
4- Work permissions
5-Utilities
6- Late surveys, incomplete or wrong
7-Delayed deliveries and disruptions
8- Worker and site safety
9- Innovative projects
10- Unsuitable equipment and materials
11- Environmental risks (such as projects close to a river, floodplain, coastal zone, high
habitat sensitivity, and so on)
-Environmental factors
96
1-Environmental analysis incomplete or wrong
2- Offsite and onsite wetlands
3- Hazardous waste, preliminary site investigation wrong
4- Lack of specialised staff (biology, anthropology archaeology, etc)
-Inaccurate assumptions on technical issues in the planning stage
- Fact sheet requirements (exception to standards)
4-Security risk management:-
Risk management is the identification, assessment and prioritisation of risks followed by
coordinated and economical application of resources to minimise, monitor, and control the
probability and/or impact of unforeseen events.
Security risk management is the specific culture, processes and structures that are directed
towards maximising the benefits of security in support of business objectives.
Adopting a risk based approach allows agencies to prioritise activities based on the likelihood
and consequence of a risk being realised, to maximise business outcomes while minimising
the occurrence or effects of events that may negatively affect outcomes.
97
CHAPTER V.
Recommendations , future scope and project work
1- Establish training courses on risk management, or teach within the curriculum, and
attention be given to the formation of a team of risk management in the company, and the
allocation of a budget for risk management. And follow the project team training sessions,
each according to its competence, and the application of codes of safety in companies and
projects strictly.
2-Study the types of contracts and contractual vocabulary accurately to identify risks assumed
by each party in the project in accordance with the selected nodes, and to turn the risks to the
party best able to manage.
3- Inventory of the damage to the work projects with the inventory of machinery and
equipment located at the projects sites before the 17th of February through supervision reports
Housing Infrastructure Board and identify the remaining ones and damaged even shorten the
time granted to those companies for the implementation of the projects, which will accelerate
to resume work immediately.
4- Should be reconsidered in the contracted projects through the formation of committees in
particular and rescheduling according to the economic and political interests of Libya.
5- Must form a transparent legal framework for the catalyst to foreign companies through the
knowledge of what their rights and obligations through the participation contracts are agreed
upon in advance.
6-Must guarantee the rights of foreign companies and therefore their sense of the presence of
justice, contributing to their return directly to their business.
98
7- Must compensate for foreign and domestic companies for damages suffered during the
War of 2011.
8- Providing attractive offers advantages such as giving tax cuts and other benefits, which in
turn contribute to the return of companies.
9- Facilitate administrative procedures and accelerate financial dues to the stages of
implementation of the projects first , in order to ensure the flow of work and not stop it.
10- The formation of committees legal, financial and technical to study of contracting
procedures, prices and foundations identified and negotiated with contractors to re-
contracting in accordance with the most suitable prices of market prices.
11- Use of the offices of foreign experience of audit firms and then to re-evaluate samples of
those contracts financially and technically in accordance with the international prices and the
expansion of the sample if it is to achieve results positive about alleviating the burdens
resulting from those contracts.
12- The need to achieve political and economic stability as well as the formation of
committees the task of revision of the stalled projects and that has not been initiated and
evaluated.
12- Assigned to guard facilities team to ensure the provision of reassuring foreign partner
and the domestic business environment.
99
CONCLUSION
The following conclusions are drawn from the present study:
1- That, the contractors and the owners suffer from lack of innovative methods to
prevent or mitigate risks and also that risk management education and training is low,
almost non-existent, in the projects in Libya .
2- That, Contractors and owners in many projects do not utilize risk analysis techniques
but depend widely on direct judgment in estimating time and cost , Causing the
negative effects on the projects regarding the schedule and the cost .
3- The contractors and owners of the projects do not find reasonable solutions and
provide practical suggestions and recommendations toward upgrading the risk
management process in construction and improve the performance of contracting
companies and owners in this field.
4- The results of the study provide useful guidelines for forming and operating effective
and efficient projects in Libya and other unstable countries.
5- Some of the companies are not able to implement projects on time and according to
the contract agreed upon in the budget.
6- Risk “of inflation and price fluctuations” plays a major role between the quantities
required and actual quantities to be used. This is one of the most important risks.
7- The risks reported by various companies are:
Financial,political, security, legal and technical. These issues are significant factors affecting
clients, contractors and project owners.
100
The following are the problems in projects risk management:-
Firstly, in general, there was no employee or a dedicated team of risk management by the
contractors. Contractors also do not have the appropriate software or models to be used in this
field and their knowledge of risk management was low.
Secondly, the failure to prepare good for contract before contracting from where of quantities
, designs ,integrated Technical drawings and this caused in issue decisions of Change Orders
to correct the conditions of the contracts when the implementation and preparation of random
Technical estimates for some items and inaccuracies in the prepare correctly as a result of
lack of experience.
Thirdly, lack of coordination with the Urban Planning Department to choose some
appropriate projects sites causing legal problems between the companies and entities which
owns the land sites.
Fourthly, contracting with local and foreign companies are unable to implementation
resulting in stalled many projects. Also, decline in the percentage of completion of projects
and most of them are stopped and resume work in 2013 in a very limited number.
Again, the extension of the implementation periods of the contracts and for a periods Exceed
the period on the original implementation in contract despite the fact that these projects have
expired duration of implementation before the scheduled 17-02-2011.
Moreover, the non assessment of the damages in the companies and projects for
compensation even after the projects resume.
Furthermore, the delay of Housing Infrastructure Board in payment of the payment
certificates for years. Many projects broken by people have seen no taking of measures
against them so far.
101
Lastly, the Libyan Audit Bureau stops a lot of contracts and the payment certificates due to
legal and administrative steps that did not comply with the implementing projects
102
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Publications papers
1- International Journal of Engineering and Techniques - Volume 2 Issue 6, Nov – Dec

2016, Analysis of Risk Management for Construction Projects ,ER. Hassan Mohamed
Abdulnabi, Prof. (Dr.) V. C. Agarwal
2- International Journal of Civil Engineering and Technology (IJCIET), Volume 7, Issue

6, Nov-Dec 2016,Claims in construction projects “design errors and change orders”
ER. Hassan Mohamed Abdulnabi, Prof. (Dr.) V. C. Agarwal
114
International Journal of Civil Engineering and Technology (IJCIET)
Volume 7, Issue 6, November-December 2016, pp. 123–130, Article ID: IJCIET_07_06_014
Available online at http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=7&IType=6
ISSN Print: 0976-6308 and ISSN Online: 0976-6316
© IAEME Publication
CLAIMS IN CONSTRUCTION PROJECTS “DESIGN

ERRORS AND CHANGE ORDERS”
ER. Hassan Mohamed Abdulnabi
Student PhD, Department of Civil Engineering, Faculty of Engineering and Technology,
SHIATS University, Allahabad, India
Dr. V. C. Agarwal
Head of Department of Civil Engineering, Faculty of Engineering and Technology,
SHIATS University, Allahabad, India
ABSTRACT
In the implementation of a construction project, there are many difficulties and unexpected
problems in the design phase. In some cases these problems are caused by design and sometimes
consulting engineer or supervisor depends on diligence in solving these problems by changing the
orders issued to the Contractor simple limited or large comprehensive.
In both cases, these problems date back to the engineer or related with him and usually it leads
to the claims of contractor's, material or time, or both , in turn, leads to an increase in the cost of
the project and its duration for the owner of the project. This study aims to know the types of
claims that occur in construction projects because of mis-design that goes back to the General
Engineer.
This study is based on a sample statistic, random, for projects implemented in Libya during the
last ten years and it has been the monitoring of claims and their impact on the project, which
resulted mainly from design errors and change orders that were later during implementation,
define this search the causes of claims and types which are generally related to engineer, through a
sample of these projects, and then concludes that a number the results can be taken to avoid
occurrence of such claims in the future.
Key words: claims, change orders, risk management, construction projects.
Cite this Article: ER. Hassan Mohamed Abdulnabi and Dr. V. C. Agarwal, Claims in Construction
Projects "Design Errors and Change Orders". International Journal of Civil Engineering and
Technology, 7(6), 2016, pp.123 – 130.
http://www.iaeme.com/IJCIET/issues.asp?JType=IJCIET&VType=7&IType=6
1. INTRODUCTION
It's hard to imagine that engineering project, implemented without any difficulties and unexpected
problems. No matter how small or large size of the project, no matter the type of project, there are
expected problems, and therefore its difficult to imagine also that the contractor whether large or small, has
performed a certain project without any various claims, there are problems and difficulties present always
in engineering projects, and there are risks in the nature of these projects, and it is difficult in some cases.
Lack of prognosis or prediction of these problems before starting the implementation of the project or
http://www.iaeme.com/IJCIET/index.asp 123 editor@iaeme.com

Claims in Construction Projects "Design Errors and Change Orders"
during the study design, results in these problems. In most cases, different claims pertain to all parties to
the contract or the project, some of these problems are resolved amicably and some of find their way to the
court because of the containment of design defects or errors relating to the design, and the change orders
that even are given to the contractor during the execution and orders from the supervisor engineer. Even if
these orders are to avoid design errors, or at the behest of the owner in order to improve the function of the
project and as a result this increases the cost and duration of projects implemented which will reflect
negatively on the project owner.
According to the International Federation of Consulting Engineers, FIDIC defines claims and "there is
no construction project without the occurrence of difficulties and problems or disputes, because of the
nature of the construction and risks, especially if the project continues for a long period of time to
implement it. Because of the nature of the construction and risks, especially if the project continues for a
long period of time to implement it, found during the execution conditions were not taken into account
during the development of the tender documents or the contract, or disputes occurring during the
interpretation of the items of the contract. It is permissible then to the contractor in accordance with these
conditions to make claims against the owner in the contract, such claims because of the termination of the
contract or cancel it. As the owner may submit claims in some cases under a contract FIDIC.
1.1. Claim Definition

FIDIC knows Claim in construction contracts as an injured party request for appropriate compensation for
damages incurred based on the terms of the contract or because of violation of one of the Parties to the
contract or the law of the contract.
The claim may be by the contractor or the owner of the project and requires FIDIC filing the claim
(period or compensation) to the supervisor or consultant engineer. If the party did not accept the claims
according to the opinion of the engineer or his estimates and refuse it, he must write claims. We can say
that any breach of one of the terms of the contract by the parties will lead to the occurrence of claims and
then in most cases of differences.
Typically the construction contracts contain provisions which provide for the method of evaluation of
claims, and then how to resolve the differences between the parties to the contract. The global and
international laws for contracts focus on the role of the consulting engineer to assess the claim, where the
claim is evaluated
It is then submitted to the engineer in two phases: -
• Is there a reason to claim a contractual or legal agreement?
• Then comes the calculation of the compensation or cost or extension phase.
1.2. The Objective of Study

The research aims to detect the size of claims, types, and sources in the engineering studies for
construction projects executed in Libya, which contributes to increasing the duration and cost of these
projects and lead to the loss of the national economy. The research also aims to develop an effective
strategy in order to avoid the occurrence of these claims or minimise the effects of these disputes between
the parties to the contract. This strategy is summed up in a system for the management of these claims or
disputes in construction projects before they occur.
2. MATERIALS & METHODOLOGY

The basic material of this research was the available data on the implementation of housing projects in
Libya. And the data was studied analysed n study and analysed to extract conclusions and data about these
projects regarding the types of claims and their causes.
The focus was on the errors in the design and claims caused by the design engineer, supervisor
engineer, the financial value of these claims and the length of time also. The methodology used in this

ER. Hassan Mohamed Abdulnabi and Dr. V. C. Agarwal
study was based on statistical sampling randomness, the sample volume in this study is 8 projects selected
randomly. Information was from the establishments and departments owners, which are in many cases the
authority supervising Also, through the projects documents completed and under implementation.
2.1. Questionnaire Survey

This questionnaire is an important part of data collection in the project, the questionnaire consists of five
sections with a total of 34 questions.
The value of these claims differs from one project to another project, depending on the amount of fault,
according to the project volume and type. In some projects, the proportion of claims up to a large value of
the cost of the project creates real financial difficulties to the owner of the project, while some projects
have been stopped for a long period of time as a result of these claims, and have failed.
Table (1) shows a list of some projects that contain orders for change as a result of design errors and
change orders, the table also shows a comparison between data and information relating to (the duration
and cost) for Change Order and the duration and cost of the original contract.
Table 1
N principal contract the value of change Order
Value LYD Duration/month Value LYD Percentage Time Duration

extensions Percentage
1- 49,823,600.000 18 1,246,198.367 2.5% 16 88%
2- 15,028,000.000 18 1,325,164.383 8.81% 9 50%
3- 14,896,000.000 18 2,846,263.000 19.1% 9 50%
4- 11,704,000.000 18 392,608.040 3.35% 6 33%
5- 18,620,000.000 18 886,330.000 4.76% 10 55%
6- 31,920,000.000 18 1,542,071.000 4.83% 14 77%
7- 14,896,000.000 18 302,176.680 2.02% 9 50%
8- 26,600,000.000 18 701,917.129 2.63% 12 66%
Analysing the data given in table (1), we find the following- :

The supervising engineer and the owner together issued the change orders to avoid design flaws and
lack of supervision in the early stages of the project, and therefore, we find that the additional cost value
ratio of between 2.02% in the project No. 7 and 19.1% in the project No. 3 and we find that the value of
the additional period of between 33% in the project No. 4 and 88% in the project No. 1
2.2. The most important differences and claims that occur between the contractor and the
owner
Differences occur in engineering contracts as a result of divergent views in understanding some of the
issues between the parties to the contract, and can be classified as engineering differences on the basis of
the following sources, see Figure (2):
A-Design engineer (or Contract Documents / project file)
B-Supervising engineer: or quality control of the project and project management contract

C- Management (owner)
D- Contractor
E- Contract
F- Other problems.
Claims in
engineering
contracts
During the
The selection Selection of Other
contract contract
of Eng. the contractor problems
execution
Designer
supervisor Rising prices
Conditions of Cash flow
Financial and Contract Force Majeure
administrative Settlement of Climate
Quantities the claim in a
capacity Currency value
Specifications timely
Labor
Figure 2
The design engineer is responsible for the preparation of the study and documentation of the project
before the implementation phase and the supervising engineer who is overseeing the project since the
beginning of implementation.
The situation will be examined in two phases, the first phase will discuss claims belonging to the stage
study of the project, and in the next phase, we will discuss the engineering claims belonging to the
supervising
ervising engineer on the implementation of the project.
The study or engineering design for the project and drawings and contract documents are the first cause
of claims and disputes between the contractor and the owner, especially with regard to the specifications
spec
and the pricing method or estimate the price.
Figures (3,4,5) shows the parties to the claims and parties that cause them and the share of each party ,
as contained in the sample of the projects studied.
Figure 3 Parties to the claims

Figure 4 Parties causing claims
Figure 5 The main reasons for claims and the share of each of them
2.3. Claims caused by the contract documents and other problems

As shown in Figure (5) the contract documents had substantiated claims of 60% of the total claims, and
other problems such as (Rising prices, Force Majeure, Climate, Currency value, Labour) had substantiated
claims of 40%.
Claims are caused by the design engineer when Conducting a study of the project including documents
and drawings and specifications, where it is possible that the engineer commits unintended errors due to
lack of awareness or weakness of experience in the design work as a result of Insufficient time, which,
these errors can cause disagreements between the parties of the project resulting in financial and time
claims of both the contractor and the owner, and an increase in the quantity and volume of these errors
increases the volume of the project. These errors are called Design error.
According to Building Research Establishment -BRE estimates that 60% of the studied projects in
Britain contain design errors, and this error ranges from simple and functional error to a large structural
fault.

Through this study of the causes of claims, these claims can be classified into:
2.3.1. Technical Documents Claims

It is possible to make mistakes during the preparation of the technical documentation for the project (tender
documents of the project), causing many claims and these claims are divided into the following:
A - Claims of technical specifications.
B - Claims because of errors estimate prices.
C - Claims of quantities tables.
D - Contract claims.
Claims of technical specifications: These claims come due to errors in the writing and preparation of this
specification. It was the volume of the claims relating to the specifications in the studied sample of 10%
(see Figure 6).
Claims of quantities tables: Result from the wrong estimate of the quantities of the project by more than
the contractual ratio, and the volume of the claims relating to erroneously estimate quantities in the studied
sample 20 % (Figure 5), a large proportion. This is due to the speed in the calculation of quantities by the
engineer and not on detailed plans.
Contract claims: These claims relate to documents contract (the original contract) with the contractor,
such as the difference between the contract items and conditions and the general conditions of legal,
technical documents. In most documents contracts for these projects are of major differences, which give
many possibilities of interpretation leading to various financial claims of the parties to the contract, In the
sample studied was the percentage of the claims relating to the contract was 10 %.
The figure shows (6) common claims in the sample of projects as a result of errors in the design or
project documents
Figure 6 Claims ratios in construction projects and its causes
2.3.2. Drawings Claims

Causing mistakes in the preparation of project drawings have several claims, including:
1- Claims because of architectural errors with a percentage of 20 %.
2- Claims because of geotechnical studies and reports of soil and this is one of the most common claims
and with a percentage of 40 %.

3-Claims due to errors in the measurement of the project area in hectares and again per square meter.
3. RESULTS
By studying the claims and analysis in the sample projects, we conclude the following:
1. One of the main reasons for claims in construction projects is the engineering design for the project
errors.
2. There is the need to develop a methodology for the selection of the design engineer and supervising
engineer for the project well.
3. Application to achieve the quality of the Engineering Design System.
4. The composition of an expert team to the project owner to control the design stage in accordance with
the requirements of the standards and codes design.
5. Reducing change orders version of the supervising engineer consultant, especially those undocumented
entrepreneurs of the administration, it leads to financial and time claims of the contractor.
6. The need to develop a system for the management of claims in each project.
4. CONCLUSION
This study determines the defining qualities of construction claims which could impact on the
implementation of the engineering project. The finding of this study shed some light on the construction
claims; it was found that engineering design and geotechnical are a potential error for engineering projects
in Libya.
This study will help the industry personal gather the appropriate information about construction claims
for this study is recommended regarding construction claims ., construction claims, which could be faced
during the implementation of engineering projects and induced consulting engineer either designed or
supervisor of the implementation through a sample of the executed projects in Libya projects study. It was
found that more potential errors are in the engineering design of the project as well as the geotechnical
studies the reports of the soil will lead to claims.
REFERENCE
[1] Akpan, E. O. P., and Igwe, O. (2001). “A methodology for determining price variation in project
execution.” J. Constr. Eng. Manage. , 127(5), 367–373.
[2] Asem, M., Abdul-Malak, U., El-Saadi, M. M. H., and Abou-Zeid, M. G. (2002). “Process model for
administrating construction claims.” J. Manage. Eng., 18(2), 84–94.
[3] Brunies, R., and Eng, Z. E. (2003). “Calculating loss of productivity due to overtime using published
charts-Fact or fiction.” Technical Rep., Revay and Associates Limited, Montréal.
[4] Ibbs, C. W., and Allen, W. E. (1995). “Quantitative impacts of project change.” Source Document 108,
Construction Industry Institute, Univ. of Texas at Austin, Austin, Tex.
[5] Leonard, C., Moselhi, O., and Fazio, P. (1991). “Impact of change orders on construction productivity.”
Can. J. Civ. Eng., 18, 484 492.
[6] Thomas, H. R., and Napolitan, C. L. (1995). “Quantitative effects of construction changes on labour
productivity.” J. Constr. Eng. Manage. , 121(3), 290–296.

[7] U.S. Army Corps of Engineers (1979). “Modification impact evaluation guide.” Technical Rep. EP 415-
1-3, Washington, D.C.
[8] Jamal M. Assbeihat, Factors Affecting Delays on Private Construction Projects, International Journal of
Civil Engineering and Technology (IJCIET) , 7 (2), 2016, pp. 22-33.
[9] Sayali shet and Prof. Raju Narwade, An Empirical Case Study of Material Management in Construction
of Industrial Building by using Various Techniques. International Journal of Civil Engineering and
Technology (IJCIET), 7(5), 2016, pp.393 –400.

International Journal of Engineering and Techniques - Volume 2 Issue 6, Nov – Dec 2016
RESEARCH ARTICLE OPEN ACCESS
Analysis of Risk Management for Construction Projects

ER. Hassan Mohamed Abdulnabi 1 Prof. (Dr.) V. C. Agarwal 2
PhD student, Department of Civil Engineering Faculty of Engineering and Technology

SHIATS University, Allahabad, India 1
Professor Dr, Head of Department of Civil Engineering Faculty of Engineering and
Technology SHIATS University, Allahabad, India 2
Abstract:
The length of the implementation period in the construction of projects may lead to a change in
circumstances which expose them to many risks because of the length of the implementation period and multiple
stages, beginning with the start-up phase and even phase of the project, and this leads to increased circumstances of
uncertainty and increasing the probability of the occurrence of risks, and this is reflected negatively on the
construction contracting and construction economy.In this research questionnaire was developed to identify the
risks encountered in construction. Projects have been distributed to some local and foreign construction companies
in Libya, having been identified the risks that may face the projects. Through questionnaires and interviews with
engineers and project managers of companies, and making risk analysis qualitatively, there was a need to prepare a
checklist of the risks facing projects in Libya, and know the benefit of the contractor and the owner based on the
results. This paper examines the most important risks faced by construction projects in Libya, which is difficult and
how they are able to implement these projects and housing companies, the research explains a formulated model to
evaluate companies before being contracted to know the financial and technical capabilities.
Keywords — Risk management, construction of projects, evaluating the risks, risk analysis
INTRODUCTION I. PROJECT RISK CONCEPT

The sector of construction is one of the key
economic sectors and is the main force the Risks can be defined in any of the projects an
Libyan economy, in the last has event is uncertain which results from the
witnessed in noticeable expansion occurrence or negative impact positively on the
activities. This has resulted in the recovery of the goal of the project (PMBOK, 2002, P127). Every
construction profession and subsidiary industries, risk of reason leads to a result, for example, the
therefore, the construction sector has taken the reason may be the qualified labour force limited
foremost position among the other, mainly in the for the project and that the result clear will appear
attraction of investments and creation of new in the additional cost or imbalance in scheduling
jobs. The management of risks is very important work and the length of the implementation period
in the planning and management of the projects, or the quality of implementation. There are some
construction industry is subject to more risks and known risks that have been identified, analysed
uncertainty than several other industries. The take and can now be planned. On the contrary the
off process of project from initial investment unknown Risks cannot be managed, although the
assessment to completion and into use is a managers of the project can deal with it by
difficult process. The construction industry in applying General Contingency Plans based on
Libya Strip is suffering from the past experience gained during the implementation
misunderstanding of risk management including of previous projects. A risk is anything that
risk identification, analysis and assessment. threatens the success of the project but accepted
ISSN: 2395-1303 http://www.ijetjournal.org Page 153

when undergoing budget in return which will threaten its goals, and this requires methods to
result. identify risks such as questionnaire, interviews
with project managers or officials in companies,
checklists, brainstorming, or Delphi Technique.
II. THE RISK MANAGEMENT Risk identification can depend on goals, any risk
PROCESS impedes the achievement of project goals
considered risk.
Overall risk management is the process of
identifying and evaluating the risks and 2. QUALITATIVE RISK ANALYSIS
Qualitative analysis of risks is most common in
developing strategies to manage it. These
the risk analysis process. On part, uses qualitative
strategies include the transfer of risks to other
risk analysis to prioritize risks that affect the
parties and to avoid and minimize the negative
goals of the project, and must be done on
effects and to accept some or all of its
qualitative analysis of the risks at the beginning
consequences. Traditional risk management
of the project and reviewed during the
focuses on the risks arising from physical or legal
implementation to keep pace with changes in the
reasons (example: natural disasters, fires,
level of risk.
accidents, death and lawsuits) on the other hand,
The ranking of risks:
financial risk management focus on those risks
Each project has different risks associated with
that can be managed using financial barter.
its processes, risk implementation, all of which
Regardless of the type of risk management, all
affect the activities of the project. A technique
the big companies and small businesses have a
used in risk arrangement is Probability Impact
dedicated team of risk management.
Risk Rating Matrix( ward،1999) as shown in
The risk management process should include the
Table (1), which expresses the value of all the
definition of risk identification, risk analysis, risk
risk in numbers 1,5,10 to signal risk arrangement
mitigation, monitoring and control of risk as
(low, Medium, High). Risk = Possibility x
show in Figure (1)
impact.
Table (1), Probability Impact Risk Rating Matrix(ward،1999).
3. RISK MITIGATION
The goal of this strategy is to mitigate the
consequences of the risk to an acceptable level.
Taking some of the actions that mitigate the risks
for the best to take action to address the
Figure (1). The Risk Management Process consequences of that risk. Examples of actions
taken before the start of implementation of the
1. RISK IDENTIFICATION projects during implementation, or the
The aim of this phase is to identify all the engineering or seismic tests or the selection of
potential risks that may face the project and suitable suppliers, These procedures may include

changing the conditions to mitigate the potential 3-Political factors.

for danger, such as adding resources or time to 4-Lack of security and stability.
the activities of the project. 5- Design errors.
6-Errors in the calculation of quantities.
4. RISK MONITORING AND FOLLOW UP 7- Obtaining permits and approvals.
It is monitor and follow up of the effectiveness of
the actions taken or any other deviations can
occur in the project.
III. CHECK LIST

Questionnaire was developed to identify the risks
faced by projects in Libya. Financial and
economic impact of projects on the distribution
of the questionnaire section for 32 the company
implemented housing projects in Libya to get to
know some of the risks faced by projects in Libya
with an estimate of the probability of occurrence
and the resulting impact.
Table 2 shows the checklist risks that could have Figure (2). The risks very high probability of occurrence.
faced the owner or contractor in the construction Lack of companies ability to implement:-
projects. The list of these risks that have been Lack of companies able to implement projects
identified from the companies in the study due to three reasons must be considered when
sample had a negative impact on the project in contracting and these reasons are: -
terms of (time, cost and quality). 1- Organizational ability
N The risk
2- Financial ability
1 Lack of companies ability to implement
2 Delays in the payment of payment certificates
3- Financial and technical ability and experience
3 Political factors. in the implementation of projects.
4 Lack of security and stability. Delays in the payment of payment certificates:
5 Design errors. Delays in the payment of payment certificates for
6 Errors in the calculation of quantities. the executed works, and can reduce these risks
7 Obtaining permits and approvals. through the following actions: -
8 The lack of experience of supervising engineers.
9 The inexperience of the offices of the National
1- Must submit payment certificates timely.
Advisory. 2- Must prepare preparation payment certificates
10 Centralised decision-making. before submission it to owner.
11 Technical specifications change during the Political factors:
execution of the project.
The worry of foreign financiers and domestic
12 Lack of experience and financial and technical
capacity of the contractor companies from the collapse of the political
13 Lack of labor experience. regime in the country where the result in the
14 Lack of materials. collapse of the security and economic level and
Table ( 2) the checklist risks the lack of the rule of law. In this case, one of the
Most of the participating companies in the study main parties in the contract is unable to fulfil its
questionnaire reported that the risks from 1 to 7 contractual obligations.
have very high probability of occurrence .All of Lack of security and stability:
these risks are described in Figure 2 and impact The risks security have a negative impact on the
are as follows: - projects. The companies face a big problem in
1-Lack of companies ability to implement terms of the inability to bring in workers from
2-Delays in the payment of payment certificates

abroad to work to the project. Also many of the aim is to identify the main criteria that should be
projects turned to a military barracks of the used in the assessment of the construction
armed militias, and some subjected to breaking in companies.
from the citizens. 2. The criteria that must be provided in the
Design errors and Errors in the calculation of proposed form
quantities:- A- Financial situation: This includes aspects
There are technical risks amendments to the related to the financial status of the company and
designs and construction methods of execution the documents to be submitted and knowledge of
during the implementation, in addition to the monetary flowability and financial ability.
wrong estimate for quantities necessary to B- Material resources file: A file that includes
implement the projects in contracts. all the machinery and equipment available to the
Obtaining permits and approvals:- company to implement the project.
The difficulty in obtaining permits and approvals C- Years of experience of the company: The
before and during the implementation of projects company's experience in the implementation of
is one of the most important risks that affect the projects as well as the professional reputation of
project duration as these procedures may take the company.
months before the completion of its cycle of D- Technical File: A file that includes all the
administrative between the owner and the technical possibilities available to the company.
contractor. E- Human Resource file: A file that includes all
Rehabilitation of construction companies administrative and technical cadres available to
before contracting with them the company to implement the project.
One of the most important risks facing F- Planning and Follow-up: Is the company's
construction projects in Libya is the ability of ability to management, planning and control
companies implementing projects on time and at work on the project.
cost and specifications agreed upon. So it was a G- Safety and Insurance: Includes the industrial
study for the rehabilitation of these companies safety of the project and the safety of labourers
before contracting with them and suggests forms and insurance on the project.
for the rehabilitation of these companies so as to 3. The questionnaire results in the proposed
know the financial, technical and managerial its form
potential before being contracted. And It created a form for evaluating companies and
classification of companies should be in write all the basic criteria format questions with
accordance with the several criteria such as the the use of economic laws in Libya and that define
share capital and years of experience as well as and assess the activities of construction
volume of technical manpower and the cadres of companies. With included questionnaire on 7
administrative and equipment and machinery. basic criteria, each of which contains several
1. Suggested form for evaluating construction secondary standards were the result of many
companies. questions to illustrate different aspects and to
After seeing the economic laws in Libya, which evaluate construction companies before
identifies and assesses companies activities and contracting with them, were distributed to the
most recently the Council of Ministers project managers and contractors and consultants,
Resolution No. (171) of 2006, Issuing the and the table 3 major shows the results of the
executive regulations of Law No. (21) Of 2001 questionnaire ratios basic standards.
concerning the practice of economic activities in the basic criteria Secondary criteria
Libya. It has been proposed as a form for Having current accounts in banks
Financial situation Cash flow of the company
evaluating construction companies, through a 28.1%
questionnaire which was distributed to 32 of the Owning machines and equipment
companies that implement projects in Libya. The Material resources file required for the work

15.6% Owning construction materials

required for the work
The lack of previously unsuccessful
Years of experience of projects
the company 15.6% The absence of a lawsuits against the
company
A number of similar projects for the
current project
Quality certificates in the
implementation of previous projects.
Technical File 12.5% Providing cadre trained in project
implementation
Having integrated engineering
Human Resource file specialities for the project wanted
12.5% implement
Having the entire organisational
structure of the company
Planning and Follow-up Having research and development
9.4% department
Having of control system and follow-
up work carried out in the project
Safety and Insurance Having certificates of insurance Figur (4). Files used in suggested form.
6.3% project Depending on the obtained results of the
The existence of previous incidents of questionnaire, the companies were ranked
death for workers
according to their potential and capabilities, and
Provide a cadre of industrial security
company so the candidate is notified for the tender, while
Provide training programs for the the companies that did not get the required grades
prevention of accidents are excluded. That the reality of companies in
Provide protection from natural Libya indicates the presence of a large deviation
disasters system
Table (3) the basic criteria and Secondary files in the proposed form in the success of these projects and the reason for
Results from the survey shows that the financial the deviation is due to many factors, including
situation of the companies is the most important those related to Implementing the company or the
factor in the proposed model for the evaluation of royal institution. The evaluation of companies is
construction companies. Where the percentage a key factor in the success of the project by
rate of 28.1% of the companies participating in making sure their potential financial and
the survey, and then followed by materials technical capabilities and administrative and its
resources file and years of experience of the previous experience in the projects implemented.
company by percentage rate of 15.6% , and then VI. CONCLUSION
comes to the files in the order as follows:- Construction projects are always associated with
Technical File 12.5% risk and uncertainty because of the length of the
Human Resource file 12.5% implementation period that change the conditions
Planning and Follow-up 9.4% making it contain multiple risks. The most
Safety and Insurance 6.3% important risk facing the projects in Libya are the
Figure 4 shows the proportions of these files in presence of companies not able to implement
suggested form. projects on time and in the required quality and
the approved budget and specifications agreed
upon. Valuation of companies is a key factor in
the success of the project by making sure the
financial, technical and administrative
capabilities and expertise in the implementation
of previous projects. Therefore this field study
was to determine suggested form for the

rehabilitation of the construction companies 8. Kevin, J. Implementing A Design / Build.

before contracting with them, and the purpose of Prequalification System, Journal of Management
in Engineering, vol11 (3), 31-37, USA, (1995).
this model is to ensure the ability of companies
financial, technical and administrative 9. McNamara, C., Authenticity Consulting, LLC
capabilities and expertise in the implementation Copyright 2008, (2008).
of projects The definition of criteria that must be
available in these companies in the suggested
10. Rodger, C, and Jason P , Uncertainty and Risk
form to be invited to the auction. These Analysis, price water house ,U.K, (1999).
companies in the project and these standards are
(financial situation, material resources file, years 11. Samuel G S, Estimation of the Financial Risk Public
of experience of the company, technical file, Enterprises Construction in Egypt, Cairo-University,
human resource file, planning and Follow-up, Egypt, (1996).
safety and Insurance). using this suggested form
to evaluate companies before contracting with 12. Sonmez, M. H., Graham, G., Applying Evidential
them is recommended. The preparation checklist Reasoning to Prequalifying Construction
contains the risk of the projects to be a reference Contractors, Journal of Management in Engineering,
point for any owner or implementer of projects to 18(3), 116-118, USA, (2002).
be taken into account when hiring or
implementation of projects. These risks have the 13. WARD, S. C., Assessing and Managing Important
Risks, International Journal of Project Management,
greatest impact on the time, cost and quality. 17(6), 331-336, (1999).
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1. Carter, B., Hancock, T., Morin, J.M., and Robins, N.,
Introducing RI methodology, the Stationery Office,
London. (1996).
2. Dave H and David H , Universal Risk Project, Risk

Management Institute , UK , (2002).
3. Fouzi, hossen, Analyse and manage the risks faced by

construction projects, Faculty of Engineering,
University of Omar Mukhtar, Libya, (2012).
4. Gillett, J. E., Hazard Study and Risk Assessment in

the Pharmaceutical Industry, Interpharm Press,Inc,
USA, (1997).
5. Hossen Fouzi A. Planning Risk Assessment in the

Manufacture of Complex Capital Goods, PhD Thesis,
Newcastle University, UK, (2006).
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Management Institute, U.K, (2001).
7. Raftery, J.,Risk Analysis in Project Management,

Suffolk: St Ed Bury Press Limited, Bury St Edmunds,
(1994).

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Thesis

Under the Supervision of

Dr. V.C. AGARWAL

To My Father: Mr. Mohamed

To My Mother: Mrs. Najma

To My Wife: Mrs. Hanan

To My Kids: Mohamed, Ahmed, Najma, Mansour

To My Best Friend: Mr. Bright

To My College and My Country

Place:-Allahabad Hassan Mohamed Abdulnabi Ahmed

may be facing in the projects in Libya was prepared.

Keywords: Risk management, construction, projects, implementation, housing.

Hassan Mohamed Abdulnabi Ahmed.

Title page No.

Table of Contents iii

List of Figures VIII

1.1. Risk Management Process 4

1.1.3. Potential Risk Treatments 7

1.3. Project Management 11

1.5. Statement Of The Problem 13

1.6. Significance Of The Study 13

1.7. Scope Of The Study 13

Chapter II: Literature Review 14

2.1 .Preliminary Remarks 14

3.0 Material & Methodology 33

3.1. Case Study 36

3.1.1. Construction of (1612) housing units in Wadi AlshaticityBrak "LIBYA” 37

3.1.2. Construction of (128) housing units in Akhlafe Ubari city "LIBYA” 40

3.1.3. Construction of (140) housing units in El Houamed city "LIBYA” 43

3.1.4. Construction of (341) housing units in Elmahrougha "LIBYA" 46

3.1.5. Construction of (2000) housing units in Ghadames city "LIBYA” 49

3.1.6. Construction of (3050) housing units in Sabha city "LIBYA ". 52

3.1. 7.Construction of (130) housing units in Wanzureik "LIBYA" 56

3.1.8. Construction of (60) housing units in Tamzawh "LIBYA” 59

3.1.10. The construction of 110 housing units in Almansoura city"LIBYA” 65

3.2. Libyan Audit Bureau and Construction projects. 68

Chapter IV: Results and Discussion 71

4.1 Questionnaire distribution and respondents profile 71

4.2 Questionnaire response & abstention 73

4.3 years of experience in the line of work 73

4.4 Executive situation for the project 74

4.5 Studding risk management and project management courses 75

4.6 Knowledge of Risk Management 76

4.6.2 The participating in project phases 78

4.6.5The participation in risk management . 82

4.6. 6Construction Risks that face the projects in Libya 83

4.6.7 The Influence of project actors on risk management. 84

4.6.8 The collaboration between the actors in the project 85

4.6.10 Option time extension and Impact on risk management. 87

4.6.11 Impact decisions of Change Orders in contract on risk management . 88

4.7 The risks in construction projects in Libya 89

4.9 Control of risks during construction period 91

4.10 Risk management and construction companies’ management systems in Libya. 92

4.11 Impact time extensions option in contracts on risk management 92

4.12 Impact of the decisions of Change Orders in contract on risk management 93

4.13 Effects of the project risk 93

4.14 Risk management 94

Chapter V: Recommendations, future scope and project work 98

Questionnaire survey 107

List of publications 114

Figure3.1.Construction of (1612) housing units in Wadi Alshati city Brak 39

Figure 3.2.Construction of (128) housing units in Akhlafe Ubari city 42

Figure 3.3.Construction of (140) housing units in El Houamed city 45

Figure 3.4.Construction of (341) housing units in Elmahrougha 48

Figure 3.5.Construction of (2000) housing units in Ghadames city 51

Figure 3.6.Construction of (3050) housing units in Sabha city 55