AN INVESTIGATION INTO ESTIMATING RISK IN CONTRACTORS' TENDER FIGURE

Abstract

Risk is inherent in all human endeavors, including construction activities, and the risk elements involved are diverse and varied. Construction projects are normally executed under an environment characterized by varying degree of risks and uncertainties, which can result from ‘known’, ‘known-unknown’, and ‘unknown’ conditions. Failure to adequately deal with these uncertainties has been shown to cause cost and time overruns in construction projects. Quite often, contractors are unable to effectively price for the risk in construction projects. The aim of this study is to assess the impact and significance of estimating risk on contractors’ tender figure for with the view of ensuring efficient delivery of projects by identifying the types of estimating risks, their impact and significance based on the contractor’s tender figure. The methodology adopted in this research was a survey using self administered questionnaires and statistical data analysis was carried out. All the responses were received and analyzed using descriptive statistics and relative importance index. It was found that defective design, contractors’ competence, inflation, political uncertainty and government regulations were the most highly occurred risks on the contractors tender figure. Some recommendations were made which include: Drawing should be certified by the client to see that it represents its brief, Competent contractors should be allowed to tender, the construction professionals should be aware of these estimating risk factors and follow the   procedure of risk management for their proposed project to be actualized as budgeted, government should ensure that, there is stability in the inflation trend and prevent it from galloping and government should formulate new policy that will enhance efficient project delivery while pricing by contractors.