Exploring the risk factors associated with peb projects in lahore.

Exploring the Risk Factors Associated with Pre-Engineered
Building Projects In Lahore.
A Project submitted in partial fulfillment of the requirement for the
degree of Master of Science in Project Management at School of
Professional Advancement, University of Management and
Technology Lahore
Submitted by:
Rizwan Khurram
MS PM 13001171-010
Approved Supervisor: Approved Co-Supervisor:
Name: Mr. Talha Zubair Name: Mr. Syed Ali Bukhari
Signature: ____________________ Signature: ____________________
Dated: _______________________ Dated: _______________________
School of Professional
Advancement

Exploring the Risk Factors Associated with Pre-
Engineered Building Projects In Lahore.
Submitted by:
Rizwan Khurram
MS PM 13001171-010
School of Professional Advancement
University Of Management and Technology
Lahore
2017

Acknowledgements
All praises to Allah Almighty the Lord, the superior, the creator of everything, the most
Beneficent, the most Merciful. I would like to show my gratitude and thank the many people
and organizations that helped me develop the idea into a reality.
First and foremost, I express my heartiest gratitude to my supervisor, Mr. Talha Zubair
Ahmed Khan, for his great interest, inspirable supervision, critique, valuable suggestions
and encouragement in understanding and completion of my work. He has been a great
source of inspiration with valuable insights. Moreover, i also would like to thank Mr. Syed
Ali Bukhari and Mr. Khalil Arbi that guide me on my first research.
My gratitude is also due to all those Pre-Engineered Building Organization that took their
time and effort to distribute the questionnaire among their project engineers.
I am also thankful to my fellow classmates for their constructive feedback and insightful
comments.
I don’t have enough words to express my feelings about two special persons in my life, my
parents, who are my inspiration in life and who made me what I am today. Their prayers
always helped me out through ups and downs of my life.
RIZWAN KHURRAM

Abstract
The construction industry is more exposed to risk than other industry. If the risk is
not handled properly it may causes the poor performance on the industry. The Scale of
building projects is large in nature and having large amount of investment. Wastage of
any resource influence is high loss in project. All the losses are associated with risk
factors. In Pakistan, only few researches have been done so far in this area. Thus this
study needs focus of risk management in field of construction projects. We conclude from
study that financial issue, skillful workers, shortage and inaccurate design are significant
risk factors affecting the projects. Contractors are responsible for risk linked with
machinery, material and quality related issues. While clients are responsible for the risk
associated with scope of work. Study concludes that good coordination and
communication between stakeholders and proper drawings works are key factors to
control the project.

Contents
1 Introduction ........................................................................................................................1
1.1 Background of the Research .......................................................................................1
1.2 Risk..............................................................................................................................2
1.3 Technical Risk.............................................................................................................3
1.4 Financial Risk..............................................................................................................3
1.5 Management Risk........................................................................................................4
1.6 Project Risk Management ...........................................................................................5
1.7 Significance of Risk Management ..............................................................................6
1.8 Difference between Pre-Engineered Buildings vs. Conventional Buildings ..............7
1.9 Pre Engineered Buildings............................................................................................7
1.10 Research Problem........................................................................................................8
1.11 Objective of Research .................................................................................................8
1.12 Scope of study.............................................................................................................9
2 Literature Review .............................................................................................................10
2.1 Risk............................................................................................................................10
2.2 Risk Identification.....................................................................................................10
2.3 Design category.........................................................................................................11
2.4 Finance category .......................................................................................................13
2.5 Management category ...............................................................................................14
2.6 Construction project..................................................................................................16
3 Research Design ...............................................................................................................22
3.1 Research Objective....................................................................................................22
3.2 Research Process.......................................................................................................22
3.3 Risk in Pre Engineered Building...............................................................................24
3.3.1 Technical Risk ...................................................................................................24
3.3.2 Financial Risk ....................................................................................................24
3.3.3 Management Risk ..............................................................................................25
3.4 Theoretical Frame Work ...........................................................................................25
3.4.1 Methodology......................................................................................................25
3.4.2 Method of Survey ..............................................................................................27
3.4.3 Questionnaire Structure .....................................................................................27

3.5 Questionnaire Design................................................................................................28
3.5.1 Risk Rating .......................................................................................................28
3.5.2 Instrument Development...................................................................................28
3.5.3 Sampling ............................................................................................................29
3.5.4 Reliability...........................................................................................................30
4 Result Analysis.................................................................................................................32
4.1 Analysis.....................................................................................................................32
4.2 Results.......................................................................................................................33
4.3 Explanation................................................................................................................39
5 Discussion, Recommendation and future work................................................................40
5.1 Discussion .................................................................................................................40
5.2 Recommendations to the Companies: ....................................................................41
5.3 Future Work ..............................................................................................................42
6 References ........................................................................ Error! Bookmark not defined.
7 Appendices ....................................................................... Error! Bookmark not defined.
7.1 List of Pre- Engineered Building Companies in Lahore..........Error! Bookmark not
defined.
7.2 Questionnaire ............................................................ Error! Bookmark not defined.

List of Table
Table 1.1 Project Risk Management...........................Error! Bookmark not defined.
Table 3.1 Research Methodology ................................................................................26
Table 3.3 Philosophical Stance....................................................................................27
Table 3-3 Reliability....................................................................................................30
Table 4.1 Rotated Component matrix..........................................................................37

1
1 Introduction
1.1 Background of the Research
In order to meet stakeholder requirement, it is basically the implementation of
all knowledge areas from where different tolls and technique are effectively utilized.
Project risk management includes the method of organize the context, identifying,
analyzing, evaluating, treating, monitoring and responding to project risk associated
with any activity. It consists to increase the reaction of positive events or opportunity
and minimizing the losses. Karatam and karatam in 2000 describe that the construction
industries are directly linked with high degree of risk due to involvement of
construction activities, organization environment, and process.
Pre-Engineered Building concept is new in Pakistan; and need a lot of work to
be done. Construction industry is more exposed of risk than other industries. For every
project in construction industry, risk management is an essential component of the
process. From a client's perspective, design-bid-build is often the most risk adverse
delivery method. But when situations where time is short and structure must be
optimized for space as well as cost savings. The greatest value in this case often lies in
pre-engineered buildings.
As in IJEDR the PEB Structure is 30% lighter than conventional steel structure.
As it reduces the dead load of structure so also reduces the size of foundations.

2
1.2 Risk
In the book of PMI, Risk is a multifaceted concept. The construction industry
business is more risky than others. However, construction projects are subjected to have
more structural risks due to participation of different stake holders like suppliers,
contractors, designers, owners etc.
Organizations face different types of risks are depend upon the organization to
organization. Mostly related to financial loss and business failure.
Risk can be explained as “the positive or negative impact on the objective that
sometime happened.” (Smith, 1999), “a combination of hazard and exposure” Chicken
and Posner (1998). The construction industry business like any other business is more
risky because construction projects are more likely of inherent risks due to involvement
of many contracting parties such as suppliers owners, designers ,contractors, etc. (PMI
2004).
Risks are either acceptable or unacceptable. An acceptable risk effect is on the
non-critical path but on the other hand unacceptable risk is that negatively affect the
on task on critical path. According to PMBOK the critical path is generally, but not
always, the sequence of schedule activities that determine the duration of the project.
It is the longest path through the project.
Generally the main types of risk are economical risk, financial risk, political and
social risk, commercial and legal relationships, technical risk, and management risk

3
1.3 Technical Risk
It is the ability to overcome the technological risks in construction projects. In
these risk factors involves issues associated with the technologies involved in the
exaction of construction projects. There are some technical risk which is very common in
construction industry, like accident on site, change in the scope of design, failure of
equipment, errors in drawings, and difficulty in construction at site. Shortage of
electricity, material theft at site. Lack of qualified staff, architecture or structure
disputes.
1.4 Financial Risk
Alaghbari in 2007 describe the financial risk as this type of category includes all
the factors related to financial issues on the project, such as payment delayed, Problem
of Cash flow, and external economic problems. Sweis and Aibinu describe the financial
risk as it is the Major frame work of study shows that mostly finance-related risk factor
is delayed payment for completed work. Major kind of risk includes loss due to inflation
rate, due to fluctuation of interest rate, inflation of fuel price. Insurance risk, change of
bank formalities and regulation.

4
1.5 Management Risk
Heerkens describe that in management risk, there are two important form of
project management: the science and the art of the project. The art deals with the
stakeholder that are directly or indirectly involved in the project, while the science
describe and coordinating the work to be done; for example, it concern with the
knowledge, skillful application and understanding of a project management process.
Main management risks include change of top management, time constraints, and poor
communication between clients.

5
1.6 Project Risk Management
Standard Associates of Australia describe the project risk management as it is the process
culture and characterize structure that are towards the forceful management of potential
opportunities and minimize the effects.
Kartam & Kartam in 2000 elaborate that construction industry business and its stakeholders are
openly associated with high degree of risks due to nature of construction business activities,
organization, but the Edward in describe that construction industry has poor reputation in coping
with risks, many projects fails to meet deadlines and cost targets. Clients, contractors, and other
stakeholders the public and others have suffered as a result.
All choices in our life are having risk. Risks cannot be totally eliminated, but have different
choice that can be made so that it can be minimized.

6
PM BOK,
1.7 Significance of Risk Management
Following are the benefits of risk management (ISSN-2229-5518)
Less ambiguity
Formation of value
Accomplishment of objectives
Stakeholder’s reliability
Table 1.1 Project Risk Management

7
1.8 Difference between Pre-Engineered Buildings vs. Conventional
Buildings
(IJEDR) Generally pre-engineered buildings are 30% lighter than conventional building
due to efficient use of steel. Low frame weight gives easy weight foundation design as well as
higher resistance to seismic force as compared to conventional building which is higher in
weight. Due to taper of the frame it enhances the aesthetic view of the structure.
1.9 Pre Engineered Buildings
Pre-engineered building is basically a steel structure that built by using the different
components called as primary and secondary members. It is the cost effective alternate
solution of conventional building. Members of primary structure are fabricated according to
design requirement which save the cost and material. Construction time of PEB is faster than
concrete construction.
For every project in construction industry, risk management is an essential element
of the process. From a client's perspective, design-bid-build is often the most risk adverse
delivery method. But what about situations where time is short and structure must be
optimized for space as well as cost savings. The greatest value in this case often lies in a
PEB.

8
1.10 Research Problem
What is the underline structure of project risk factors in Pre Engineered buildings
in Lahore?
1.11 Objective of Research
The construction industry is more exposed to risk than other industry. If the
risk is not handled properly it may causes the poor performance on the industry.
Scale of building projects is large in nature and they involved large amount of
investment. Wastage of any resource influence is high which leads to loss in project.
All the loss are associated with risk factors
Risk management is basically the process of identifying the risk and
mitigating the risk. In developed countries the research on risk assessment and its
management has been done by various people. In Pakistan, only few researches
have been done so far in this area. Thus this study needs focus of risk management in
field of construction projects.
 To explore the project risk factors associated with pre-engineered buildings in
Lahore.

9
1.12 Scope of study
Scope is restricted to the Pre Engineered Building construction industry and
mainly covers the key stakeholder’s. Exercise has been made to include as many types
of pre-engineered buildings projects as possible. Main city of Pakistan namely Lahore,
was selected for questionnaire survey and interviews.

10
2 Literature Review
2.1 Risk
Risk is a multifaceted concept. The business of construction is more risky.
Construction projects are exposed to more environmental and structural risks due to
involvement of many stakeholders such as Designer, Supplier, and Contractor etc.
2.2 Risk Identification
It is the main process of finding the risk which might affect the project and their
characteristics (American National Standard 2004) and as per Standards Association of
Australia 1999, it is the process of findings what can happen, why and how.
Proactive risk identification characterizes the potential future risk event that
affect the result of objective positively or negatively. On the other hand reactive risk
identification involves identifying and informs events, arising due to decision that could
affect project objectives, either negatively or positively (Loosemore et al., 2006).
Past research literature will help in understanding and clarification of the topic
and will help in development of Project Assessment and is management for this study to
be conducted on the Pre-engineered building construction sector of Pakistan’s
construction industry. The research can be summarized in an overall aim and
measurable objectives. The aim is:

11
To explore the project risk factors associated with pre-engineered buildings
projects in Lahore.
2.3 Design category
The allocation of ample time and money at the beginning level of design phase
result into the minimization of time delay and cost overrun (Koushki et al., 2005). It is
one of the important and critical because the factors related to it are considered to be key
risks in construction project (Fereigh & Kartam, 2006).
It is the ability to overcome the technological risks in construction projects. In
this risk factors involves issues arise or concerns associated with the technologies
involved in the exaction of construction projects. Some technical risk which is very
common in construction industry, like accident on site, change in the scope of design,
failure of equipment, errors in drawings, and difficulty in construction at site. Shortage
of electricity, material theft at site, Lack of qualified staff, architecture or structure
disputes.
 Accidents on site
The ability to overcome the accident on site in construction projects. The risk factors
having different issues or concerned associated with the accidents which cause loss of
humans as well as money.
 Change in design

12
Koushiki (2005) describe the design risk as the allocation of ample time and money
at the initial level of design phase results into the minimization of time delay and cost
overrun. On the other hand Fereigh& Karatam (2006) describe about the design category
of risk it is one of the important and critical because the factors related to it are
considered to be key risks in construction project.
 Errors in Drawing
The ability to overcome the errors issues in drawings. The risk factors involves
issues and concerned associated with the drawings mistakes, which divert the scope of
project.
 High degree of difficulty in construction
The ability to overcome the difficulty in construction projects. The risk factors
involves issues or concerned associated with the site execution which is not suitable for
the
 Equipment Failure
The ability to overcome the equipment failure of the project. Mostly risks are
associated with the failure of equipment that caused delays in project
Workers like raining, mountainous areas, irregular surface etc.
 Shortage of Electricity
The ability to overcome the shortage of electricity in construction projects. The risk
factors involves issues or concerned associated with the equipment operations with
electricity, which is now a day’s biggest issue, arise in our country,
 Theft material at site

13
For the cheapest material, a large number of costs of projects is driving that meets
specifications, which is to be fabricated in a location where that has the least cost- often
in different countries.
 Architectural Vs. structural Engineering Disputes
The ability to overcome the disputes construction projects. Risk factors include issues or
concerned associated with the architecture drawing and structural drawing.
 Site distance from urban Areas
The ability to overcome the difficulty in construction projects. The risk factors involve
issues associated with the far place areas.
 Lack of qualified staff
The ability to overcome the lack of qualified staff projects. The risk factors involves
issues associated with the staff which has no past experience related to project.
2.4 Finance category
This type of category includes all the factors related to financial issues such as cash
flow problems, economic problems, payment delays etc. (Alaghbari, 2007). Major frame
work of study shows payment delay related are the financial related risk factors for
completed work (Sweis et al., 2008; Aibinu & Odeyinka, 2006).
 Bankruptcy of Project Stakeholder
 Loss due to Inflation rate

14
Inflation rate risk is more than other risk in case of financial risk, Because Pakistan
is the developing country and the price of any material is not stable and the
variations occur throughout the years.
 Loss due to fluctuation of interest rate
Interest rate fluctuation is also the one of the cause of financial risk.
 Loss due to inflation of fuel price
Fuel price is not same throughout the years, so such type of risk occurs in every
project.
 Low credibility of shareholders and lenders
 Insurance risk
 Change in bank formalities and regulation
2.5 Management category
There are two important forms of project management: the science and the art of the
project. The art deals with the stakeholder that are directly or indirectly involved in the
project, while the science describe and coordinating the work to be done; for example, it
concerns with the knowledge, skillful application and understanding of a project
management process (Heerkens, 2001).
 Change of Top management
 Time constraints

15
 Poor communication between clients
 No previous experience in identical projects
 Poor Coordination, Cooperation and Relationship among Key Stake Holders
 Internal management problems
 Conflict in Contract Document
 Delays due to disputes with contractor
 Shortage of Skillful workers
Shortage of skillful workers is the main cause of managerial risk factors, because
PEB is the new field especially in Pakistan, and it has shortage of skillful workers
 Material shortage
The shortage of material at site causes the delays of project; the works at
site will stop. In PEB the assembly of frame are in systematic way, so if
discontinuous occurs, that caused the delay of project and increase the cost of
project as well.
 Unknown site conditions
Unknown conditions of site produces difficulty in construction, it is better for
having open site because movability of crane, and much more difficult where the
access of crane is not possible.
 Incompetence of transport facility
Such type of risk are occurs in these building due large size of primary structure,
rafter and columns.
 Material category
This is an important category that directly effects on cost and delayed of any
project. Major risk factors include in material categories are type of material,
selection time and their availability in local market. Project activities that are

16
relevant to material and their effect on total cost of project could be important
(Manavazhi & Adhikari, 2002).
 External category
External risk is not as such important as other risks because it doesn’t contribute any
role in delayed of project (Sugiharto & Keith, 2003). Most of risk management
studies show that external risk including weather and site condition creates a less
impact on completion of project (Alaghbari et al., 2007).
 Labor and equipment category
Labor risk include the factors of unavailability of workforces, unskillful labor, it is
directly linked with the problems related to manpower.
2.6 Construction project
According to (Levy, 2000) some important steps are necessary for construction
projects to accomplishment which is following as,
 Completion of project on time. 
 Total amount is within the budget. 
 No allegation after Completion of Project
 Keep favorable relations with the stakeholder
 Quality level
Many stakeholders are involved in the construction project however the main
construction parities are

17
Akintoye & MacLeod (1997) concluded that risk management is necessary to
construction business activities in minimizing losses and enhancing profitability.
Construction risk is generally recognized as events that superimposed project
objectives constraints (cost, time and quality).
Risk analysis and management in construction depend mainly on intuition,
judgment and experience. Formal risk analysis and management techniques are rarely
used due to a lack of knowledge and to doubts on the suitability of these techniques
for construction industry activities.
The construction industry and its client are widely associated with high degree of
risks due to nature of construction business activities, processes, environment and
Organizations (Kartam & Kartam 2000),
Edwards (1995) Risk management is basically meant for reducing adverse
effects on company's profitability. It is utilized to reduce long-term losses and
hence increase profitability of the company.
Akintoye & MacLeod (1997) Risk management is crucial to construction
activities as it reduces the loss and increases profits. It covers the effects of
objectives of cost, time and quality. It mainly depends on experience, knowledge
and intuitive judgment.
Perry & Hayes (1985, June) Risk Management is good during strategy, tender,
development of contract preparation phases and its application stages. Risk management
is primarily carried out to avoid cost and time overruns.
Edwards & Bowen (1998) Literature from 1960 to 1997 is reviewed to identify
lags and inconsistencies in the knowledge of risk management in construction. Findings
led to the suggestion that political, financial and cultural categories require more
research attention than those related with QA and safety.

18
Bing & Tiong (1999) Risk management in JVs with a local partner is associated
with partner selection, employment, subcontracting, agreement, renegotiation and good
relationship. Risk Management model would help construction firms to improve
decision making and their ventures.
Mulholland & Christian (1999) Construction projects are surrounded by the
environment of high uncertainty and risk and are compounded by demanding time
constraints. Knowledge and experience are required to make decision technique and
amount of risk involved.
Baker, Ponniah & Smith (1999) Identification, analysis, evaluation, response and
monitoring are important in the success of a project. Experience and engineering
judgment are most applicable and favorable qualitative techniques and net present value,
sensitivity and decision analysis are major quantitative techniques.
Kangari (1988) for solving complex problems related to construction
management, a systematic approach is to be followed. A knowledge system consisting
of applications of fuzzy sets, database and knowledge-based systems in construction risk
management.
Ren (1994) two different elements are distinguished between concealment and
action project risks and using risk relationships, mutual effects between risks are
analyzed.
Uher & Toakley (1999) a survey was conducted with the respondents who were
familiar with risk management and it was statistically analyzed. The analysis revealed
that the application of risk management in conceptual phase of the construction project
was quite low.
Tah & Carr (2000) a common language is developed for description of risk and
remedial actions. UML and IDEF0 have been used to develop models which are used to
facilitate the production of working risk management system.

19
Ranasinghe (1998) a probability framework is developed to analyze the risk
management procedure adopted by an insurance firm. The acceptable clients are those
for which the probability of claim is 12% and those with over 50% the clients are not
acceptable. The insights are extracted from project duration and costs.
Zhang (1998) In China Build-Operate-Transfer (BOT) arrangement is
prevailing to fulfil the requirements of China's economic growth and development.
China's embryonic legal structure poses many risks and problems at the construction
business. This paper sheds lights on risk allocation, government guarantees and
structuring of risk in BOT transport project.
Flanagan & Robinson (1987) in construction industry, risk management term
is generally used for future forecasting of the life cycle costs, e.g., maintenance and
running cost. It is fairly known that all these cost estimated are merely guess-work. To
challenge this view, some practical techniques addressing risk and uncertainty should
be developed so that the stake holders can be provided with clear easy to
understandable information, on which they can decide better.
Ashley & Bonner (1987) Political risk management and measurement is vital
for international construction industry. International construction contracting are more
vulnerable to political environments which directly impacts on cash-flow elements of
their projects. An approach is devised in this paper to fill the gap which is made by
traditional political risk analysis used by contracting firms.
Niwa & Okuma (1982) This paper uses 'know-how transfer method' and demonstrates
its application for risk management system for a large scale construction project so that
the project manager can get more effective control of risks in a systematic way.
Wang & Ashley (1999) China is attracting international investments for
infrastructure development. It is necessary to manage and pinpoint risks involved in
investing in China's BOT power projects. This paper throws light on the results of

20
survey conducted with international professionals and suggests a framework for risk
management for future investment in BOT projects in China.
Ward & Chapman (1991) a widespread definition of risk analysis is acquired to
properly identify appreciate and manage project risks. In contracting projects, the risk of
project can be allocated properly.
Roger Miller described the understanding and managing risk in large engineering
projects in international journal of project management. Firstly risk are needed to be
classified into groups like market related, completion and institutional. Risk frame work
not must be technical problem they will also a problem with managerial issue. Finally
the danger risk only be tackle by influencing driver and institutions which leads the risk
upward.
Garrdio on risk identification technique brief that they are a lot of methods to identify
the risk in construction industries in Brazil. According to the result of identification
techniques used in construction industries are check list, flow chart and brainstorming.
These techniques are widely used in construction industries.
Karim described that the risk is key role for the success of any project. His study is
based upon the constructive perspective. He developed the 25 common factors of risk
generally categorized into five factors. In the end he concluded that five most important
factors. Shortage of material, insufficient technology, late delivery of material, poor
quality of workman ship.
Tah & Carr (2000) usual risk management techniques available to help
construction industry to raise from poor performance are based on operational research
techniques developed in 1960s of which most failed. Qualitative risk assessment has
been tried as a model and its consequences are represented as fuzzy logic and cause and
effect diagram.

21
Kangari (1988) for solving complex problems related to construction management, a
systematic approach is to be followed. A knowledge system consisting of applications of
fuzzy sets, database and knowledge-based systems in construction risk management.
Ren (1994) two different elements are distinguished between concealment and
action project risks and using risk relationships, mutual effects between risks are
analyzed.
Uher & Toakley (1999) a survey was conducted with the respondents who were
familiar with risk management and it was statistically analyzed. The analysis revealed
that the application of risk management in conceptual phase of the construction project
was quite low.

22
3 Research Design
3.1 Research Objective
Construction projects are large in nature and they involved large amount of
investment. If the risk is not handled properly it may causes the poor performance on
the industry Wastage of any resource influence is high loss in project. All the loss is
associated with risk factors
In developed countries the research on topic of risk management has been done
by different people to explore the managerial risk in pre-engineered steel construction
projects.
 To explore the project risk factors associated with pre-engineered steel construction
projects.
3.2 Research Process
The large scale project involves heavy investment and funds so any type of
wastage (either time, resources etc.) and associated with the different risk. In developed
countries the research on risk management has been done by various people in the field
of construction.

23
There have been many researches on different aspects of risk management and
also on PEB projects. But there is need to further research on different aspects of
application of risk management in PEB project domain. Risk management applied in PEB
projects but how effectively it can be applied and which risk are more important to
manage it should be research.
Different aspects of application of risk management in PEB projects can understand
through experience or examine risk management practically in PEB project. So this lead to
Positivism theoretical perspective.
Examination of different examples or survey is required to practically understand
the application of risk management in PEB projects. So this lead to survey research
methodology.
In order to understand different aspects of risk management in PEB projects
collection of data through questionnaire from practical examples or by sampling and
quantitative analysis on them is required.

24
3.3 Risk in Pre Engineered Building
3.3.1 Technical Risk
 Change in Design
 Errors in Drawing
 Shortage of Electricity
 Theft material at site
 Accidents on site
 Architectural Vs. structural Engineering Disputes
 Lack of qualified staff
 Equipment Failure
3.3.2 Financial Risk
 Inflation Rate
 inflation of fuel price
 Insurance risk
 fluctuation of interest rate

25
3.3.3 Management Risk
 Change of Top management
 Poor communication between clients
 None previous experience in similar projects
 Poor Coordination, Cooperation and Relationship among Key Stake Holders
 Internal management problems
 Conflict in Contract Document
 Delays due to conflict with contractor
3.4 Theoretical Frame Work
3.4.1 Methodology
The methodology use in this project is given below.
 Study Risk Management and literature
 Formation of questionnaire
 Construction site visit
 Questionnaire surveys and interviews
 Analyzing the questionnaire
 Qualitative analysis the data
 Conclusion

26
With reference to number of contacts this study is cross sectional in nature. Issues arises
with reference to time period, study is prospective. Nature of investigation is exploratory.
Total Eleven companies approaches from where data collected. Project managers, Site
Engineers, Sales Engineer, and Technical persons are approaches for data collection.
Table 3.1
With Reference to Number of Contacts Cross-sectional
With Reference to Time Period Prospective
Nature of Investigation Exploratory
Unit of Analysis Project Manager, Site Engineer,
Procurement Specialist, Site Supervisor
Population of Interest Rhino, Izhar, Banu Mukhtar, Zamil, HH
Robertson, Premium, TEK,
This thesis takes on reality as an objective entity discoverable through empirical
investigation of the propositions. Epistemologically, this thesis considers knowledge as an
understandable but imperfect i.e. that can only be uncovered through falsification.
Table 3-1 Philosophical Stance
Epistemology Post Positivism / Empiricism
Ontology Objective Reality

27
3.4.2 Method of Survey
Methodology of this study depends on the survey conducted. The questionnaire
collected from different contractor of different size through different resources like mail,
meetings. Initially literature view was conducted to identify the major risk identification
factors in PEB. This study is cross sectional in nature with reference to number of contacts.
3.4.3 Questionnaire Structure
Firstly Questionnaire was tested through pilot study which tells us the value
of information, clarity and its ease. The Structure of questionnaire is shown in
Appendix.
Associated risk Factors in PEB are given below:
1 Financial risk
2. Management risk
3. Technical risk

28
3.5 Questionnaire Design
The survey questionnaire is to design the study behavior of risk in Pre Engineered
Building. Questionnaire was prepared through pilot survey according to their literature
review in the field of construction. Free to ask extra questionnaire that arise in the mind of
interviewer during interview.
3.5.1 Risk Rating
For the rating of risk in construction industry, a Likert scale of 1-5 is used. It is a
type of psychometric response scale usually used in questionnaires and mostly used in
survey research. Likert scale is named after Rensis Likert, who published a report
describing its use (Likert, 1932).
3.5.2 Instrument Development
Questionnaire is adopted from the different studies and literature. . A five (5) point
Likert scale has been developed for getting the individual replies regarding the factors in
pre Engineered Building Projects. The questionnaire has been adapted from literature
review.

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3.5.3 Sampling
Pre-Engineered Buildings Companies in Lahore were analyzed as the target
population for PEB research. Eleven organizations working in Lahore were analyzed as
sample for research. PEB companies in Lahore were selected for this research. Multistage
stratified sampling technique has been used for data collection. Each company has different
types of manager’s sales manager, site manager, design managers etc. Hence for different
strata’s., Multistage stratified sampling is always considered as complex form of cluster
sampling. Cluster sampling involves population into different groups and clusters helpful
for conduction of study.
These organizations people worked in a project as leading role (Technical Person)
were selected for data collection. Organizations with Project management unit were
preferred for this research. Limit of sample size is 100 as per Gorsuch (1974).
Project managers were asked to fill questionnaire in face to face meeting.
Thoroughly discussions were also done with them on their project management experience
for validation of results. Different questions which represent technical, managerial and
financial risk associated with PEB are discussed and project managers inputs were marked
on Likert scale. Data for different demographic features like qualification, experience
gathered from project managers.

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3.5.4 Reliability
Reliability statistics is considered as an important tool for further apply statistical
tests. These statistical tests are factor analysis, correlation analysis and multiple regression
analysis models. The result of reliability statistical test is given below:
Table 3.3 Reliability
Cronbach’s Alpha 0.712 N of Items 7
This reliability scale is used for determining its value with the support of
Cronbach’s Alpha. In this study, initially the total number of dimension was 17 and
reliability value was 0.3. This value is considered very low and in order to make further
proceedings for this study and to make instrument more reliable, 10 causes have been
omitted in stepwise. The dimension eliminated is on basis of two point criteria
(1). Dimensions having factor loading less than 0.4
(2) Dimension having cross loading multiple factors
The 10 following items were eliminated to retain with 7 with Cronbach’s Alpha
value of 0.850, which is good and satisfying the criteria of 0.70.
1. Change of Scope
2. Shortage of Equipment
3. Shortage of Electricity
4. Architecture Disputes

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5. Material Theft
6. Failure of top Management
7. Poor Coordination between clients
8. Rise in Flue Price
9. Inaccurate estimate
10. Loss in exchange rate

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4 Result Analysis
4.1 Analysis
This study is exploratory factor analysis by considering the data analysis
interpretation and results. It plays a vital role for the completion of study. The main
functionality of exploratory factor analysis to reduce the data and evaluated in terms of
unobservable which is latent variable in nature. Another important variable is observed
variables which are considered as manifest variables.
Tables and graphs for SPSS analysis have been presented in appendix.

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4.2 Results
For Data Analysis Technique Principle component analysis is used
Rotation Method
Varimaz with Kaizer Normalization
Total rotation is 50
Factor Analysis
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .728
Bartlett's Test of Sphericity
Approx. Chi-Square 503.544
Df 21
Sig. .000

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Communalities
Initial Extraction
Technical Drawing 1.000 .823
Managerial Team Conflicts 1.000 .645
Managerial schedule error 1.000 .739
Financial-loss inflation rate 1.000 .859
Financial loss interest rate 1.000 .886
Managerial shortage of
skillful
1.000 .507
Managerial poor
communication
1.000 .683
Extraction Method: Principal Component Analysis.

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Total Variance Explained
Component Initial Eigenvalues Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total % of
Variance
Cumulative
%
Total % of
Variance
Cumulative
%
Total % of
Variance
Cumulative
%
1 3.92656.091 56.091 3.92656.091 56.091 3.77953.982 53.982
2 1.21617.375 73.466 1.21617.375 73.466 1.36419.484 73.466
3 .847 12.101 85.567
4 .457 6.526 92.093
5 .309 4.409 96.503
6 .178 2.544 99.046
7 .067 .954 100.000

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Component Matrixa
Component
1 2
Technical Drawing .891
Managerial Team Conflicts .773
Managerial schedule error .859
Financial-loss inflation rate .922
Financial loss interest rate .899
skillful
.625
Managerial poor
communication
.812
a. 2 components extracted.

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Component Transformation Matrix
Component 1 2
1 .972 .233
2 -.233 .972
Extraction Method: Principal Component
Analysis.
Rotation Method: Varimax with Kaiser
Normalization.
Table 4.1
Rotated Component Matrixa
Component
1 2
Technical Drawing .826
Managerial Team
Conflicts
.803
Managerial schedule
error
.831
Financial-loss inflation
rate
.919
Financial loss interest
rate
.939
skillful
.688
Managerial poor
communication
.825
Extraction Method: Principal Component
Analysis.
Rotation Method: Varimax with Kaiser
Normalization.
a. Rotation converged in 3 iterations.

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Reliability
Scale: ALL VARIABLES
Case Processing Summary
N %
Cases
Valid 105 100.0
Excluded
a
0 .0
Total 105 100.0
a. Listwise deletion based on all variables in
the procedure.
Reliability Statistics
Cronbach's
Alpha
N of Items
.850 7
Item-Total Statistics
Scale Mean if
Item Deleted
Scale Variance
if Item Deleted
Corrected
Item-Total
Correlation
Cronbach's
Alpha if Item
Deleted
Technical Drawing 19.63 14.678 .841 .803
Managerial Team
Conflicts
20.65 14.711 .639 .824
Managerial schedule error 20.70 12.749 .776 .801
Financial-loss inflation
rate
20.56 11.922 .840 .788
Financial loss interest rate 21.20 13.604 .782 .801
skillful
19.76 17.491 .279 .869
Managerial poor
communication
20.35 18.769 .110 .881

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4.3 Explanation
Data description analysis for all variables explains following features.
The table 4.1 represents the Rotated component matrix. The rotated component matrix
shows how the variables are weighted for each component and correlation between
them. This is the final output generated by SPSS Software. The variables undue
interference of technical drawings, managerial team conflicts, schedule error, loss due to
inflation rate and interest rate loss are loaded on component 1 while the shortage of
skillful workers and poor communication of management are loaded on component 1

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5 Discussion, Recommendation and future work
5.1 Discussion
After the analysis on SPSS, two factors are extract from the SPSS table of rotated
Component matrix. Variable of component 1 is names as organizational risk and on the
other hand variable loaded on 2nd
component are named as Human Resource Risk.
The word risk management is new in construction factors especially in PEB in Pakistan.
As Pakistan is in the list of developing country so it should be updated. Following are
the some points extracted from thesis.
1. Shortage of workers is considered to be the main problem faced by all
companies. The main reason is shuffling of workers due to their high demand. As
demand and salary package of Middle East countries is handsome as compared to
Pakistan, So Most of the workers wanted to shift there.
2. Inflation rate is changes with time which is very high in our country. So the
prices and material and their related material varies with passage of time. The
effect of inflation is directly on construction firms, land developers and
stakeholders. Financial part risk is very high as compare to others because bank
also increase their interest rate
3. In sum up of all risk, especially in PEB industries Technical, managerial and
financial risk are dominant than other risks.

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5.2 Recommendations to the Companies:
1. From different survey, we analyses that risk management technique is not
properly and efficiently utilized in most of the construction companies. But it
should be keep as primary tool to assess the project. If risk occurs, no any
prompt action techniques is in place to mitigate.
2. Financial risk is not handling by engineers alone so it should be handle
carefully using financial consultant.
3. There is even no single manager who handles risk management in
organization and takes decision accordingly. So risk management body
should be formed and evaluation should be done at least once in a month.
4. Companies management hierarchy is more important to follow the
employee’s voice. Top to bottom ways is traditional but down to top should
be followed so that employee’s voice is heard.
5. It is more useful to include a risk consultant in a project by considering the
stakeholder

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5.3 Future Work
We have some suggestion and recommendation for the construction industries working in
Pakistan are stated below.
1. As this study is organize in Pre Engineered building construction projects sectors of
Lahore. It can also be organize in other region and cities.
2. Additional this study can also be conducted on different risk factors associated with
PEB.
3. Investigate further risk management topic related to the construction industries.

Exploring the risk factors associated with peb projects in lahore.

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Exploring the risk factors associated with peb projects in lahore.