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India is a developing country and construction sector in Indian economy is a relevant sector and a booming industry taking into consideration the contribution of it to the economy. The base of development in India are the new projects with mounting infrastructure facilities and projects which are coming from a variety of resources like natural resources,. human resource, energy and private construction programmes. This has given the country an economic competitive advantage and a boom. A consistent double digit year-on-year growth of 12% is recorded in the Indian construction industry for the period of 2000-2005 and the expectation is that it will grow at 25-30% for the period of 2005-2010. the rising investment of government in infrastructure creation and the demand for real estate in the industrial and residential sectors are the key drivers of this growth (RocSearch Ltd, 2006). Construction industry is the second largest contributor to the national economy and is one of the largest employment generating avenue in the country. The planning commission declared $492bn as investment outlay for infrastructure development in the 11th Economic Plan of 2007(RocSearch Ltd, 2008).
KPMG a management consultants presented a report to government of India in 2008 stating that construction is one of the key economic sectors contributing 15% of the national GDP (Gross Domestic Productivity) (KPMG report, 2009). The report also added that during all this boom the construction industry in India face many challenges such as fast rising material and work costs, lack of talent and restricted contractor capabilities. After growing up to 15.6% since 2005 US$175 billion was spend on construction in 2007, out of that US$175 billion some US$140 billion was spend on non-residential construction and the rest US$35 billion was spent on residential construction(KPMG report, 2009).
Figure 1.1 India's Construction Spending Outlook
Source: IHS Global Insight 2007
The spending on construction is expected to increase by the end of 2013 to US$370 billion, again with spending on residential construction totalling to US$63 billion and non-residential recording US$307 billion as spending, so total compound annual growth rate of 13.3% was recorded(IHS Global Insight 2007). Hovering at a growth rate of 15% the construction sector domestically will generate over 9.7 million unskilled and skilled workers by the end of 2012(upcoming.yahoo.com, 2008).
1.2 Purpose of Study
One of the most important activity that can boost up the business of various industries and the rise in Gross Domestic Product is the development of infrastructure in terms of construction industry , such different projects involve a lot of money and are vast( indiabudget.nic.in 2009).
The enormity of these projects leaves a lot of scope for unseen problems like delays, natural calamities etc. Leading to a risk of time and cost overrun of projects and it can be of a huge magnitude as a large amount of money is poured in such projects(Deviprasadh, 2007). A great amount of time and capital is put into construction projects, so risk becomes an integral part of it.
Effective risk management skills are very much necessary if the projects needs to be completed within the stipulated timeline to meet the limitations of the cost and requirements of maintaining the quality (Veeravalli, 2008)
Figure 1.2 Triple constraint
Source: Veeravalli 2008
In construction business, success is typically measured by these basic performance criteria often called the triple constraint: cost, time and quality (see fig. 1.2). Safety measures are playing very important role in recent years as lacking safety performance measures on construction site can reduce economic revenues of the project. Moreover accidents have intangible liability effects on the participants in the project such as contractors, owners, designers and project managers. In the figure time, cost and quality are pulling in opposite directions and many change in one variable shows impact on one or both of the others (Veeravalli 2008).
1.3 Scope of study
This dissertation focuses on the construction industry in India and the application of the risk management strategy in Indian construction projects. "Risk management is limited to the construction of large building projects like IT parks, Multiplexes, Malls, Large residential townships etc." (Deviprasadh, 2007). Effective risk management process is again a vital part for booming Indian construction industry as risk is a usual element attached to it. In spite of the development in risk management traditions across the industries , many contractors are short of the holistic approach required as risk is an integrated part of every aspect of life cycle in the construction industry(KPMG, 2009).
1.4 Main Aim and Objectives
The aim of this research is to identify the key risks in Indian construction industry and implementation of risk management in Indian construction projects and to explore the possible measures to deal with this risk in construction projects in India
Investigating the present condition of Indian construction industry
From the published literature identify the key risks in Indian construction industry and implementation of risk management in Indian construction projects by using existing literature.
In the light of the published literature, define a suitable methodology to follow in the research.
To find the possible measures to deal with the risks available in the context of the Indian construction with the help of the questionnaire.
To identify the possible risk management strategies for Indian construction projects.
Draw conclusion from both analysis and synthesis of the secondary and primary data collected as to best practice for risk management in Indian construction industry.
Make future recommendation for the organizations about the possible and appropriate ways to manage risks for avoidance of failure of projects.
1.5 Thesis Hypothesis
The thesis report is organized into five chapters. The first chapter gives an introduction to the present study and presents the aim and objective of this investigation. Chapter two comprises literature survey. Based on the literature, research methodology is given in chapter three. The analysis of data is in chapter four. Chapter five gives the conclusion drawn from this investigation and suggestions for future work. Finally the bibliographic references are given at the end. Figure 1.3 shows a thesis roadmap and major description that will produce the final thesis report.
1.6 Chapter Description
The dissertation comprises in five chaprets, and layout for this is as follows:
Introduction: This chapter describes the back ground information of the research about construction industries in India, scope of the research, then aim and objectives of the present study and finally dissertation layout.
Literature Review: The chapter contains a study of literature on the concept of risk management strategy. How risk is managed in Indian construction industry and identification and impact of risks in Indian construction projects. Methods of risk management available in market.
Research Methodology: This chapter is about the methods utilized for this study. It includes the data collection, questionnaires used for the learning purpose, primary data and secondary data was collected from the journals, websites, and books.
Data and Analysis: This chapter provides an obvious analysis of data collected with the help of questionnaire and the obtained data from the Indian construction industries is accurately analyzed with the help of graphs and pie charts.
Conclusion and Recommendations: This chapter outlines the main findings of the study, conclusion and recommendations. Consist of whole dissertation reflection and preferred recommendations are specified.
Figure 1.3 Thesis Road map
Introduction, Aim and Objectives, thesis structure and contents
Risk Management Process
Types of Risks Chapter 2.4
Impact of Risks Chapter 2.5
Data collection Techniques, Primary and Secondary Data
Research Findings and Conclusion
Recommendations for Future Research
This chapter has introduced the research context which contributes the background of India's construction and risk strategy for construction industry and risk management for Indian construction projects. Purpose and scope of study has been established and research aim and objectives were outlined. The study comprises five chapters and detailed literature will be discussed in chapter two.