Risk mitigation approach to contractual claims of civil infrastructure projects in South Africa

Abstract

Risk mitigation approaches on contractual claims in civil infrastructure projects are according to the reviewed literature not adequately determined and evaluated. No proper mitigation model for reducing the occurrence of contractual claims risk delaying the delivery of civil infrastructure projects within the budgeted cost and time could be found. The aim of this study was to develop an effective risk mitigation model to address contractual claims risk and to enhance the delivery of civil infrastructure projects in South Africa. A risk mitigation model was conceptually developed through a review of the literature and an understanding of the research by determining the factors causing contractual claims risk in project delivery; impacts of risk occurrence; and essential strategies to mitigate risk in civil infrastructure projects. Applicable theories were evaluated to validate the feasibility of the model by integrating design concepts to establish the principles of the research constructs. The model development demonstrates the application of a mixed method technique through a procedural analysis of quantitative and qualitative data, thus both descriptive and inferential statistical approaches were used for data analysis. The quantitative data were collected through a questionnaire administered to civil engineering contractors registered on the Construction Industry Development Board grades 3–9, as grade levels 1-2 contractors are mostly not the main contractors. The results derived from the quantitative data were used to structure face-to-face interview data collection, which involved the participation of seven purposively selected stakeholders with adequate experience in civil infrastructure project execution. The findings obtained from the quantitative data analysis were further analysed using partial least square structural equation modelling (PLS-SEM) to develop a risk mitigation model. The findings confirmed that the relationship between the factors causing contractual claims risk, and the impacts of risk occurrence, have acceptable predictive potential to influence the essential strategies to mitigate risks that occur during contracting and construction activities of civil infrastructure project execution. This study established that risk management procedures for adequate project performance are not sustainably applied to assess risk occurrence during construction projects. Therefore, the study provides applicable risk indicators to construction organisations, construction professionals, risk managers, and government agencies. The model can offer solutions to issues relating to contractual claims risks based on the good relationship established between the causes, impacts, and strategies.