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1、American Journal of Engineering Research (AJER) 2016 American Journal of Engineering Research (AJER) e-ISSN: 2320-0847 p-ISSN : 2320-0936 Volume-5, Issue-8, pp-164-172 www.ajer.org Research Paper

2、 Open Access w w w . a j e r . o r g Page 164 Risk Management of Procurement Challenges: The Implication To Construction Firms In Ghana Timothy Adu Gyamfi, 1 Patri

3、ckZievie, 2 Victor Boateng3 1Mphil Construction Technology, Department of Building and Wood Technology, University of Education, Winneba 2 Department of Building Technology and Estate Management School of Applied Science

4、 and Technology WA Polytechnic. 3 Department of procurement and Supply Chain Management, St Margret University College ABSTRACT: It is clear that procurement challenges have been enormous task delving the major stakehold

5、ers in construction industry. The construction industry all over the world is fraught with challenges and the case of Ghana is no different. The study set out to examine Risk management of procurement challenges: The

6、implication to construction firms in Ghana. This study which was conducted within the Ashanti Region of Ghana, primarily sought to identify procurement challenges facing firms in Ashanti region and the effective method

7、s used to deal with those challenges. This study adopted a quantitative research approach; the study used convenient (purposive) sampling to select 20 first class construction companies within the Ashanti Region. Four

8、management staff from each firm was used, and thus, the study population for the 20 firms will be 80. Sample for the study consisted of 40 respondents from ten (10) first class construction firms in the Ashanti region.

9、 These constitute 50% of the targeted population. Questionnaires were used to solicit data and statistical tools used to analyse the data collected are descriptive tools such as frequency, and percentages and also Chi-

10、square. The study has found that risk assessment approaches used by the firms to identify procurement challenges were based on the past experiences of the firms, quantification of possible losses, and predictions drawn

11、 from secondary data. Also the challenges to procurement were the unavailability of indices for bids and costs, unavailability of construction materials, improper inventory management, and risks with working at height.

12、 The study has established that the methods for dealing with the challenges included direct imports of construction materials, the use of other substitutes, monitoring inventory and training workers on working at heigh

13、t. Keywords: procurement, risk management, procurement challenges, risk, Ghana. I. INTRODUCTION Risk is typically described as events or conditions that may have an impact on the objectives of production [1]. Risks the

14、refore concern the deviation of one or more results of one or more future events from their expected values. The impacts of risks may be positive or negative, but general usage tends to focus only on potential harm th

15、at may arise and/or accrue from incurring a cost or failing to attain some particular benefits [2].According to [3], risk management is a formal process directed at identification and assessment of and response to proj

16、ect risks, with the overall goal of maximising opportunities and minimising the consequences of a risk event. It is therefore a management tool that aims at identifying sources of risks and uncertainties, determining t

17、heir impacts and developing appropriate management responses [4]. [5], maintains that a systematic process of risk management can be divided into risk classification, risk identification, risk analysis and response, w

18、here risk response can further be categorised into avoidance, transfer, reduction and retention. According to [6], the choice of procurement option implies different ranges of responsibilities, opportunities and risks

19、 for the various actors, as well as different degrees of stakeholder collaboration [7]. The procurement options therefore determine the risk management options and the extent to which they can reduce the costs, increas

20、e profits, maintain brand quality, and avoid business insolvency [8]. According to [9], these can be achieved through risk planning and assessment of project delivery method, form of payment, and use of collaboration o

21、r partnering arrangements.However, managing procurement risk is more so complicated by risk allocation within the diverse sub-categories of procurement [10]. In line with the stakeholder theory, [11], explains that an

22、appropriate allocation of risks between actors in a construction project is important because it is impossible to eliminate all potential risks as emphasised by the blocked maxima American Journal Of Engineering Researc

23、h (AJER) 2016 w w w . a j e r . o r g Page 166 is to maximise the opportunities and minimise the consequences of a risk event. Also [23], maintains that risk management is essentially a six-step process of risk manage

24、ment planning, identification of risk events, qualitative risk analysis, quantitative risk analysis, risk response planning and risk monitoring and control. Gabel explains that risk management planning is the systemati

25、c process of deciding how to approach, plan, and execute risk management activities throughout the life of a project. It is intended to maximise the beneficial outcome of the opportunities and minimize or eliminate the

26、 consequences of adverse risk events. Risk identification on the other hand, is characterised by isolating the possible risks through risk breakdown structure and brainstorming the sources and classification of the risk,

27、 as well as the effects of the project [24, 25]. According to [26], the main categories of risk identification cover financial, economic, managerial, legal, design, construction, and environmental risks. They emphasise

28、 that, during the risk assessment, the identified risks are evaluated and ranked, with the main goal of prioritising risks for management. 2.3 Procurement practices in construction According to [27], there are no stan

29、dard definition and classification of procurement approaches have been acceptable, but the terms, contractual arrangement, project delivery system and procurement system are often used to describe the type of process th

30、at is adopted to procure a construction project and are often considered to be synonymous, though definitions vary widely. Again, [28], conceptualise procurement in construction as the acquisition of new buildings, or

31、space within buildings, either by directly buying, renting, or leasing from the open market, or by designing and building the facility to meet a specific need. Lenard and. According to [29], the procurement options va

32、ry widely, but the most commonly adopted include the design and construct procurement, management procurement and collaborative procurement. Design and construct procurement, also referred to as design and build can be

33、 described as using a single contractor to act as the sole point of responsibility to a public sector client for the design, management and delivery of a construction project on time, within budget and in accordance wi

34、th a pre-defined output specification using reasonable skill and care [30]. With design and construct procurement a contractor accepts responsibility for some or all of the design [31]. However, [32],describe design an

35、d construct procurement as one with explicit reference to the extent of design liability. Unless the contract states otherwise, the liability for design is an absolute liability under which the contractor warrants fitn

36、ess for the purpose intended. On the other hand, some design and construct forms limit the design liability of the contractor to the normal professional duty to exercise reasonable care and skill [33]. In that situatio

37、n, independent consultants engaged by the contractor are under a liability no greater than normal. However, [34] caution that an indemnity or acceptance of liability is likely to be worthless unless backed by adequate

38、indemnity insurance. Thus, if the contractor uses external consultants, their identity should be established before a tender is accepted. However, [35], endorse, design and construct methods on the assertion that it off

39、ers certainty on the contract sum and brings cost benefits. This is because, the close integration of design and construction methods and the relative freedom of the contractor to use their purchasing power and market k

40、nowledge most effectively can provide a client with a competitive price [19]. With a design and construct method, it is possible to ensure a quicker start on site, and the close integration of design and construction c

41、an result in more effective programming [36]. One other type of procurement is management procurement, which [37], differentiate as management contracting, construction management and design and manage. In the case of

42、management contracting, the contractor has direct contractual links with all the works contractors and is responsible for all construction work. The client appoints an independent professional team, and also a manageme

43、nt contractor to serve as advisors to the team, and during construction, to be responsible for executing the works using direct works contracts [38]. With this type of contract it is possible to make an early start on-

44、site and achieve early completion [39]. Because of its flexibility, it allows the client to change the design during construction because drawings and matters of detail can be adjusted and finalised as the work proceed

45、s In construction management, a contractor is paid a fee to professionally manage, develop a programme and coordinate the design and construction activities, and to facilitate collaboration to improve the project?s con

46、structability [40].The basic difference is that works contracts, although arranged and administered by the management contractor, are direct between the client and works contractor. [41], asserts that this approach giv

47、es the client a greater measure of control, but it also makes client assumes a considerable amount of risk. The management contractor is thus, simply an agent, and usually cannot guarantee that the project will be fini

48、shed to time and cost 2.4 Procurement challenges in construction The research literature identifies several problem areas in risk management in construction. One of the problems is that project actors often focus on the

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