Nature of the critical risk factors affecting project performance in Indonesian building contracts

Project delay and cost overrun are recognised as the most common problems faced by contractors. The primary aim of the study reported in this paper was to collect information to allow the critical risk factors causing construction time and cost in building projects in Indonesia to be determined. The study was predominantly based on interviews with project managers using a structured questionnaire, which was designed to assess risk levels in terms of time and cost. It consisted of four risk factors in each of four major risk categories giving sixteen risk factors in all. A total of 22 building projects under construction in East Java and Bali provinces were surveyed. The respondents were asked to assess the probability that risks would occur, estimate the impact on cost and time if the risks did occur using a five point scale and consider the weight of risk importance using pair-wise comparison. The results showed the critical risks affecting both project time and cost perceived by the building contractors were similar. They were: high inflation/increased material price, design change by owner, defective design, weather conditions, delayed payments on contracts and defective construction work. A common theme amongst the critical risks identified appears to be that most of them cannot be controlled or managed by the contractors.