Engineering, Technology & Applied Science Research Vol. 8, No. 4, 2018, 3260-3264 3260 www.etasr.com Akhund et al.: Risk Attributes, Influencing the Time and Cost Overrun in Joint Venture Construction … Risk Attributes, Influencing the Time and Cost Overrun in Joint Venture Construction Projects of Pakistan Muhammad Akram Akhund Department of Civil Engineering ISRA University Hyderabad, Pakistan akhund42@gmail.com Ali Raza Khoso Department of Civil Engineering Mehran University of Engineering & Technology, Jamshoro, Pakistan aliraza.khoso@faculty.muet.edu.pk Ashfaque Ahmed Pathan Department of Civil Engineering Mehran University of Engineering & Technology, Jamshoro, Pakistan ashfaquepathan2003@gmail.com Hafiz Usama Imad Department of Civil Engineering ISRA University Hyderabad, Pakistan usama.imad@isra.edu.pk Fida Siddiqui Department of Civil Engineering Mehran University of Engineering & Technology Jamshoro, Pakistan fidasiddiqui2@gmail.com Abstract—Business collaborations formed by construction contractors to enhance their abilities and effectiveness in large construction projects are known as construction joint ventures (CJVs). It is widely used as a way of merging assets, capitals, funds, resources and expertise of different organizations. It helps business to grow faster, increase efficiency and generate greater profits without borrowing money. Though it is useful and beneficent for the vendors, it may contain several types of risk. It is both beneficial and stimulating due to differing technical skills, economic and political atmospheres, and cultural and legal backgrounds. Recent development and modernization in Pakistan have led it towards a new construction phase, which involves national and multinational joint venture projects. Global and local CJVs have become gradually prevalent to produce mega construction projects. Current research aims to investigate and to identify the communal, ecological, political, legal, economic and other external risks associated with CJV projects in Pakistan. The study was carried out by literature review and a few national and international guidelines. Interviews were conducted with relevant professionals, experts, and owners of the organizations working on CJV projects. Data was collected in the form of a questionnaire from relevant professionals. The descriptive analysis was performed through SPSS using average index (A.I) technique. This study is helpful for the Government of Pakistan, public and private construction firms working under JV to reduce the emerging risks of construction projects. Keywords-joint venture; risk; construction; Pakistan I. INTRODUCTION Developing countries usually prioritize to invest in construction and infrastructure development [1]. Infrastructure development and mega construction projects need huge financial and human resources. Building complex engineering projects requires prominent level of expertise, sophisticated machinery and well managed teams with sufficient monetary resources, which is often beyond the scope of a single contractor. A joint venture (JV) is a commercial alliance between two or more separate entities that offers a unique opportunity to combine the distinctive competencies, increase the capacity of advantages and the complementary resources to participating firms [2]. Construction joint ventures (CJVs) have nowadays become more popular because of their importance as a strategic alternative in global competition and its vast advantages to the concern entities. In CJVs, two or more independent partners ally to achieve their goals [3]. All the terms and conditions of the alliance are pre-agreed between the parties, something that stipulates the conditions of partnership including work distribution, profit sharing, resource contribution and conflict resolution [4, 5]. For multinational and international projects, the alliance is made between local and foreign teams. This type of association is termed as international construction joint venture (ICJV) [6]. It is extensively used to improve the capacities of partners and competitiveness of the CJV [7]. Due to the change in the globalized and modern demands of construction many studies carried out regarding construction procurement methods have revealed that there needs to be a change of culture and attitude in the construction industry, moving away from traditional adversarial relationships to cooperative and collaborative relationships [8-11]. There are increasing concerns on improving the industry by alternative procurement methods, involving a movement away from traditional procurement systems [12]. JVs possess a lot of advantages, but they also offer a high level of uncertainty. 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III. The designed st part consist e second part kistan. Respon firms which a d estimated co aning that the duration and pacts on durat s distributed nstruction fie egories, name ve a better und rying between re considered mmercial, pub vered for data d a wide rang gure 2, shows sitions are ass pondents at ke se on lower re used for i kistan constru ormation is sum 018, 3260-3264 nd Cost Overru owners, con data, the anal ges for social ected as main dustry of Pak he relevant ex ustry. Figure Fig. 1. Rese DATA COLLE d questionnaire ted of particip t contained th ndents were req are affecting t ost. The ranki mentioned fa d cost while 5 tion and cost o among 180 ld, mainly f ely clients, co derstanding of 5 million to d. All major blic amenities collection. Re ge of experie s the responde ociated with t ey positions is positions. Av identifying th uction indust mmarized in T Fig. 2. Posit n in Joint Vent nsultants, and lysis was do sciences). The causes of a ch kistan. These xperts in the c 1 shows the earch methodolog ECTION AND AN e was divided pant’s demogr he risk factors quested to rank the constructio ing scale rang actor is not sig means that t of the project. 0 professional from three m onsultants, and the issue, diff 3500 million r fields incl s, roads, and espondents inc ence, so the d ents’ range a their experien more worthy verage index t he risk factor try. [24-25]. Table I. tion of responden 3261 ture Constructi contractors. one through S en the most cr hanged order i causes were context of Pak e detailed res gy NALYSIS into two parts raphic informa s in CJV firm k the risk facto on project dur ges from 1 to gnificantly affe the factor has . The question ls related to major stakeh d constructors ferent scale pro n Pakistani Ru luding reside d bridges etc luded in the su data were reli and position. ce. The opinio than the opini technique met rs in JV firm All demogr ts ion … After SPSS ritical in the then kistan earch s. The ation. ms of ors in ration o 5, 1 ecting high nnaire o the holder s. To ojects upees, ential, c. are urvey iable. Their on of ion of thods ms of aphic Engineering, Technology & Applied Science Research Vol. 8, No. 4, 2018, 3260-3264 3262 www.etasr.com Akhund et al.: Risk Attributes, Influencing the Time and Cost Overrun in Joint Venture Construction … TABLE I. DEMOGRAPHIC RESULTS Frequency Percentage (%) Cumulative % Organization Type Client 68 44.44 44.44 Consultant 33 21.58 66.02 Constructor 52 33.98 100.00 Project Size <20million 21 13.73 13.73 20–40million 46 30.06 43.79 50–150million 14 9.15 52.94 150–400million 12 7.84 60.78 400–800million 16 10.46 71.24 800–1800million 23 15.03 86.27 1800–3000million 10 6.53 92.80 >3000million 11 7.20 100.00 Project Type Commercial 46 30.06 30.06 Roads 30 19.60 49.66 Residential 32 20.91 70.57 Social Amenities 21 13.72 84.27 Bridges 24 15.73 100.00 Working Experience 0–5 years 62 40.52 40.52 6–10 years 23 15.03 55.55 11–15 years 33 21.57 77.12 16–20 years 13 8.50 85.62 More than 20 Years 22 14.38 100.00 IV. RESULTS AND DISCUSSION All influencing factors are categorized into six categories namely cultural, contractual, financial, managerial, legal and political. The average score of Liker’s scale by each type of respondent is listed in Tables II-VII. Average index and standard deviation of factors are also listed in front of each factor. It is observed that unidentified organizational goals are the highest ranked factor among the factors in the contractual category. The average score from clients is higher than the one of the other two types of respondents. It is clearly evidenced that regarding the opinion of clients this factor is responsible for the time and cost overrun of the project. For mega projects, where the team is large and consists of members having diverse cultural and lingual background, language barriers is of the highest concern and ranked 1st in the category of cultural attributes. The pattern of work and its difference with the difference in the background of the worker is the least concerning issue in this category. Similarly, price escalation, distrust, lack of laws and political influence are top-ranking attributes in each category respectively. Difference of opinion exists in clients, consultants and constructors, but on average the above-mentioned factors are identified as the most risky and most critical in their respective category. Overall sudden policy change and other political issues are highlighted as crucial features which can cause delays and can raise other complexities in JV projects. V. CONCLUSION JVs in construction are growing day by day due to their increased work capacity, so this study just highlights the points related to project risks. In future, the JVs would be more embraced in the field of construction. Further work can be done in order to resolve the issues regarding the Pakistan law, because new laws must be introduced for JVs. Risks of being delayed and being the defaulter of the project become more crucial in JV projects. Among 48 critical attributes responsible for causing undesired interruptions in the project, the most crucial factors are a change in policies, distrust between parties and non-enforcement of laws. Irrespective of position and designation in the project, clients, consultants, and constructors have identified these factors in independent surveys. If JV projects in Pakistan have to be strengthened, policymakers should mitigate these obstacles and remedy the risk causing factors. VI. SUGGESTIONS AND RECOMMENDATIONS Some suggestions by experts to alleviate risk in the JV projects follow: Organizational goals should be defined clearly with the scope of the project and in compliance with 3C principles. 10% of workers on site and at each specific task should have sufficient qualification and the multilingual background to overcome communication concerns. Sufficient inflation cost should be included at the time of bidding. Consultants should be bound to weigh the project activities as per legislation. There should be weekly meetings among clients, consultants, and constructors. TABLE II. CONTRACTUAL RISK ATTRIBUTES OF CJV PROJECTS IN PAKISTAN 1 Undefined organizational goals 4.78 4 3.63 4.13 0.48 2 Violation of contract by project partner 3.16 4.41 4.73 4.1 0.68 3 Lack of organizational commitment 3.8 4.01 4.29 4.03 0.20 5 Contractual terms not clear (from partner side) 3.98 3.95 3.89 3.94 0.04 6 Ownership problem in project partner 3.33 3.78 4.54 3.88 0.50 7 Undefined degree of agreement 4.13 3.94 3.36 3.81 0.33 8 Less availability of information to partners 3.98 3.88 3.03 3.63 0.43 9 Quality assurance 2.89 3.19 4.42 3.5 0.66 10 Payment distribution 3.19 2.89 4.06 3.38 0.50 11 Profit/loss distribution among partners 2.94 3.18 3.81 3.31 0.37 12 Variation in payments 2.77 3.47 3.69 3.31 0.39 13 Risk allocation 3.16 2.93 3.48 3.19 0.23 14 Extension in time 4.12 2.1 3.35 3.19 0.83 Engineering, Technology & Applied Science Research Vol. 8, No. 4, 2018, 3260-3264 3263 www.etasr.com Akhund et al.: Risk Attributes, Influencing the Time and Cost Overrun in Joint Venture Construction … TABLE III. CULTURAL RISK ATTRIBUTES OF CJV PROJECTS IN PAKISTAN 1 Language differences between parties 4.57 4.09 4.33 4.33 0.20 2 Lack of communication between parties 4.13 4.18 4.56 4.29 0.19 3 Cultural differences between partners 3.98 4.35 4.06 4.13 0.16 4 Social differences between partners 2.76 3.33 3.9 3.33 0.47 5 Unfamiliarity with local conditions 3.02 2.98 3.3 3.1 0.14 6 Clashes of parties while doing same work with different patterns 2.24 2.1 2.65 2.33 0.23 TABLE IV. FINANCIAL RISK ATTRIBUTES OF CJV PROJECTS IN PAKISTAN 1 Labor and material price escalation 4.11 4.02 4.56 4.23 0.24 2 Budget over run 3.9 3.31 3.8 3.67 0.26 3 Loss due to variation of currency exchange rate 4.1 3.13 3.78 3.67 0.40 4 Loss due to variation in interest rate 3.74 3.07 3.69 3.5 0.30 5 Financial management issues with firm itself 3.08 2.93 3.98 3.33 0.46 6 Change in market conditions 3.13 3.36 3.5 3.33 0.15 7 Bankruptcy of project partner 2.91 3.11 3.55 3.19 0.27 8 Poor consideration for inflation 2.85 3.36 3.21 3.14 0.21 9 Low credibility of shareholders and lenders 1.97 2.89 4.14 3 0.89 TABLE V. MANAGERIAL RISK ATTRIBUTES OF CJV PROJECTS IN PAKISTAN 1 Distrust between partner employees 4.92 4.87 4.91 4.9 0.02 2 Incompetence of project management team 4.88 4.37 4.91 4.72 0.25 3 Disagreement between both parties about staff allocation 4.09 4.04 3.87 4 0.09 4 Improper project planning and budgeting 4.11 3.31 4.07 3.83 0.37 5 Improper project feasibility study 4.28 3.17 3.62 3.69 0.46 6 Inadequate choice of partner 3.24 4.09 3.68 3.67 0.35 7 Poor relations with government departments 3.28 3.34 3.37 3.33 0.04 8 Relationship with government 4.01 2.42 3.56 3.33 0.67 9 Relationship with power groups 2.88 3.12 3.99 3.33 0.48 10 Inadequate project organization structure 4.02 2.68 3.29 3.33 0.55 11 Involvement of more decision makers 3.11 2.86 3.54 3.17 0.28 12 poor relations and disputes with partners 3.33 2.27 3.4 3 0.52 TABLE VI. 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