RISK MANAGEMENT PRACTICES AND PERFORMANCE OF PROJECTS IN

NAIROBI CITY COUNTY, KENYA

PETER GITAU NJUGUNA

D53/OL/CTY/26701/2014

A RESEARCH PROJECT SUBMITTED TO THE SCHOOL OF BUSINESS IN

PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF
DEGREE IN MASTER OF BUSINESS ADMINISTRATION (PROJECT
MANAGEMENT) OF KENYATTA UNIVERSITY

NOVEMBER, 2019

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 DECLARATION
I declare that this project is my original work and has never been presented in any other
university for any other award. No part of this project should be produced without authority
of the author or/and Kenyatta university

Signed………………………………. Date……………………...

PETER GITAU NJUGUNA

D53/OL/CTY/26701/2014

This research project has been submitted for examination with my approval as the supervisor

Signed……………………………… Date……………………...

Mr. Shadrack Bett

Department of Business Administration
Kenyatta University

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 DEDICATION
I dedicate this research project to my lovely wife, parents, friends and colleagues who
supported me along the process

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 ACKNOWLEDGEMENT
I would like to thank the Almighty God for giving me the opportunity and strength to pursue
my education. It is through His abundant grace that has brought this research work this far.
This work would have not been possible without my supervisor Mr. Shadrack Bett who
guided me all along the process. I would like to thank my family, for their support and
wonderful ideas throughout this process. I further wish to thank my older siblings for their
invaluable advice and companionship on how to tackle the life challenges they have always
been a source of inspiration from whom I get my strength and intelligence. Lastly, I also
appreciate my friends who share this journey with me and encouraged me in the adventure of
academics and have been my anchor

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TABLE OF CONTENT
DECLARATION ....................................................................................................................... ii
DEDICATION .......................................................................................................................... iii
LIST OF FIGURES ................................................................................................................ viii
OPERATIONAL DEFINITION OF TERMS ..............................................................................x
ABSTRACT ............................................................................................................................. xi
CHAPTER ONE ....................................................................................................................... 12
INTRODUCTION .................................................................................................................... 12
1.1 Background of the Study ............................................................................................. 12
1.1.1 Risk Management Practices .............................................................................................. 13
1.1.2 Project Performance ......................................................................................................... 15
1.2 Statement of the Problem .................................................................................................... 16
1.3 Objectives of the Study ....................................................................................................... 17
1.3.1 General objective .............................................................................................................. 17
1.3.2 Specific Objectives ........................................................................................................... 17
1.4 Research Questions ............................................................................................................. 18
1.5 Significance of the Study ..................................................................................................... 18
1.6 Scope of the Study............................................................................................................... 19
1.7 Limitation of the Study........................................................................................................ 19
1.8 Organization of the Study .................................................................................................... 19
CHAPTER TWO ...................................................................................................................... 21
LITERATURE REVIEW .......................................................................................................... 21
2.1 Introduction ......................................................................................................................... 21
2.2 Theoretical Review ............................................................................................................. 21
2.2.1 Expectancy Theory ........................................................................................................... 21
2.2.2 Enterprise Risk Management Theory ................................................................................ 22
2.2.3 Network Theory ............................................................................................................... 22
2.3 Empirical Literature Review ................................................................................................ 23
2.3.1 Risk Transfer and Project Performance ............................................................................. 23
2.3.2 Risk Prevention and Project Performance ......................................................................... 24
2.3.3 Risk Control and Project Performance .............................................................................. 25
2.3.4 Risk Retention and Project Performance ........................................................................... 27
2.4 Summary of Literature Reviewed and Research Gaps .......................................................... 28
2.5 Conceptual Framework ....................................................................................................... 30
CHAPTER THREE................................................................................................................... 32
RESEARCH METHODOLOGY............................................................................................... 32
3.1 Introduction ......................................................................................................................... 32

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3.2 Research Designs ................................................................................................................ 32
3.3 Target Population ................................................................................................................ 32
3.4 Sample Size and Sampling Procedures ................................................................................ 33
3.5 Data collection Instruments ................................................................................................. 33
3.6 Data Collection Procedures ................................................................................................. 34
3.7 Reliability and Validity of the study Instruments ................................................................. 34
3.7.1 Validity of the Instruments ............................................................................................... 34
3.7.2 Reliability of the Instruments ............................................................................................ 34
3.8 Data Analysis and Presentation............................................................................................ 35
3.9 Ethical Consideration .......................................................................................................... 35
CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSSION ........................................... 36
4.1 Introduction ......................................................................................................................... 36
4.1.2 Reliability Test ................................................................................................................. 36
4.4 Inferential Statistics .......................................................................................................... 48
4.4.1 Model Summary ............................................................................................................... 48
4.4.2 ANOVA ........................................................................................................................... 49
4.4.3 Regression Coefficient ..................................................................................................... 50
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS .................. 52
5.1 Introduction ......................................................................................................................... 52
5.2 Summary of the Findings .................................................................................................... 52
5.4 Recommendations ............................................................................................................... 54
5.5 Suggestions for Further Studies ........................................................................................... 55
REFERENCES ......................................................................................................................... 56
APPENDICES .......................................................................................................................... 61
APPENDIX 1: QUESTIONNAIRE........................................................................................... 61

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 LIST OF TABLES

Table 2. 1 Summary of Literarure Reviewed and Research Gaps ............................................... 28

Table 3. 1 Target Population ..................................................................................................... 33

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 LIST OF FIGURES
Figure 2. 1 Conceptual Framework............................................................................................ 31

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 ABBREVIATIONS AND ACRONYMS
ISO International Organization for Standardization
PMBOK Project Management Body of Knowledge

PMI Project Management Institute

PRM Project Risk Management

SWOT Strength Risk and threat

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 OPERATIONAL DEFINITION OF TERMS
Project Performance: This is the actual realization of project goals and objectives. It

involves implementing a project according to plan, time schedule,

budget and scope

Risk control : This is the process of identifying risks, separating the project plan

from encountering them in advance and having a risk management

plan to enable minimize chances of the risks from occurring

Risk management practices: these are approaches used to identify, mitigate, control,

prevent and avoid incidences or activities that can affect negatively the

implementation or lifecycle of a project

Risk prevention : The process of advocating for early detection of risks and coming up

with ways of enhancing staff capacity, work plans and thorough

inspection and monitoring to ensure no risks frustrate the project

management process

Risk retention : The process of avoiding risks through self-insurance, use of

alternative plans and not necessarily overcoming it but rather exploring

options around it

Risk transfer : This is the use of third-parties to carry the burden of the risks

involved in the project lifecycle through insurance, legal agreements

and outsourcing

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 ABSTRACT
Projects are prone to risks the numerous types of risks that may affect a project are financial,
strategic, hazardous and operational risks. Unexpected events and uncertainty often result to
damaging consequences for projects. If these risks are not effectively dealt with, they may
pose a challenge in the completion of the project. Therefore, risk analysis and management of
risks is a major feature of project management in which project managers need to effectively
deal with the risks and uncertainty in order to fully achieve the vision of the project. Project
performance is determined by factors such as cost, customer satisfaction, time, health, client
changes and business performance the concept of project delays as a result of risk is now a
global phenomenon. The study’ general objective was to determine the influence of risk
management practices on performance of projects in Nairobi City County, Kenya. The study
was guided by the following specific objectives; to determine the influence of risk retention
on project performance in Nairobi City County, Kenya, to investigate how risk prevention
affects performance of the projects in Nairobi City County, Kenya, to examine the effect of
risk control on performance of projects in Nairobi City County, Kenya and to evaluate how
risk transfer affects the performance of projects in Nairobi City County, Kenya. The study
will be guided by the Enterprise Risk Management theory, Network theory and the
Expectancy Theory. The study adopted a descriptive design in order to determine how risk
management practices with respect to the following independent variables risk prevention,
risk retention, risk transfer and risk control and how they affect the performance of projects in
Nairobi City County, Kenya. The study used primary data. The study employed semi-
structured questionnaires to gather relevant information from a total of 135 project managers,
supervisors, risk managers, construction firms and finance officers. The data collected was
then analyzed using SPSS and findings of the study were presented in graphs, pie charts and
tables. The study established that risk management practices have a significant and positive
effect on project performance. The study concluded that risk transfer had a significant and to
a great extent affected the performance of the projects in Nairobi City County, Kenya. It was
also concluded that risk transfer is significantly embraced, applied and practiced among firms
implementing projects in Nairobi City County, Kenya. The study concluded that risk
prevention significantly affected project performance. It was concluded that risk prevention is
embraced among organizations executing projects in Nairobi City County, Kenya as a risk
management practice and it has enhanced project completion within scope, budget and time
schedule. The study further concluded that there a significant and positive relationship
between risk control and project performance. Risk control was significantly practiced among
the organizations involved projects in Nairobi City County, Kenya and had a significant
influence on project performance. It was concluded that risk retention had a positive and
significant effect on the performance of the projects. To great extent, risk retention as a risk
management practice had a positive effect on project performance. The study recommends
that the management of the projects need to ensure the risk management practices are
integrated in project implementation. Most of the practices were in place but were not
effectively employed to ensure peak performance. The organizations were found to be
skeptical on planning for risks and taking risk management steps and therefore for peak
performance there is need to have a risk management plan in place and stick by it.

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 CHAPTER ONE

INTRODUCTION
1.1 Background of the Study

According to the Project Management Institute (2004), a project is a temporary venture that
has an ending point and a unique way of achieving its objective. Project management on the
other hand involves application of skills, techniques and tools that are incorporated in the
project activities in order to achieve the project requirements. A project meets its objective
and goals through the integration and application of project management practices such as
initiation ,planning, implementation , monitoring and controlling and the closing phases
(PMI,2004).In as much as project managers can apply these project management practices
and tools it is undeniable that projects are prone to risks that makes the project teams bear
challenges such as delay in completion, not biding to the desired quality and costs overrun
which results to poor project performance Macharia (2017).

Project performance is determined by factors such as cost, customer satisfaction, time, health,
client changes and business performance safety (Musyoka, 2012). The Concept of delays and
overrun cost in projects is now a global phenomenon. According to a report of USA standish
group (CHAOS report 2009) only 32% of projects meet the successful expected delivery
period.44% are challenged due to budget constraints and 24% projected with failure and
cancellation Africa failure of projects be it NGO, Governmental or Religious based
sponsored generates a cycle of rising expectation and unfulfilled promises. The failure of
such project teams to meet the desired project goals is usually as a result of failure to manage
risk associated with the projects. According to Carbone and Tippet 2015, managing of project
risk is important in successful management of projects.

Kumar (2014) risk management tools and techniques have been developed in order for
project team to successfully deliver the project on time, within budget and in order to meet
client desired quality. However, these project management practices are not widespread and
most of the project managers have failed in applying them thus resulting to project failure.
According to Musyoka (2012) all entities are faced with risk however the challenge of the
management is the determination of how much risk it is prepared to accept so as it to strives
to grow the value of the stakeholders. However, these uncertainties present both values and

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risk with the potential; of enhancing or eroding value. Risk management practices enable
them to identify, examine and manage risks associated with the uncertainty.

Unexpected events and uncertainty often result to damaging consequences for projects (Gitau,
2016). Therefore, risk analysis and management of risks is a major feature project
management in which project managers need to effectively deal with the risks and
uncertainty in order to fully achieve the vision of the project (Anderson, 2012). Globally, Lee,
Lam and Lee (2015) Conducted a study in Canada on risk management practices on energy
contracting projects performance the study established that uncertainty such as baseline
measurement and increase in overrun costs and project complexity arises due to failure of
project managers to identify risks at the initiation phase of the project. In Nigeria, Augustine,
Ajayi, Ade and Edwin (2013) evaluated risk management practices applied in construction
firms in Lagos, the study established that introduction of Risk management practices has
helped in reduction of costs, overtime run and hence has improved the quality of construction
projects.

Regionally, Amandin and Kule(2016) conducted a study in Kigali Rwanda on risk

management practices on construction roject the study established that project delay is
usually caused as a result of failure in identifying a formal and well-structured risk
management strategy during project planning with involvement of project team, professionals
and end users. In Kenya, Macharia (2016) established the effect of risk management
strategies on performance of public schools in Nairobi the study findings implicated that
among four risk management practices risk avoidance had the major influence on completion
of the construction and it concluded that risk reduction, risk sharing and risk retention
practices positively influenced the completion of the construction projects. According to
Mbada (2016), failure of private and public construction projects to meet cost, time and
quality has resulted to poor performance and waste of resources.

1.1.1 Risk Management Practices

According to PMI (2008) project risk is an uncertain event that when it occurs leads to a
positive or negative consequence on at least one project objective, such as cost, time, quality
or scope. Risk management is one of the nine knowledge areas propagated by the PMI.
Project Management Body of Knowledge (PMBOK,2004) highlighted the essence of risk
management as it includes t the processes concerned with carrying out risk management in

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areas of initiating, planning, identifying, analyzing and monitoring and controlling on a
project.Project risk management discipline has developed over a period of time as critical part
of project management. Risk can have a two-dimensional meaning, either a negative
implication or appositive implication. Risk management practices involve identification,
understanding and determining of the potential unsatisfactory results that is likely to affect a
project (Muriana & Vizzini, 2017).

After identifying the uncertainties, the risks involved are then analyzed basedon likelihood
and impact of the risks. According to Burtonshaw (2017), tools used in risk examination
include the use of probability (Risk matrices), the SWOT analysis which is analyzing the
strength, weakness, opportunity, and threat associated with the risk that has emerged. After
the SWOT analysis the top ten risk item tracking technique is applied to access and rank the
risk depending on the significance to a particular project. Probability and impact can be
prioritized using a five-point scale for evaluating risk in the scale of critical risk, serious risk,
moderate risk, minor risk and negligible risk. According to the PMBOK (2004) Risk control
and response includes avoidance, acceptance, transfer and mitigation and thereafter positive
risk can be enhanced, shared and exploited.

According to Cagliano, Grimaldi and Rafele (2015) risks should be continuously evaluated
and monitored in order to identify new risks and effectiveness of risk control and feedback.
Carvalho, and Rabechini (2015) identifies five Project Risk Management Practices (PRM)
they include; systematic risk identification through documentation of reviews and
information gathering techniques like SWOT analysis and interviews; methodic trade-off
analysis which involves coming up with a plan and appointing risk manager; detailed
planning for uncertainty to reduce the probability and the consequences associated with an
adverse risk to an acceptable threshold; probabilistic risk analysis which includes assessing
of likelihood that a risk will occur and the effects if it occurs.

A critical component of management of risk is the mitigating risk at its point of occurrence
by reducing their impact. A successful risk mitigating strategy often leads to a reduction in
the adverse impacts. According to Chapman and Ward (2007), when a risk mitigation
strategy is well planned and properly administered it replaces an uncertain even with a more
controlled and predictable response. Wallace and Blumkin (2007) argues that control
activities at the planning phase includes risk profiling, architect and engineer selection

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process, architect and engineer contract review, site selection and validation, need
identification and validation and preliminary budget and schedule development.

According to the International Organization for Standardization (ISO) risk is an effect of

uncertainty on objectives, which means that they either results to a positive or negative effect.
ISO 31000 is a set of standards relating to management of risks codified by the ISO
31000:2009, Risk management – Principles and guidelines it provides a principle, framework
and a process for risk management. It can be applied by any organization regardless of its
capacity,operations or sector. Using ISO 31000 helps organizations to increase the likelihood
of achieving its vision, mission and objectives, improve the 6 identification of opportunities
and threats and effectively allocates and utilizes resources for risk treatment.

1.1.2 Project Performance

According to Muller (2016), an endeavor that is conducted in order to come up with a unique
product that is beneficial and brings about change is known as a project. The essential
measure of a successful project is that it measures it delivers what it is designed to deliver in
terms of output product or services to a business. In addition, factors such as time limit
achievement, working within the budget, approved scope and quality are also contributing
reasons for a successful project. Measures of project performance consist of meeting
outcomes positively and delivery of outcome within a specified contracted time frame and
within the budget allocated with respect to reduced costs. Project performance relates to
accomplishment of objectives and goals in fulfilling customer satisfaction and fulfilling
technical requirements.

Todorović, Petrović, Mihić, Obradović and Bushuyev (2016) when projects are managed
effectively, they contribute to a number of factors thus improving organizational performance.
The long run advantages of project management include; attaining specified targeted profits,
attainment of competitive advantages, an increase in market share, enhancement of the
organization status quo. Cheung (2014) project performance is appraised and quantified using
a number of performance indicators that include; cost, safety and health, quality, firm
performance, time, endorsement of client and changes. According to Nyoni (2018), the
implementation stage of the project is the benchmark of measuring the performance of a
project this is because it provides a guideline to how the project will run in terms of its
activities and ensuring all the project participants focus on the end goal of a project. This
means that difference in opinions along with the project objectives among project participant

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would lead to failure of the project. Kerzner (2017) project initiation takes an overall of 80%
of all project activities and utilization of resources thus it’s a benchmark of whether the
project will be successful or not.

According to Kerzner (2017), there are four dimensions of project performance. These four
dimensions consist of factors such as quality, cost, time efficiency and production efficiency.
However, different projects have different performance measurement thus organization
should avoid limiting measurement of performance through using efficiency measures as the
only indicators of project performance because it does not always signify the overall
performance of a project. Organization should therefore look at measures such as the effect of
the project on clients and how the end product of the project impacts the future state of the
organization.

1.1.3 Projects in Nairobi City County, Kenya

Many projects fail due to risk management practices in the implementation of the projects by

the Nairobi’s county government. In 2009 there were many projects which finished with poor

performance because of many evidential poor risk management, non-availability of materials,

road closure, amendment of the design and drawing which are entailed in projects design

risks, additional works, waiting the decision, handing over, variation order, amendments in

Bill of Quantity (B.O.Q) and delay of receiving drawings (Strenman, 2012). Nonetheless

there are other factors for problems of performance in Kenya such as project management,

coordination between participants, amongst other factors.

1.2 Statement of the Problem

Projects are always prone to uncertainties and risks and failure to effectively manage the
associated risks appropriately results to failure of the projects in terms of delay in completion
(Jean, 2015). Globally, regionally and locally various studies have been conducted on the risk
management practices on performance and success of projects. For instance, Carvalho and
Rabechini (2015) investigated the impact of project risk management practices on success of
IT projects findings of the study revealed that IT projects carry out risk management to
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maximize the performance and to manage risk effectively and efficiently enjoy financial
savings and greater productivity. Adeleke, Nasidi and Bamgbade (2016) assessed the
influence of risk management practices of construction projects in Lagos findings of the
study revealed that risk management practices has a positive correlation with project
success. When used consistently, risk management practices increase the chances of project
success.
In Kenya , Kinyua, Ogolla and Mburu examined the effect of risk management practices on
performance of SME dealing with communication and technology in Nairobi Kenya findings
of the study revealed that many (ICT) enterprises in Nairobi, Kenya have realized the
importance of risk management practice in ICT project management to achieve process
success and adoption of risk management practices has improved success rates of new
projects and better decision making. Macharia(2017) investigated risk management strategies
and performance of public school construction projects in Murang’a county findings of the
study revealed that The risk avoidance strategy has the strongest influence on performance of
construction projects while risk transfer had the lowest influence risk management strategies
have positive influence on performance of construction project in secondary schools.

The above-mentioned studies have proved that risk management practices enhance project
performance. There is a contextual gap since very few studies have been done on the
influence of risk management practices on performance of projects in Nairobi Kenya.
However, the application of the findings of the mentioned studies is limited. It is in this
perspective that this research assessed the influence of risk management practices and project
performance in Nairobi City County, Kenya

1.3 Objectives of the Study

1.3.1 General objective

The study’ general objective was to determine the influence of risk management practices on
performance of projects in Nairobi City County, Kenya.

1.3.2 Specific Objectives

The study was guided by the following specific objectives;

i. To determine the influence of risk retention on project performance in Nairobi City

County, Kenya

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 ii. To investigate how risk prevention affects performance of the projects in Nairobi City
County, Kenya
iii. To examine the effect of risk control on performance of projects in Nairobi City
County, Kenya
iv. To evaluate how risk transfer affects the performance of projects in Nairobi City
County, Kenya.

1.4 Research Questions

i. To what extent does risk retention affect the performance of projects in Nairobi City
County, Kenya?
ii. What is the effect of risk prevention on performance of projects in Nairobi City
County, Kenya?
iii. How does risk control affect the performance of projects in Nairobi City County,
Kenya?
iv. What is the effect of risk transfer practice on performance of projects in Nairobi City
County, Kenya?

1.5 Significance of the Study

It is hoped that the findings of this study will fill the existing gap on influence of risk
management practices in enhancing performance of projects in Nairobi City County, Kenya.
Findings of this study will be relevant to stakeholders involved in different projects. This
study will outline risk management practices that lead to success of projects and enhance
performance of those projects. The findings of the study will not only be important to the
Nairobi City County, Kenya Government but will also be applicable in different projects
settings such as NGOs, Religious based Organization and government projects. The findings
of the study will also add up to the existing literature thus will be used as a point of reference
by scholars who would want to pursue related research study.

Donors, government body and stakeholders may find the findings of this study useful in the
process of decision making because the findings of the study will form a basis of
understanding on how risk management practices influence performance of projects. The
study will also be of relevance to potential investors and existing investors who would want
to be invest in different projects because they shall be in a position to make appropriate

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decisions on risk management practices and how they affect performance. Project managers
will also benefit from the study since they will gain a clear understanding on which risk
management practice effectively influence performance of projects. Lastly, the study will be
of relevance to consultancy firms because they will be in a position of making wise decision
on advice and recommendations to issue to their clients on influence of risk management
practices and project performance.

1.6 Scope of the Study

This study focused on risk management practices and performance of projects in Nairobi
Kenya with an emphasis on risk retention, risk transfer, risk control and risk prevention. To
effectively establish how the risk management practices, affect the performance of project in
Nairobi City County, Kenya. The study scope will consist of 190 staffs of Nairobi City
County, Kenya Government that are involved in project implementation. The scope therefore
consisted of, general managers, project managers, project supervisors, project officers,
finance officers and Contracting Companies representatives. The reason for choosing the
above mentioned was because they would give the relevant information on performance of
projects in Nairobi City County, Kenya.

1.7 Limitation of the Study

Use of structured questionnaires was employed in data collection, the study experienced
unwillingness of some respondents to share relevant information due to fear of victimization
to overcome this challenge the researcher assured the respondents that information conveyed
would be confidential. The researcher also acknowledged that respondents were busy when
administering the questionnaires to curb this challenge the researcher contacted the
respondents before administering the questionnaires and also used the drop and pick later
method to ensure that answers given were well thought.

1.8 Organization of the Study

This study consists of five chapters. The first chapter gives us the body of the study it consists
of background information, study objective, statement of the problem, research questions,
research questions, significance of the study, scope and limitation of the study. The second
chapter discusses the literature review consisting of theoretical and empirical literature and
also gives us the research gaps and conceptual framework. The third chapter outlines the
research methodology that was utilized to determine how project management practices

19
affects performance of projects in Nairobi City County, Kenya. Chapter four presents
research findings, interpretations and discussions while chapter five gives the summary of the
findings, conclusions and recommendations.

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 CHAPTER TWO

LITERATURE REVIEW
2.1 Introduction
In this chapter, theories that form the basis of the study are discussed. Various studies carried
out on risk management practices and performance of projects is also discussed in the
empirical review. The research gaps and the conceptual framework are also included in this
section.
2.2 Theoretical Review
Kothari (2003) the theoretical review provides the researcher with an opportunity to have a
philosophical stand. Theoretical framework affects the decisions made in the process of
research. The study was guided by three theories namely; Network Theory, Expectancy
Theory and lastly the Enterprise Risk Management Theory.

2.2.1 Expectancy Theory

This theory was developed by Vroom (1964). The theorist believes that motivation of the
individual is determined by perception of relationship between the actions and rewards. The
theory is categorized into three sections namely, valence, expectancy and instrumentality.
Expectancy assumes that a certain level of effort will be followed with certain level of
performance. Valence represents a value that a given outcome has for individual.
Instrumentality relate to the connection between first level outcome like promotion and
second level outcome such as raise.

Thomas (1990) analyzed Vroom expectancy theory model in the context of construction
industry, and found that the theory discusses variations of performance in terms of effort
which the employee is willing to exert in order to finish a job. According to Thomas, the
result performance could be observed based on efficiency, effectiveness, quality of work,
innovation, profitability and productivity. 12 According to Gonzalez (1991), managers should
determine the outcome of each employee values and define adequate and good performance,
in terms that are observable and measurable so that employees understand managers’ desires.
Project managers in construction industries should also ensure that intended level of
performance is attainable in fact; they should connect the outcome required by the workers to
specific performance. This theory relates to performance of projects as it will help all

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stakeholders such as projects managers to develop measurement guide that can give
important feedback to workers therefore improving performance of projects.

2.2.2 Enterprise Risk Management Theory

According to Nocco and Stulz (2006), Enterprise Risk Management (ERM) is a risk
management theory advocates for recommends for the measurement and management of
notable risk facing a given entity whole than the management of each risk independently. Its
main aim is to combine the risk management silos in an organization into one holistic and
comprehensive framework. The ERM risk management framework of managing risk
emphasizes that senior company executives and employees should actively be involved in
risk management process of analyzing and responding to a wide range of company risks
(Hallowell, Molenaar, &Fortunato, 2013). This concept encourages all members of the
organization to be involved in the management of risks and not only one or a few members.

The ERM also highlight the importance of clear process and policies for managing risks.
According to Olson and Wu (2010), the theory also affirms that if 10 organizations can
embrace formal policies that define risks appetite, strategic goals, tolerance and systematic
processes then they can improve their risk management capacity of identifying, analyzing,
and treating of risks. The theory also stresses on a creation of risk management culture where
all stakeholders are empowered and accountable to manage risks. Cormican (2015) suggested
that ERM practices involve increased competitive advantage, stakeholder confidence and
long-term viability of organizations. The ERM theory has become popular in project
management techniques despite the fact that it was developed for management of company
risks. Drumll (2001) explains that adopting ERM philosophy in the construction industry is a
wise decision as it applies to industries that have very high rates of failure like construction
industry. These failures are as a result of failure to identify, mitigate and control risk across
the entire business making this theory relevant to this research

2.2.3 Network Theory

Network theory is a hypothesis that is used to clarify the structure and working of social
frameworks. According to Fang, Marle, Zio&Bocquet (2015) this hypothesis sees social
frameworks, for example, organizations or projects as a network that includes nodes and links
associating these nodes. For example, in a given projects, the nodes may incorporate
members of the project team, the task administrator, suppliers, owner of the project and

22
project financiers. These nodes are associated with different connections such as supplier-
buyer relationship, financing, legal, and working connections. The hypothesis clarifies that
adjustments or unsettling influences in any node or line inside the system cause a
progressively outstretching influence on every single other line and nodes. The theory is
frequently used as a part of risk management to clarify and educate the procedure of risk
analysis.

Moreover, according to Zingrand (2010), this theory also put more emphasis on the need to
adopt a systematic approach when analyzing and understanding risk instead of concentrating
on the risk consequences as one component of the project. It urges project team to consider
how different segments of the project are interrelated and how obstruction in one component
will influence other components of the project. This point of view of investigating risk
empowers managers of the project to think of a more reasonable and all-encompassing
evaluation of the effect of specific risk. This theory recommends that in order to judge the
success of project management strategies the researcher should establish the extent at which
this strategy holistic and comprehensive making this theory relevant to this research.

2.3 Empirical Literature Review

2.3.1 Risk Transfer and Project Performance

Aduma and Kimutai (2018) conducted a study in Nairobi Kenya to investigate risk
management practices conducted at the National Hospital Insurance Fund in Nairobi. A
descriptive research design was adopted in the study and a total of 651 management
employees at NHIF were the study’ target population. A stratified proportionate random
sampling technique was employed and the sample size was 241. Self-administered
questionnaires were then administered to the study respondents who consisted of staff from
finance, Health insurance and legal affairs, Public procurement and human resources
departments. The data collected was then analyzed using both descriptive statistics and
inferential statistics a test for multicollinearity. Findings of the study revealed that risk
transfer influenced performance of NHIF in that use of outsourcing, high cost of risk
premiums and insurance policy and contractual agreements to a third party greatly influenced
performance of the Funds projects.

Nsiah and Bonnah (2014) conducted a study in Ghana to investigate the effect of risk
management practices on Ghanaian banking industry. The study adopted a case study

23
research design and a total of 5 banks located in the rural area consisted of the study’ target
population. The employed questionnaires and face to face in-depth interviews to investigate
how risk management practices influenced the performance of the banks. Questionnaires
were then successful administered to bank managers, strategic and finance officers. For data
analysis, the study employed descriptive and content analysis and findings of the study
revealed that risk transfer strategies such as high-risk premiums, signing of contracts and
insurance policy influenced the performance of the 5 banks.

Kolo (2015) investigated the influence of project risk management practices in construction
projects in Abuja Nigeria. The study adopted a descriptive research design and a total of 12
construction firms in Yola were the study’ target population. Questionnaires were
successfully administered to project managers, supervisors and general managers of the firms.
Data collected was then analyzed using descriptive analysis and findings of the study
revealed that the construction firm adopted risk transfer strategies such as insurance policy
and risk premiums influenced performance of the projects in terms of cost time and quality.

Pimchangthong and Boonjing (2017) investigated the effect of risk management practices on
performance of IT projects. The study adopted a descriptive research design and a total of
200 project managers, IT managers and IT analysts working in IT firms were interviewed.
The researcher successfully administered questionnaires consisting of both open ended and
closed ended questions to the study respondents. Data collected was then analyzed using
descriptive statistics. Findings of the study revealed that risk transfer strategies such as high-
risk premiums, signing of legal agreements and outsourcing influenced the performance of
the firm’s IT projects

2.3.2 Risk Prevention and Project Performance

Wabomba (2015) conducted a study in Nairobi Kenya to investigate the influence of risk
management strategies on performance of projects among International Development
Organizations. The study adopted a correlational predictive research design and data was
collected using both documentary study review analysis of concepts used by literature and
primary methods. Questionnaires were then administered to project and programme managers
involved in managing of International Development projects. Data collected was then
analyzed using Excel 2013 and findings of the study revealed that the organization adopted
changing of work plans to avoid risks, contingency, regular inspections, operational reviews
training and skill enhancements in order to prevent risks.
24
Weingarten, Humphreys, Gimenez, and McIvor (2016) conducted a study to investigate the
influence of risk prevention on performance and success of supply chain integration study
adopted a descriptive research design and a total of 12 firms dealing with supply of stationery
were the study’ target population. Questionnaires were then successfully administered to the
study respondents who consisted of managers, finance offices and procurement officers. Data
collected was then statistically analyzed using descriptive and inferential statistics. Findings
of the study revealed that the supply chain firms adopted risk prevention strategies such as
detailed planning, alternative approaches and contingency as a way of risk prevention. Study
findings further implicated that risk prevention practice positively influences the performance
of supply chain firms.

Aimable, Shukla and Oduor (2015) conducted a study in Rwanda to investigate the effects of
risk management strategies on the performance of construction projects. The study adopted a
descriptive research design and a total of 291 project team located in 4 districts were the
study’ population. The study used simple random sampling and the sample size was
169.Study employed structured questionnaires, documentary review and In-depth interviews
for data collection and for data analysis the study adopted qualitative analysis techniques.
Findings of the study revealed that detailed work plan, safety inspection and having a safety
system influence the performance of the construction projects. The study concluded that
research prevention strategy influenced the performance of the construction firms.

Singh, Deep, and Banerjee (2017) carried out a study in India to investigate the influence of
risk management practices in India construction firms. The study adopted a descriptive
research design and questionnaires were developed based on the existing literature. A total of
152 respondents consisting of project managers, project team, supervisors and general
managers of 3 construction firms were included in the study. Findings of the study revealed
that the 3 construction firms used risk prevention strategies such as safety inspections, safety
systems, contingency and detailed work plan to influence the construction projects
performance. The study findings further revealed that alternative approaches for risk
prevention.

2.3.3 Risk Control and Project Performance

Okumu and Wanjira (2017) investigated the risk management strategies adopted by Insurance
firms in Kenya. The study adopted a descriptive research design and a total of 18 motor

25
insurance companies consisted of the study population. A simple random sampling and
purposive sampling was employed and a total of 54 employees and management of the motor
insurance companies were interviewed. The study employed self-administered questionnaires
for data collection. Data collected was then analyzed statistically using descriptive statistics
and content analysis. The findings of the study implicated that risk control strategies such as
identifying risk events, quantifying risk, responding to risk as defied in risk management plan,
risk control meetings, use of quality assurance, signed contracts, and use of contingency
positively influenced performance of the motor insurance companies.

Aimable, Shukla and Oduor (2015) conducted a study in Rwanda to investigate the effects of
risk management strategies on the performance of construction projects. The study adopted a
descriptive research design and a total of 291 project team located in 4 districts were the
study’ population. The study used simple random sampling and the sample size was
169.Study employed structured questionnaires, documentary review and In-depth interviews
for data collection and for data analysis the study adopted qualitative analysis techniques.
Findings of the study revealed that identifying risk event, quantifyingrisk, responding to risk
as defined in risk management plan had a positive effect on performance of the construction
projects.

Ubani, Amade, Benedict, Aku, Agwu, and Okogbuo (2015) conducted a study in Nigeria to
investigate the influence of risk management practices on construction industry. The study
adopted a case study research design and the study’ target population consisted of contractors,
clients and consultants in the construction industry. A total of 84 respondents represented the
sampling size. For data collection the study adopted use of questionnaires that were
administered t 15 construction companies. Data collected was then analyzed using SPSS and
the findings of the study revealed that the construction firms adopted risk control strategies
through identification of the risk, quantifying and responding to the risk in accordance to risk
management policy of each firm. The findings of the study further implicated that all of the
construction firms adjusted plans and scope of work in order to counter risk effects,
monitoring risk making timely decisions and keeping project managers informed about
possible risk. The study concluded that by adopting risk control measures the construction
company’s performance of projects is enhanced through working within the time limit and
budget of projects.

26
2.3.4 Risk Retention and Project Performance

Naktari (2014) conducted a study in West Pokot to investigate the effect of humanitarian risk
management strategies on NGO’s. The study adopted a descriptive research methodology and
the study’ population consisted of all humanitarian NGO operating in West Pokot. The study
employed structured questionnaires that consisted of both open ended and close ended
questions. For the data collected the study employed descriptive statistics and content
analysis for statistical analysis of the data collected. Findings of the study revealed that the
NGO’s adopted a contingency plan to minimize hazard risks financial risks, operational and
strategic risks. Study findings further revealed that the NGO’s adopted a detailed crisis
management plan and a disaster recovery plan as the mitigation strategies.

Ubani, Amade, Benedict, Aku, Agwu, and Okogbuo (2015) conducted a study in Nigeria to
investigate the influence of risk management practices on construction industry. The study
adopted a case study research design and the study’ target population consisted of contractors,
clients and consultants in the construction industry. A total of 84 respondents represented the
sampling size. For data collection the study adopted use of questionnaires that were
administered t 15 construction companies. Data collected was then analyzed using SPSS and
the findings of the study revealed that the construction firms adopted risk retention through
active retention by taking self-insurance after evaluation of possible losses and costs of
alternative ways of handling risks. The study findings further implicated that risk retention
positively influences performance of the construction firms.

Aimable, Shukla and Oduor (2015) conducted a study in Rwanda to investigate the effects of
risk management methods on the performance of construction projects facilitated by RBSS
multi-storey building projects. The study adopted a descriptive research design and a total of
291 project team located in 4 districts were the study’ population. The study used simple
random sampling and the sample size was 169.Study employed structured questionnaires,
documentary review and In-depth interviews for data collection and for data analysis the
study adopted qualitative analysis techniques. Findings of the study revealed that the
construction firm purchase insurance and have detailed crisis management plan and a disaster
recovery plan in the case of hurricanes. The findings of the study revealed that risk retention
positively influenced the performance of the construction projects.

27
Ali, Stewart and Qureshi (2017) conducted a study in Pakistan to investigate the risk
management practices adopted in Construction industry. The study adopted a descriptive
research design the study target population consisted of constructionpractitioners,
construction managers and construction project team. Questionnaires were successfully
administered to 40 respondents and data collected was statistically analyzed using descriptive
statistics and inferential statistics. Findings of the study implicated that the risk retention
strategies adopted by the construction company such as taking insurance and contingency
plan influence completion of projects. The study concluded that risk retention policies have a
strong positive influence on project performance.

2.4 Summary of Literature Reviewed and Research Gaps

Table 2.1: Research Gaps

Author Study Topic Study Findings Research Gap

Aduma and Kimutai Project risk Risk transfer influenced The study was
(2018) management performance of NHIF in conducted based on
strategies and project that use of outsourcing, projects of a health
performance at the high cost of risk premiums insurance provider.
National Hospital and insurance policy and
Insurance Fund in contractual agreements to
Kenya a third party greatly
influenced performance of
the Funds projects.
Wabomba (2015) Influence of Risk Stud was conducted
Management Changing of work plans to in International
Strategies on Project avoid risks, contingency, Development
Performance: A regular inspections, Organizations.
Survey of Selected operational reviews
International training and skill
Development enhancements in order to
Organizations Based prevent risks.
in Nairobi City,
Kenya
Okumu and Wanjira Risk Mitigation Study focused on
(2017) Strategies and Risk control strategies Motor-Insurance
Performance of such as risk control Companies.
Insurance Industry in meetings, use of quality
Kenya: assurance, signed
contracts and use of
contingency positively
influenced performance of

28
 the motor insurance
companies.

Naktare (2014) Humanitarian Risk Study focused on

Mitigation Strategies NGO’s adopted a NGO’s located in
Adopted by Non- contingency plan to West Pokot.
Governmental minimize hazard risks
Organizations in financial risks, operational
West Pokot County and strategic risks. Study
findings further revealed
that the NGO’s adopted a
detailed crisis
management plan and a
disaster recovery plan as
the mitigation strategies.

Nsiah and Bonnah The Effect of Risk Risk transfer strategies The study was
(2014) Management in the such as high-risk conducted in Ghana.
Banking Industry in premiums, signing of
Ghana: A Case Study contracts and insurance
of Asokore Rural policy influenced the
Bank Ltd. performance of the 5
banks.
Aimable, Shukla and Effects of risk The study was
Oduor (2015) management methods Detailed work plan, safety conducted in
on project inspection and having a Rwanda.
performance in safety system influence
Rwandan the performance of the
construction industry. construction projects. The
study concluded that
research prevention
strategy influenced the
performance of the
construction firms.

Ubani, Amade, Project risk Construction firms The study was

Benedict, Aku, management issues in adopted risk control conducted in Nigeria.
Agwu, and Okogbuo the Nigerian strategies through
(2015) construction industry. identification of the risk,
quantifying and
responding to the risk in
accordance to risk

29
 management policy of
each firm. The findings of
the study further
implicated that all of the
construction firms
adjusted plans and scope
of work in order to counter
risk effects, monitoring
risk making timely
decisions and keeping
project managers informed
about possible risk
Ali, Stewart and Evaluating risk implicated that the risk Study was conducted
Qureshi (2017) management retention strategies in Pakistani.
practices in the adopted by the
Pakistani construction company
construction industry. such as taking insurance
and contingency plan
influence completion of
projects
Source: Literature Reviewed and Researcher, 2019

2.5 Conceptual Framework

A conceptual framework is important in a research, as it helps in making the conceptual
distinction and in the organization of ideas. In this study risk management practices form the
independent variable as it influences performance of projects which forms the study’
dependent variable. The main independent variables are risk transfer, risk retention, risk
prevention and risk control. Based on the conceptual framework the effect of risk
management practices on project performance will be established.

30
 Independent Variables

Risk Transfer

 Insurance Policy use

 Using legal agreements to
transfer risks to third party
 Outsourcing

Risk Prevention
 Safety Systems Dependent Variable
 Detailed Work plan
 Contingency Plan Project Performance
 Safety Inspection  Cost
 Time
 Quality
Risk Control  Scope

 Risk identification
 Risk Classification
 Risk Assessment

Risk Retention

 Self-Insurance
 Taking action on risks
perceived
Figure 2. 1 Conceptual
ContingencyFramework
Plan

Source: Researcher, 2019

31
 CHAPTER THREE

RESEARCH METHODOLOGY
3.1 Introduction

According to Chekaluk and Batchelor (2016), research methodology refers to a set of

principles that guides a research study. This chapter discusses the methodologies that were
utilized in this study. The chapter is organized into 8 broad sections that discuss the research
design, target population, sample and sampling techniques, data collection instruments, data
collection procedure, data analysis plan, reliability and validity tests and ethical
considerations.
3.2 Research Designs
A research method is a plan that specifies and outlines procedures and methods that are used
in analyzing and collecting data on a given topic of research and reporting of findings in a
manner that is detailed (Lewis, 2015). In order to achieve goal and objectives of this study a
descriptive research design was adopted. Creswell and Creswell (2017) define a descriptive
research design as a framework within which a research is conducted and it consists of a set
of outlined guidelines of data collection for the study. Mugenda and Mugenda (2003)
describes descriptive research design as a design that describes data and features in relation to
study population, this design answers the who, what and how research questions of a study.

3.3 Target Population

A population is a set of members who belong to a group within which research is carried out
that possess homogeneous observable characteristics (Barasa, Ikamari, Kiplang’at& Oladipo,
2015). The target population for this study consisted of a total of 135 respondents who
included 10 general managers, 20 project supervisors, 30 M&E officers, 60 project officers,
25 finance officers and 10 project managers.

32
Table 3. 1 Target Population
Department Respondents
General Managers 10
Project Supervisors 20
Contracting Firms 20
Project Officers 60
Finance Officers 25
Total 135

3.4 Sample Size and Sampling Procedures

Sampling is a process that involves selection of members of a population that represents
entire population (Ogula, 2005). Barasa, et al. (2015) defines sampling as a process of
selection of a section of respondents from the target population in a manner that is
representative. Probability and Non-probability are the two popular sampling techniques.
Probability sampling is where every member of the population has a likelihood of being
selected whereas, where elements of the target population do not have equal chance of
selection is Non-probability sampling (Lewis, 2015). In this study census was used since the
population is less than 200. Census is effective when the sample size is less than 200
(Mugenda and Mugenda, 2003). The sample size for this study was therefore 155.

3.5 Data collection Instruments

According to Kothari (2004), data collection instruments are tools and methods used in
collection of data. Primary and Secondary methods are the two ways if collection of data.
Primary involves collection of fresh data and Secondary involves collection of data that have
been analyzed.

This study relied on primary for collection of data. Observations, Interviews and
questionnaires are the various techniques of primary collection. Use of structured
questionnaires was employed in assessing risk management practices and performance of
projects in Nairobi City County, Kenya. According to Cresw, Kausha and Singh (2017) a
questionnaire is an inquiry tool used in collection of data in order to find answers of a set of
research questions. The structured questionnaires were to answer the study research questions.
The questionnaire was designed in a scale method consisting of a 5-point opinion scale
(Likert scale Format) where 1 represents strongly disagree and 5 represents strongly agree in

33
order to make it easy when conducting qualitative analysis and to minimize biasness
(Mugenda & Mugenda, 2003). The questionnaires were administered through drop and pick
method. The structured questionnaire provides well thought answers since it ensures
anonymity.

3.6 Data Collection Procedures

The researcher applied for a research permit from National Commission for Science
Technology and Innovation (NACOSTI) before performing field visits. The researcher also
sought approval from school department and after receiving approval the researcher
contacted the study respondents and later on dropped the questionnaires with an attached
letter explaining the purpose of conducting the study.

3.7 Reliability and Validity of the study Instruments

3.7.1 Validity of the Instruments

Validity refers to the extent in which an item measures what its established to measure. Hair
and Lukas (2014) defines validity of a data collection instrument questionnaire as the extent
to which it measures what it claims to measure. In order to eliminate biasness and unclear
phrases the piloted questionnaire will be tested. Testing of the piloted questionnaire will
ensure that the final questionnaire has a capability of eliciting information that answers the
research question. Content and Construct validity was also determined in this study. To
confirm the validity of the structured questionnaires, questionnaires were administered to
managers and supervisors. Invalid questions were then removed from the final questionnaires
after the review process.

3.7.2 Reliability of the Instruments

Reliability refers to the consistency of outcome when a test is carried out over and over.
Cronbach's alpha (α) was employed in the analysis of the pilot test data to determine the
internal consistency or average correlation of items in a survey instrument to gauge its
reliability. According to Yin (2017), the Cronbach's alpha (α) indicates the extent to which
the set of research instruments are reliable making it appropriate for the study. A coefficient
value of above 0.7 implies that the research instruments (questionnaire) is reliable thus
appropriate for use in the study (Neuman, 2013).

34
3.8 Data Analysis and Presentation
According to Mugenda and Mugenda (2003), data collected must be edited, cleaned and
analyzed to establish accuracy, completeness, consistency and usefulness of data collected.
Steps undertaken to organize data in order to deduce and make inference about data with the
aim of finding correct answers of the research questions is known as data analysis (Barasa, et
al., 2015) in this study data was analyzed statistically using Statistical Package for Social
Science (SPSS version 23. The study also employed descriptive statistics to explain the
distribution of scores, such as mean, frequency distributions, standard deviation and
percentages. Findings of the study were presented using tables, pie charts and bar charts. The
regression model below were used to establish the relationship between risk management
Practices and performance of Nairobi City County, Kenya Government Projects.
Y = β0 + β1 X1 + β2 X2+ β3 X3+ β4 X1+ β4+ ε
Where: - Y = Project Performance
X1 = Risk Transfer
X2=Risk Retention
X3=Risk Control
X4=Risk Prevention
β0 = Intercept,
β1 = Beta coefficient and
ε = error term.
3.9 Ethical Consideration

The study was conducted in an ethical manner. According to Kothari (2004), a norm that

governs human conduct and has a significant effect on welfare of human is referred to as

ethics (Kothari, 2004). The researcher ensured that the study was undertaken in an ethical

manner by seeking permission before conducting the research in form of formal letter of

request elaborating reasons for undertaking the study and the study’ purpose. The researcher

also assured the respondents that any information submitted was treated with utmost

confidentiality. The researcher also conducted the research in a professional manner.

35
 CHAPTER FOUR
RESEARCH FINDINGS AND DISCUSSION
4.1 Introduction
This chapter presents the findings of the study on the effect of risk management practices on
the performance of projects in Nairobi City County, Kenya. The risk management practices
selected were risk transfer, risk prevention, risk control and risk retention. The respondents
were the project management staff who consisted of a total of 135 respondents. The data was
analyzed using both descriptive and inferential statistics with the aid of SPSS. The findings
are as presented in the following sections.
4.1.1 Response Rate
Out of the 135 respondents sampled for the study, 120 of them completed the questionnaires
and presented them for analysis. This represents a response rate of 88.89%. This rate is
statistically significant and representative according to Mugenda and Mugenda (2003) who
indicated that the response rate of half is sufficient for investigations and revealing, a 60%
rate is by and large great while a 70% rate of response is magnificent. This is presented in the
table below;
Table 4.1: Response Rate
Response rate Frequency Percentage
Response 120 88.89
Non-Response 15 11.11
Total 135 100
Source: Field data, 2019
4.1.2 Reliability Test
The study conducted a pilot study which was used to test reliability of the study instruments
by assessing the consistency of data arising from the use of the study research method. A
Cronbach Alpha was used to measure reliability of the research questionnaires. The Cronbach
findings were as shown in Table 4.2.

36
Table 4.1: Reliability Test
Variable Number of Coefficient Cronbach Alpha

Risk transfer 5 0.827

Risk prevention 5 0.794
Risk control 5 0.809
Risk retention 5 0.862
Average 0.823

Source: Field data, 2019

The study indicated that risk transfer as a risk management practice had a Cronbach Alpha of
0.827, risk prevention had a coefficient of 0.794, risk control had a coefficient of 0.809 while
for risk retention it was 0.862. Since the Cronbach alpha coefficients were all more than 0.7
the data collection instruments were deemed statistically reliable to collect data for the study.
4.2 Demographic Data
The study assessed the demographic background of the respondents among the projects in
Nairobi City County, Kenya based on their age, highest education level, period worked
among the projects and the job designations of the respondents. The findings were as
presented below;
4.2.1 Age of Respondents
The study analyzed the age distribution of the respondents who were the employees among
the projects in Nairobi City County. This was to ascertain their level of maturity and
appropriateness as employees and respondents to the study. The pie chart below presents the
findings;

37
Figure 4.1: Respondents’ Age
Source: Field data, 2019
As presented in figure 4.1 above, 40% of the respondents were aged between 31 and 40 years,
24% were aged between 20 and 30 years, 2% were below 20 years, 12% were above 50 years
while 22% were between 41 and 50 years. This indicates that majority of the respondents
were aged above 30 years. This shows that they were grown-ups in the active labour force
and above to deliver on their mandate.

4.2.2 Highest Academic Level

The study sought to establish the highest education level of the respondents. The findings
were as tabulated below;
Table 4.3: Highest Academic Qualification
Academic Qualification Frequency Percentage
Primary certificate 0 0
Secondary certificate 2 1.67
College diploma 12 10.00
University graduate 81 67.50
Post-graduate 25 20.83
Total 120 100
Source: Field data, 2019
The study established that 1.67% of the respondents among the projects in Nairobi City
County were secondary school graduates, 10% had college diplomas, and 67.5% were
university undergraduates while 20.83% had post-graduate qualifications. This indicates

38
that most of the project staff among the projects were bachelor’s degree holders. This
shows that the staff had the necessary academic, skills and knowledge to perform their
duties.

4.2.3 Period worked in the current organization

The study sought to find out the number of years the respondents had worked in their
respective projects. The findings were as presented in the chart below;

Figure 4.2: Number of years worked

Source: Field data, 2019
The study established that 13% of the respondents had worked for less than 1 year in the
projects in Nairobi City County, 34% had worked for between 1 and 5 years, 33% had
worked for between 5 and 10 years while 21% had worked for more than 10 years. This
indicates that most of the project staff had worked for more than 1 year in their project
hence understood the operations, risks encountered, possible mitigation strategies and
project performance. This makes them better in making the study valid.

4.2.4 Job designation

The study in the process of assessing the background information regarding the
respondents’ suitability for the study, sought to determine the job designation of the
respondents in their respective organizations or projects. The figure below presents the
findings;
39
Figure 4.3: Respondents’ job designation
Source: Field data, 2019

As presented in Figure 4.3 above, 5% of the respondents were risk managers in the respective
organizations, 8% were project managers, 6% were general managers, 48% were project
officers, 15% were project supervisors while 18% were finance officers. This indicates that
majority of the respondents were project officers. All cadres of management in the
organizations or projects were fairly and significantly represented.

4.3 Descriptive Findings

The study analyzed the extent to which the independent variables which included risk
management practices were applied among the projects using descriptive statistics. The
findings were presented using means and standard deviations as indicated in the subsequent
sub-sections.

40
4.3.1 Risk Transfer and Project Performance
The first objective of the study was to establish the effect of risk transfer on project
performance among projects in Nairobi City County, Kenya. To this regard, the respondents
were asked to indicate the extent to which risk transfer affected project performance. The
findings were as presented in the chart below;

Figure 4.4: Extent to which risk transfer affects project performance

Source: Field data, 2019

The study established that 28% of the respondents indicated that risk transfers affected
project performance to a very great extent, 38% alluded that it affected it to great extent, 18%
indicated that it was to a moderate extent, 13% were of the opinion that it was to a little
extent while 4% indicated that risk transfers had no effect on project performance. This
generally indicates that to a great extent, risk transfers had a significant effect on the
performance of projects in Nairobi City County. Similar findings were made by Aduma &
Kimutai (2018) in their study on project risk management strategies and project performance
where they indicated that risk transfer influenced project performance through the use of
outsourcing, high cost of risk premiums and insurance policy and contractual agreements to a
third party which greatly influenced performance of the projects
Further, the respondents were asked to indicate the extent to which they agreed or disagreed
with the following statements on how risk transfer affect financial graduation projects

41
performance in their organization on a scale of 1-5 where 1=strongly disagree, 2=disagree, 3-
undecided, 4= agree and 5= strongly agree. The findings were as presented in the table below;
Table 4.4: Risk Transfer and Project Performance
Risk Transfer and Project Performance Mean Std. Dev
Our organization insures project items such as construction equipment to 3.64 0.861
ensure no circumstances will result to delay in projects.
Our organization signs legal agreements to any even that may lead to project 3.18 0.719
delay.
Our organization outsources any project functions example workforce that 2.89 0.822
may cause a delay in project
Source: Field data, 2019
As presented in Table 4.4 above, the respondents agreed that their organizations insures
project items such as construction equipment to ensure no circumstances will result to delay
in projects as indicated by a mean of 3.64 and standard deviation of 0.861. The respondents
were however neutral or indifferent on whether their organizations sign legal agreements to
any event that may lead to project delay and they outsource any project functions example
workforce that may cause a delay in a project as indicated by a mean of 3.18 and 2.89
respectively. This indicates that the organizations or projects to a significant extent
transferred most of their risks especially those that may contribute to project delay through
sub-contracting, outsourcing, legal agreements and insurance.

4.3.2 Risk Prevention and Performance of Project in Nairobi City County, Kenya
The second objective of the study was on risk prevention and project performance. The
respondents were asked to indicate the extent to which risk prevention included the
performance of projects in their organizations. The figure below presents the findings;

42
Figure 4.5: Extent to which risk prevention affects project performance
Source: Field data, 2019
54% of the respondents indicated that risk prevention to a very great extent affect project
performance, 33% indicated that it was to a great extent, 9% indicated that it was to moderate
extent, 3% indicated that it was to a little extent and 1% indicated that risk prevention didn’t
have any effect on project performance. This generally indicates that to a significant extent,
risk prevention as a risk management practice influenced project performance. Wabomba
(2015) in his study on the influence of risk management strategies on project performance in
international development organizations in Nairobi City indicated similarly that changing of
work plans to avoid risks, contingency, regular inspections, operational reviews, trainings and
skill enhancements in order to prevent risks contribute significantly to project performance.

The respondents were requested to further indicated the extent to which they agreed or
disagreed with the following statements using a scale of 1-5 where 1=strongly disagree,
2=disagree, 3- undecided, 4= agree and 5= strongly agree. The study had the following
findings;

43
Table 4.5: Risk Prevention and Project Performance
Risk Prevention and Project Performance Mean Std. Dev
Our organization ensures installation of safety systems against any event 2.88 0.798
that may lead to project delay
Our organization advocates for the use of alternative plan in case of 3.14 0.911
occurrence of any event that may cause project delay
Our organization through project officials inspects ongoing projects to 3.71 0.801
ensure projects are not delayed
Our organization encourages use of a detailed work plan to ensure no event 3.66 1.466
leads to delays in projects
Our organization trains project team to ensure that projects run within the 3.91 0.769
allocated time schedule
Source: Field data, 2019
The respondents agreed that their organizations through project officials inspect ongoing
projects to ensure the projects are not delayed; the organizations encourage use of a detailed
work plan to ensure no event leads to delays in projects and the organizations train project
teams to ensure that projects run within the allocated time schedule as indicated by a mean of
3.71, 3.66 and 3.91 respectively. The study respondents agreed to a moderate extent that their
organizations ensure installation of safety systems against any even that may lead to project
delay and advocates for the use of alternative plan in case of occurrence of any even that may
cause project delay as indicated by a mean of 2.88 and 3.14 respectively. This indicates that
the organizations significantly embraced risk prevention mechanisms which involved
installation of safety systems, having alternative plans, inspection and feedback, use of a
detailed work plan and capacity building among project team members.

4.3.3 Risk Control and Project Performance

The respondents were asked to indicate the extent to which risk control mechanisms put in
place among the organizations contributed to performance of projects in Nairobi City County,
Kenya. The findings were as presented below

44
Figure 4.6: Risk Control and Project performance
Source: Field data, 2019
43% of the study respondents indicated that risk control to a very great extent influenced on
the performance of projects, 33% indicated that it was to a great extent, 18% were for
moderate extent, 4% to a little extent while 2% indicated that it was to no extent. This shows
that risk control significantly and to a great extent affected the performance of projects in
Nairobi City County. Similarly, Okumu and Wanjira (2017) in their study on risk mitigation
strategies and performance of insurance industry in Kenya established that risk control
strategies such as risk control meetings, use of quality assurance, signed contracts and use of
contingency positively influenced performance of firms.
+The respondents were further asked to indicate the extent to which they agreed or disagreed
with the following statements on risk control on a scale of 1-5 where 1=strongly disagree,
2=disagree, 3- undecided, 4= agree and 5= strongly agree. The study findings were as
tabulated below;
Table 4.6: Risk Control and Project Performance
Risk Control and project Performance Mean Std.Dev
Our organization identifies risks associated with projects 2.45 0.850
Our organization separate actual risk events from sources of risks 2.69 0.697
Our organization through the risk managers respond to risk 3.56 0.717
Our risk manager responds to risks appropriately as defined in the risk 2.71 0.811
management plan
Source: Field data, 2019

45
The respondents disagreed that their organizations identify risks associated with projects as
indicated by a mean of 2.45 and standard deviation of 0.850. They however to a moderate
extent agreed that their organizations separate actual risk events from sources of risks and
risk managers respond to risks appropriately as defined in the risk management plan as
indicated by a mean of 2.69 and 2.71 respectively. They on the other hand agreed that their
organizations through the risk managers respond to risk as indicated by a mean of 3.56 and
standard deviation of 0.717 respectively. This indicates that to a moderate but significant
level, the organizations were found to employ risk control mechanisms which include risk
identification, separation of risks, response to risk and use of risk management plan.

4.3.4 Risk Retention and Project Performance

The study sought to establish the effect of risk retention on project performance. The
respondents were therefore asked to indicate the extent to which risk retention contributed to
project performance.

Figure 4.7: Extent to which risk retention affects project performance

Source: Field data, 2019
The study respondents indicated that to a great extent (37%) risk retention affected project
performance, 20% of them indicated that risk retention had a moderate effect on performance,
9% indicated that it was to a little extent, 2% indicated that it had no effect while 32%
indicated that it had a very great effect. This indicates that risk retention to a significantly
great extent had an effect on the performance of projects in Nairobi City County.

46
Naktare(2014) in his study also made similar findings that adopting a contingency plan to
minimize hazard risks, financial risks, operational and strategic risks have a direct and
significant effect on project performance.

The study further asked respondents to indicate the extent to which they agreed or disagreed
with the following statements on risk retention on a scale of 1-5 where 1=strongly disagree,
2=disagree, 3- undecided, 4= agree and 5= strongly agree. The findings were as indicated
below;
Table 4.7: Risk Retention and Project Performance
Risk Retention Mean Std. Dev
Our organization adopts self-insurance to avoid occurrence of events that 3.91 0.861
may delay projects
Our organization sometimes takes no action to identified risks despite the 3.71 0.791
fact that they may affect the duration of the construction project, as it is
beneficial not to deal with them.
Our organization advocates for use of alternative plan to avoid any 3.88 0.688
circumstances that result to project delay
Source: Field data, 2019
The respondents generally agreed that their organizations have adopted self-insurance to
avoid occurrence of events that may delay projects, sometimes they take no action to
identified risks despite the fact that they may affect the duration of the construction project,
as it is beneficial not to deal with them and that the organizations advocate for use of
alternative plan to avoid any circumstances that result to project delay as indicated by a mean
of 3.91, 3.71 and 3.88. The generally indicates that the organizations significantly employed
risk retention practices which included self-insurance, calculated risk management and use of
alternative plan.

4.3.5 Project Performance

The dependent variable of the study was project performance. This section contains
statements related to the performance of construction projects in terms quality expected and
meeting the schedule. The respondents were asked to indicate the extent to which they agreed
or disagreed with the following statements on project performance on a scale of 1-5 where

47
1=strongly disagree, 2=disagree, 3- undecided, 4= agree and 5= strongly agree. The findings
were as indicated below;
Table 4.8: Project Performance
Project Performance Mean Std. Dev
In my own point of view risk transfer to third-party leads to the timely 3.66 0.719
completion of projects.
Project Retention risk lead to timely completion of projects. 4.01 0.902
Our organization has been able to complete projects on time over the past 3.81 0.843
one year
Source: Field data, 2019
The respondents agreed that in their own point of view risk transfer to third party leads to the
timely completion of projects, project retention of risk leads to timely completion of projects
and the organizations have been able to complete projects on time over the last one year as
indicated by a mean of 3.66, 4.01 and 3.81 respectively. This indicates that the performance
of projects in Nairobi City County was above expectations.
The respondents indicated that risk management practices improve project performance as
indicated by 81% of them. This signifies the relationship between the two main variables of
the study.

4.4 Inferential Statistics

The study used regression analysis to establish the relationship between the independent and

dependent variables of the study. The findings of Model Summary, ANOVA and Coefficient

of Regression were as indicated in the following sections.

4.4.1 Model Summary

The findings of coefficient of correlation and coefficient of determination are as shown in

Table 4.9.

48
Table 4.9: Model summary

Model R R square Adjusted r square Std. Error of the estimate

1 .819a .856 .849 1.61972

a. Predictors: (constant), risk transfer, risk prevention, risk control and risk retention

Source: Field data, 2019

The study shows that coefficient of correlation R of 0.819 an indication of strong of

correlation between the variables. The adjusted R2 was 0.849 which implies that 84.9% of the

variation in project performance was accounted for by the four independent variables which

include: risk transfer, risk prevention, risk control and risk retention. The residual of 15.1%

can be explained by other variables not incorporated in the current study.

4.4.2 ANOVA

An ANOVA was conducted at 95% level of significance. The findings of F Calculated and F

Critical are as shown in Table 4.10.

Table 4.10: ANOVA

Model Sum of squares Df Mean square F Sig.

Regression 716.233 10 71.6233 19.0401 .000b

Residual 414.122 110 3.7617

Total 1130.355 120

a. Dependent variable: Project performance

b. Predictors: (constant), risk transfer, risk prevention, risk control and risk retention)

Source: Field data, 2019

49
It was established that the study had F Calculated of 19.0401 and F Critical was 5.8126, this show

that of F Calculated > F Critical an indication that the overall regression model was significant for

the study. The p value was 0.00<0.05 an indication that at least one independent variable

significantly influenced the performance of projects in Nairobi City County, Kenya.

4.4.3 Regression Coefficient

The study used a regression coefficient to establish the effect of individual variables of risk

management practices on performance of projects in Nairobi City County, Kenya. The

findings are indicated in Table 4.11.

Table 4.11: Regression Coefficient

Unstandardized Standardized
coefficients coefficients
Model B Std. Error Beta T Sig.
(constant) 5.194 1.06 2.213 .000
Risk transfer 0.816 .041 .526 2.366 .000
Risk prevention 0.799 .039 .175 3.712 .000
Risk Control 0.893 .071 .499 2.539 .000
Risk Retention 0.801 .082 .487 2.410 .000
a. Dependent variable: Project Performance

Source: Field data, 2019

Y = 5.194 + 0.816X1 + 0.799X2 + 0.893X3 + 0.801X4

Whereby: Y = Performance of Projects in Nairobi City County, Kenya

X1 = Risk transfer

X2 = Risk prevention

X3 = Risk control

X4 = Risk Retention

50
Table 4.11 indicates that all variables held constant, project performance would be at 5.194

this indicates that performance of the projects can still take place without the influence of the

stated variables. The variable coefficients indicate that the relationship between risk

management practices identified and project performance was positive and significant. These

findings are similar to those by Aimable, Shukla and Oduor (2015) who on their study on

effects of risk management methods on project performance in Rwandan Construction

industry. The researchers indicated that detailed that risk management practices have a

significant and positive effect on project performance.

The p values of all the independent variables which include project planning, monitoring and

evaluation, communication and stakeholder participation were 0.000<0.05 an indication that

the variables significantly influenced performance of projects in Nairobi City County. This is

supported Ubani, Amade, Benefidct, Aku, Agwu and Okogbuo (2015) who in their study on

project risk management issues and project performance concluded that project management

practices are critical for peak project performance. The study indicated that organizations

adjust plans and scope of work in order to counter risk effects, monitoring risks making

timely decisions and keeping project managers informed about possible risk contributes to

positive project performance.

51
 CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter presents the summary of the findings of the study as presented and discussed in

the previous chapter. The study conclusions and recommendations are enumerated based on

the findings; suggestions for further studies are also provided.

5.2 Summary of the Findings

The study sought to establish the effect of risk management practices on the performance of

projects in Nairobi City County, Kenya. The study sought to establish the effect of risk

transfer, risk prevention, risk control and risk retention on the performance of projects. The

target population was 135 project management staff where a census was adopted. The

response rate was 88.89% with 120 questionnaires sufficiently completed and submitted and

hence used for analysis. Both descriptive and inferential statistics were used to analyze and

present data.

5.2.1 Risk Transfer and Project Performance

The study established that risk transfer positively and significantly influenced performance of
projects in Nairobi City County. The study established that to a great extent, risk transfers
had a significant effect on the performance of projects in Nairobi City County. The
respondents agreed that their organizations insure project items such as construction
equipment to ensure no circumstances will result to delay in projects. The respondents were
however neutral or indifferent on whether their organizations sign legal agreements to any
event that may lead to project delay and they outsource any project functions example
workforce that may cause a delay in a project. This indicates that the organizations or projects
to a significant extent transferred most of their risks especially those that may contribute to
project delay through sub-contracting, outsourcing, legal agreements and insurance.

5.2.2 Risk Prevention and Project Performance

52
The study found out that risk prevention significantly influenced performance of projects in
Nairobi City County. The study established that to a significant extent, risk prevention as a
risk management practice influenced project performance. The respondents agreed that their
organizations through project officials inspect ongoing projects to ensure the projects are not
delayed; the organizations encourage use of a detailed work plan to ensure no event leads to
delays in projects and the organizations train project teams to ensure that projects run within
the allocated time schedule. The study respondents agreed to a moderate extent that their
organizations ensure installation of safety systems against any even that may lead to project
delay and advocates for the use of alternative plan in case of occurrence of any even that may
cause project delay. This indicates that the organizations significantly embraced risk
prevention mechanisms which involved installation of safety systems, having alternative
plans, inspection and feedback, use of a detailed work plan and capacity building among
project team members

5.2.3 Risk Control and Project Performance

The study pointed out risk control positively influenced performance projects in Nairobi City
County. The study established that risk control significantly and to a great extent affected the
performance of projects in Nairobi City County. The respondents disagreed that their
organizations identify risks associated with projects. They however to a moderate extent
agreed that their organizations separate actual risk events from sources of risks and risk
managers respond to risks appropriately as defined in the risk management plan. They on the
other hand agreed that their organizations through the risk managers respond to risk. This
indicates that to a moderate but significant level, the organizations were found to employ risk
control mechanisms which include risk identification, separation of risks, response to risk and
use of risk management plan
5.2.4 Risk Retention and Project Performance

The study established that risk retention significantly influenced performance of projects in
Nairobi City County. The study established that risk retention to a significantly great extent
had an effect on the performance of projects in Nairobi City County. The respondents
generally agreed that their organizations have adopted self-insurance to avoid occurrence of
events that may delay projects, sometimes they take no action to identified risks despite the
fact that they may affect the duration of the construction project, as it is beneficial not to deal
with them and that the organizations advocate for use of alternative plan to avoid any

53
circumstances that result to project delay. The generally indicates that the organizations
significantly employed risk retention practices which included self-insurance, calculated risk
management and use of alternative plan.

5.3 Conclusion

The study concluded that risk transfer had a significant and to a great extent affected the

performance of the projects in Nairobi City County, Kenya. It was also concluded that risk

transfer is significantly embraced, applied and practiced among firms implementing projects

in Nairobi City County, Kenya.

The study concluded that risk prevention significantly affected project performance. It was

concluded that risk prevention is embraced among organizations executing projects in

Nairobi City County, Kenya as a risk management practice and it has enhanced project

completion within scope, budget and time schedule.

The study further concluded that there a significant and positive relationship between risk

control and project performance. Risk control was significantly practiced among the

organizations involved projects in Nairobi City County, Kenya and had a significant

influence on project performance.

It was concluded that risk retention had a positive and significant effect on the performance

of the projects. To great extent, risk retention as a risk management practice had a positive

effect on project performance

It was finally concluded that a significant number of the projects organizations are

implementing in Nairobi City County were performing well.

5.4 Recommendations

The study recommends that the management of the projects need to ensure the risk

management practices are integrated in project implementation. Most of the practices were in

place but were not effectively employed to ensure peak performance.

54
The organizations were found to be skeptical on planning for risks and taking risk

management steps and therefore for peak performance there is need to have a risk

management plan in place and stick by it.

The study recommends that the project management team should provide adequate finances

for risk management, capacity building, and insurance and safety installations for better risk

preparedness.

5.5 Suggestions for Further Studies

The study recommends a similar study to be carried out by use of secondary data. The current

study had a coefficient of adjusted R2 of 0.849 and a residual of 15.1% which can be

explained by other variables beyond the scope of the current study that future scholars should

focus on. The main objective of the study was to establish the effect of risk management

practices on the performance of projects in Nairobi City County, future scholars should carry

out similar study in other sectors or entities.

55
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 APPENDICES
APPENDIX 1: QUESTIONNAIRE
This study aims at investigating the effects of Risk Management Practices on Performance
of Projects in Nairobi City County, Kenya. All responses will be treated in strict confidence
and will not be used for any other purpose apart from that stated. Thank you.
Please answer all the questions in all the sections as indicated by either ticking or filling in
the blank space provided.
Section A: Background information (please put an X in relevant box)
Name (Optional)………………………………………….
1. What is your age bracket?
Below 20 years [ ]
20-30 years [ ]
31-40 years [ ]
41-50 years [ ]
Above 50 years [ ]
2. Which is your highest academic level?
Primary certificate [ ]
Secondary certificate [ ]
College diploma [ ]
University Graduate [ ]
Post graduate [ ]
3. How long have you been working in your current organization?
Less than 1 year [ ]
1-5 years [ ]
5-10 years [ ]
Above 10 years [ ]
4. What is your job designation?
General Manager [ ]
Project Officer [ ]
Project Supervisors [ ]
Finance Officer [ ]
Project Manager [ ]
Risk Manager [ ]

61
Section B: Risk Transfer and Project Performance
5. To what extent does Risk Transfer affects the performance of projects in Nairobi Kenya.
No extent [ ]
Little extent [ ]
Moderate extent [ ]
Great extent [ ]
Very great extent [ ]
6. Indicate the extent to which you agree or disagree with the following statements on how
M&E plans affect financial graduation projects performance in your organization. Use a scale
of 1-5 where 1=strongly disagree, 2=disagree, 3- undecided, 4= agree and 5= strongly agree.

Risk Transfer and Project Performance 1 2 3 4 5

Our organization insures project items such as construction equipment to
ensure no circumstances will result to delay in projects.
Our organization signs legal agreements to any even that may lead to
project delay.
Our organization outsources any project functions example workforce that
may cause a delay in project

Section C: Risk Prevention and Performance of Project in Nairobi City County, Kenya
7. To what extent does Risk prevention influence the performance of Project in our
organization?
No extent [ ]
Little extent [ ]
Moderate extent [ ]
Great extent [ ]
Very great extent [ ]
8. Indicate the extent to which you agree or disagree with the following statements. Use a
scale of 1-5 where 1=strongly disagree, 2=disagree, 3- undecided, 4= agree and 5= strongly
agree.
Risk Prevention and Project Performance 1 2 3 4 5
Our organization ensures installation of safety systems against any event
that may lead to project delay

62
Our organization advocates for the use of alternative plan in case of
occurrence of any event that may cause project delay
Our organization through project officials inspects ongoing projects to
ensure projects are not delayed
Our organization encourages use of a detailed work plan to ensure no
even leads to delays in projects
Our organization trains project team to ensure that projects run within the
allocated time schedule

Section D: Risk Control and Project Performance

9. To what extent does Risk Control affect the performance of projects in Nairobi City
County, Kenya
No extent [ ]
Little extent [ ]
Moderate extent [ ]
Great extent [ ]
Very great extent [ ]
10. Indicate the extent to which you agree or disagree with the following statements. Use a
scale of 1-5 where 1=strongly disagree, 2=disagree, 3- undecided, 4= agree and 5= strongly
agree.
Assessing risks Overhead cost General risk control Operating efficiency Policy Controlling
indicator
Risk Control and project Performance 1 2 3 4 5
Our organization identifies risks associated with projects
Our organization separate actual risk events from sources of risks
Our organization through the risk managers respond to risk
Our risk manager responds to risks appropriately as defined in the risk
management plan

Section E: Risk Retention and Project Performance

11. To what extent does Risk Retention affect performance of projects in Nairobi City
County, Kenya

63
 No extent [ ]
Little extent [ ]
Moderate extent [ ]
Great extent [ ]
Very great extent [ ]
12. Indicate the extent to which you agree or disagree with the following statements. Use a
scale of 1-5 where 1=strongly disagree, 2=disagree, 3- undecided, 4= agree and 5= strongly
agree.
Risk Retention 1 2 3 4 5
Our organization adopts self-insurance to avoid occurrence of events that
may delay projects
Our organization sometimes takes no action to identified risks despite the
fact that they may affect the duration of the construction project, as it is
beneficial not to deal with them.
Our organization advocates for use of alternative plan to avoid any
circumstances that result to project delay

13. SECTION F: Project Performance

This section contains statements related to the performance of construction projects in terms
quality expected and meeting the schedule. Tick one box accordingly. Strongly Agree
Neutral Disagree Strongly Disagree 5 4 3 2 1
Project Performance 1 2 3 4 5
In my own point of view risk transfer to third-party leads to the timely
completion of projects.
Project Retention risk lead to timely completion of projects.
Our organization has been able to complete projects on time over the past
one year

14. In my own opinion, do you think risk management practices improve project performance?
Yes{ } No { }

64