PROJECT RISK MANAGEMENT STRATEGIES AND PERFORMANCE OF REAL ESTATE DEVELOPMENT PROJECTS IN NAIROBI CITY COUNTY, KENYA

Humphrey Njuho Komu, Dr. Anne Marie Wairimu Mungai

Abstract


Risk management for the real estate project management entails a proactive approach where the right risks are properly identified and assessed at different stages of the life cycle of the real estate development. The real estate sector in Kenya is facing various challenges that hinder project success in the sector. The general objective was to examine the effect of project risk management strategies on performance of real estate development projects in Nairobi County, Kenya.  The specific objectives were to examine effect of risk transfer, and risk acceptance on performance of real estate development projects in Nairobi County, Kenya. This research was guided by portfolio theory, and enterprise risk management theory. The study adopted a descriptive research design. The study target was 80 registered real estate companies. The unit of the analysis was the company staff involved in project management; 80 project managers, 80 project supervisors, 80 project administrators, and 80 project architects (320 project staff).  The sample size of 178 project team members was determined using Yamane 1967 formula. The study adopted a stratified random sampling technique. Questionnaires were used for data collection. A pilot test was conducted with 10% of the sample hence 18 project staff. The study used content and construct validity. Cronbach's Alpha Coefficient was used to measure reliability. Data was analyzed using descriptive (frequencies, percentages, and mean) and inferential statistics (correlation and regression) with the help of SPSS Version 28. Findings were tabulated. Findings show that there is a strong significant relationship between risk transfer and project performance (r=0.777, p=0.000), and a strong significant relationship between risk acceptance and project  performance (r=0.835, p=0.000). The recommendations are; The firms’ management should ensure that all projects are insured. This will ensure that project funds are not used to cater any losses incurred in case of work accidents or any other unfortunate event. The project management managers should set realist budget to manage project risks. This will ensure the project funds are not used to cover costs incurred when managing risks.

Key Words: Project Risk Management Strategies, Risk Transfer, Risk Acceptance, Real Estate Development Projects 


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