ABSTRACT
The construction industry (CI) worldwide involves many forms
of activities that exposes it products, professional, services providers and
consumers in the industry to many forms of risk and uncertainties in various
dimensions. Contractors are not of sound mind when carrying out construction
project because of the uncertainty and risk associated with it. This study
presents critical examination of contractor insurance options available to the
contractor and determines potential innovations in insurance delivery and means
of adopting the options in the CI of Ghana. The study was based on a mixed
method research methodology and covers construction and contractor insurance
options, means of adopting an innovation method of contractor insurance option
in order to ascertain the nature and typology contractor insurance options in
the CI of Ghana. Data was collected in a questionnaire survey of 60
stakeholders in the CI and insurance companies across the Ashanti region of
Ghana representing 76.92 percent (%) as the response rate. Descriptive
statistical analyses were used toanalyse the research questions. Proposed findings
cover better ways of creating awareness of risk and uncertainties involved in
successful completion of construction projects and the need to involve them as
contractor to contactor insurance when contracts are awarded. The study shows
that, creating awareness of risk and uncertainties associated with contractor
insurance is to fully protect construction worker as a core responsibility for
every contractor. The study also shows that, the most influencing factors
affecting the selection of contractor insurance are the insurance companies‟
parameter and the determinants of contractor insurance options respectively.
There is also evidence of “Contractor Insurance options and innovation is key
to the development of the insurance industry” as the most potential innovations
insurance option that influence the selection of contractor insurance option in
the CI.
CHAPTER ONE
GENERAL INTRODUCTION TO THE
RESEARCH
1.1 BACKGROUND OF THE STUDY
The CI worldwide involves many
forms of activities that exposes it products, professional, services providers
and consumers in the industry to many forms of risk and uncertainties in
various dimensions. Risk is the likelihood, chances or possibility of
occurrence of a danger to a construction activity or injury to a construction
professional, worker, service provider, equipment among others (Ringen, et al.,
1995). Uncertainty in the context of construction is the likelihood of
unfortunate and unforeseen incidents to occur. This may occur as a result from
any form of accidents including vehicle accidents, injuries from workplaces and
diseases which may lead to permanent or partial incapacitation (Green, 1997;
Loosemore, et al., 2006). Risks in the industry have received tremendous
attention whereas the subject of uncertainty in construction activities has not
been given the necessary attention in term of research. The two concepts are
all likelihood events since their occurrence are not known until they happen.
Although risk can be measured and predicted, uncertainty is difficult and
sometime not even thought of many in the industry.
The nature of construction works
exposes almost all the factors of construction products and production to
various kinds of risks including the use of scaffolds, chemicals and toxics
that are harmful to human health and the effects of natural disasters such as
flood, fire outbreak, earthquake among others as well as poor
workmanship(Wisner, 2012). In order to reduce the devastating consequences of
any of such risks and uncertainties, construction companies (CC), clients,
consultants have devised conventional ways that cushioned them and other third
parties to the contract against the results of such unfortunate occurrences.
One of such conventional
means is the institutionalization of an insurance cover, which depending on the
aspect of the construction process is determined as very critical in insuring.
Contractor insurance is a means by
which there is an exchange of a party prerogative over an amount which is fixed
in order to protect another party/parties‟ interest in relation to a particular
construction project (O‟Sullivan, 2016). According to Rapp, (2011) and Edwards
(1995), contractor insurance in itself is a major innovative way of managing
risks for contractors, clients and other related parties associated with the
project. It provides party funding in time of the occurrences of any risk and
uncertainty to the insurers. Contractor insurance acts in a more and more
important in ensuring project success and as with underwriters transferring
gains and losses that result through sudden happenings as well as natural
disasters (Akbıyıklı, et al., 2011).
Despite the above, risk and
uncertainty mitigation mechanism in the CI has little been known in both
practice and in literature about the utilization and the potential innovations
in the options available to contractors in the Ghanaian Construction Industry
(GCI). The subject of contractor insurances does times does not receive the
necessary attention it deserves due to some various factors. Notably among
these factors could be as a result of the lack of understanding of the industry
on the importance of insurance; lack of legal framework within which stakeholders
can operate; stakeholders, particularly in the context of Ghana lacks the
understanding as to how to allocate risk and the methods used in managing risk
through insurance.
In the CI, insurance is limited to
a section of its staff, thus living the rest and the works to their providence.
The CI is one of the largest employment provider‟s in Ghana.
According to Cotton et al. (2005), the construction industry is among the most
hazardous industries with records of high occurrence of accidents that cause
deaths, injuries, financial losses etc. This indicates that instead of managing
the risk for maximum protection and increase in profit margins, CI is doing
otherwise.
According to Lloyd (2014),
globally, contractors normally have risk indemnity policies covering almost
every aspect of their projects as it is the most profitable for them to
maintain this indemnity. Once insurance is made to cover all aspects of the
construction project, the risks involved in the process is consequently passed
to the owner. Even though defects in the project are normally not included in
the insurance policy; wording could be purchased instead to cover damages
caused by the defects to the works of the project. For such insurance to be
significant, different aspects of the works ought to be precisely defined.
Construction insurance is only available when construction works is going on in
accordance with sound established techniques of construction.
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===================================================================Item Type: Ghanaian Topic | Size: 70 pages | Chapters: 1-5
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