Abstract:
Construction consultants are one of the significant stakeholders in the construction industry
and are involved in the construction of a project, starting from conducting feasibility studies
to contract closeout. They are representatives of the client and independent contract
administrators and are bound contractually and legally for their services. Hence, they are
prone to risk for their roles and responsibilities. To alleviate this problem is to come across
alternative practices to be used in more quantity. This research was conducted to assess risk
management and professional indemnity insurance practices of construction consultants in
Ethiopia. It identified significant risks in construction consultancy services in the pre construction, construction, and post-construction stages.
This research is both qualitative and quantitative in nature. Literature review of text books,
research papers, journals, magazine, internet, and other sources were conducted to collect
secondary data. The data obtained was used to prepare questionnaire which was distributed
to and collected from consulting firms in Addis Ababa. SPSS and Microsoft Excel software
were used to analyze the results of questionnaire using descriptive statistics.
In this research, 53.8% of the consultants stated they had a formal risk management plan
and used either an in house risk manager or insurance broker to manage risks. However,
most consultants showed poor performance in actual application of the different techniques
in the processes of risk management, relying mostly on expert judgments, interpersonal
skills, and meetings. 81% of the consultants had professional indemnity insurance coverage
that protects them from errors and omission and negligence liabilities.
The consultants still do not consider risk management as a priority and their main reason to
acquire professional indemnity insurance was only when a clause was specified under
specific contractual obligations. Hence, the application of risk management techniques and
awareness of professional indemnity insurance is lacking among construction consultants.
