CHAPTER ONEINTRODUCTION1.1 Background of the StudyThe development of infrastructure is one of the most important activities that can boost the business of various industries, thereby increasing the economy of such state or country. Construction industry is one of such industry and its projects are always unique with risk rising from a number of different sources.Risk in its simplest form mean uncertainty with a recognise probability distribution (Barkley, 2004). According to Holmes (2002) risk is not the actual being of a problem rather the possibility that a certain problem may arise in the future. Baloi and Price (2003) define risk as the likelihood of an unfavorable incidents occurring to a project. According to Edward and Bowen (1998), risk is the probability that an adverse event occurs during a stated period of time. It is widely accepted across the construction management body of knowledge that a project risk is any even or series of events whether motivated internally or externally, when occurred will negatively affect the project objectives, goals, functionality, performance, time, cost and quality (Devripasadh, 2007).Ashworth and Hogg (2002), Shou et al. (2004) and Florence and Linda, (2006) stated that “projects have life cycles or a sequence of stages and activities from origin to completion and there is always a degree of risk associated in each stage”. Risks are major component of the overall cost of construction and their distribution has significant effect on the project financial plan. The major problem associated with most highway projects in Nigeria is always, cost overrun coupled with delay on completion Odeyinka, (2000); Tar and Carr (2000); Odeyinka (2000), Nasir (2003) and Lowa and Kaka (2007) pointed out that too often this risk is not dealt with satisfactorily which has resulted into poor project delivery in Nigeria. They submitted that to solve this problem the is need to integrate risk management practice into estimation of construction project cost and time, as this will help considerably to avoid excess overrun.Construction project risk management is the process of identifying, analysing and responding to construction project risk (Project Management Institute, PMI, 2003). It involves the maximisation of positive result (opportunities) and the minimisation of negative results and its consequences (treats). It is also defined as a planned form of identifying and evaluating risk, selecting, establishing and applying options for the handling of the risk (Kremljak, 2004). Project risk management involves conducting risk management planning, engaging in risk identification, completing risk analysis, creating risk respond action plan, monitoring and controlling risk on a project while risk management is described as the difficult area within construction management (Winch, 2002; Potts, 2008), its application is promoted in all projects in order to avoid negative consequences Potts (2008).Risk is associated to any project regardless of the industry and thus risk management should be of interest to any project manager.Risk differs between projects due to the fact that every project is unique especially in the construction industry (Gould and Joyce, 2002). The construction industry operates in an uncertain environment where conditions can change due to complexity of each projects (Sanvido et al., 1992).