Thesis:

Effectiveness of risk management strategies on mitigating cost overruns in infrastructure projects in Chemususu water company, Kenya

Infrastructure projects are essential for driving economic development and improving the quality of life by providing services such as water, energy, and transportation. Despite their importance, cost overruns have remained a persistent challenge in public sector infrastructure projects in Kenya. Approximately 85% of such projects experience cost overruns, with water infrastructure projects managed by entities like Chemususu Water Company being particularly affected. This study evaluated the effectiveness of risk management strategies in mitigating cost overruns in infrastructure projects undertaken by Chemususu Water Company. The specific objectives of the study were: to determine the influence of the risk avoidance strategy on mitigating cost overruns in infrastructure projects in Chemususu Water Company; to establish the influence of the risk reduction strategy on mitigating cost overruns in infrastructure projects in Chemususu Water Company; to examine the influence of the risk transfer strategy on mitigating cost overruns in infrastructure projects in Chemususu Water Company; and to assess the influence of the risk retention strategy on mitigating cost overruns in infrastructure projects in Chemususu Water Company. The study was guided by Risk Compensation Theory, Resource-Based View Theory, Enterprise Risk Management Theory, and Prospect Theory. A descriptive research design was adopted, targeting key stakeholders involved in infrastructure projects at Chemususu Water Company, including project managers, engineers, procurement officers, financial officers, contractors, and community representatives. Data were collected using closed-ended questionnaires based on a five-point Likert scale. The study adopted a census approach.Both descriptive and inferential statistics were used in the analysis, with SPSS software facilitating multiple regression analysis to determine the relationships between the risk management strategies and cost overruns. The results indicated statistically significant moderate positive correlations between risk avoidance (r = 0.518, p = 0.011), risk reduction (r = 0.563), and risk transfer strategies and the mitigation of cost overruns. These findings emphasized the importance of early risk identification, proactive planning, and strategic subcontracting in enhancing cost control. Risk retention, however, showed a weaker and less consistent impact. While respondents acknowledged the existence of cost management strategies, their perceptions of effectiveness varied, suggesting gaps in implementation. The study recommended the integration of risk management strategies into project execution frameworks, particularly in scope control, monitoring mechanisms, and strategic outsourcing. Additionally, it noted the importance of regular training on risk assessment and strict adherence to risk protocols to enhance financial efficiency and ensure projects are completed within budget.