The constructionindustry plays an important role in the economic development of any country. Ithas provided tremendous support to the economy as a whole through itsback-to-back links with other economic sectors. In addition, it helps createhuge employment opportunities in the economy. Malaysia realized thesignificance of the construction industry in its early days of independence andbegan to develop the industry (MPC, 2016). Malaysia’s constructionindustry is divided into two parts. The part is involve engineering works suchas civil engineering and other construction works likes construction forresidential areas as well as commercial buildings In addition, specialcommercial and engineering works such as metal engineering, power engineering,plumbing, sewage and sanitation will be part of the construction industry (MPC,2016).Compared with othereconomic sectors such as service industry, manufacturing industry andagriculture, the contribution of construction industry to Malaysia’s economy isrelatively small.
Its contribution to GDP is 12 times smaller than servicesector, 2.2 times smaller than agriculture sector and 7 times smaller thanmanufacturing sector. From 1990 to 2010, the average contribution ofconstruction industry to GDP was 4.1%, while that of service industry,manufacturing industry and agricultural sector was 48.3%, 28.2% and 9.
2%respectively over the same period (Bakar, Awang, Yusof & Adamy, 2011).However, it is still an important part of the national economy due to theback-and-forth linkage and spillover effects with other industries (AHKMalaysia, 2011).Moreover, constructionis also one of the most challenging and dynamic industries in Malaysia. Thisindustry is different from other industries because of its unique and complexcharacteristics. Factors such as type, size, duration, diversity, participantsand locations can lead to many risks to the construction industry.
In Malaysia,risk management has been in place since the early 1990. However,not all companies have established their own risk management department. Inaddition, due to the lack of relevant data, most Malaysian constructioncompanies have not yet implemented risk management in their constructionprojects (Siang & Ali, 2012).