Examining the Causal Relationships of Risk Management Variables in Construction Firms: A Structural Equation Modelling Approach

Abstract

This study aims to develop and validate a causal model to explain risk management practices among construction firms in the Davao Region. Specifically, it would test the influence of buyer–supplier collaboration, top management commitment, and organizational culture on risk management through a structural equation modeling (SEM) approach. The researchers used a quantitative, descriptive-correlational design and collected data from 401 key operational personnel in construction firms selected as respondents. The results indicated high ratings for buyer–supplier collaboration, very high ratings for top management commitment and organizational culture, and high ratings for risk management practices. Correlation analysis revealed that all exogenous variables were significantly related to risk management. Results from regression and SEM further confirmed that organizational culture was the most direct influence on risk management, followed by buyer-supplier collaboration and top management commitment. The final structural model fit the data well, indicating that the three organizational variables had significant, combined effects on risk management. The findings show that to improve risk management practices, it is important to foster a collaborative environment, secure strong leadership commitment, and build an organization that is risk-aware. The study presents a model empirically validated and offers practical insights for construction firms seeking to enhance project resilience and performance.