Financial Risk Management Strategies and Cost Performance of Public Construction Projects in Tanzania: The Case of Msalato International Airport.

Maeda, Angela Leonard (2025) Financial Risk Management Strategies and Cost Performance of Public Construction Projects in Tanzania: The Case of Msalato International Airport. Masters thesis, The Open University of Tanzania.

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Abstract

This study examines the effectiveness of financial risk management strategies employed in public construction projects in Tanzania, with a focus on the Msalato International Airport construction project. A mixed-methods approach was utilized, incorporating both qualitative and quantitative data collection from key government agencies, including the Tanzania National Roads Agency (TANROADS), the Tanzania Airports Authority (TAA), and the consulting firm known as BEZA Consulting Engineers. Thematic analysis was used for qualitative data, meanwhile descriptive statistics and multiple linear regression analyses were performed on the quantitative data. The study identified key financial risk factors affecting cost performance in public construction projects, including delayed government budget allocations, inaccurate budget estimates, inflation, exchange rate fluctuations, and delayed contractor payments. The study also established that financial risk response strategies, including risk acceptance, avoidance, exploitation, and transfer, were effectively applied to mitigate cost overruns. Additionally, financial risk monitoring practices such as proper documentation, financial risk forecasting, and compliance with financial regulations were identified as key contributors to cost performance improvement. The study concludes that an integrated approach to financial risk management; that incorporating strong identification, analysis, response, and monitoring mechanisms, was crucial for minimizing financial risks in public construction projects. Keywords: The government agencies should invest in capacity building programmes to enhance financial risk management expertise and adopt advanced financial monitoring tools to improve cost control and prevent budget overruns

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