doi:10.3850/978-981-08-7920-4_S1-CP10-cd


A Risk-Assessment and Risk-Pricing Method for Hong Kong Housing Authority Construction Contracts


Lawrence K. W. Chung

Development & Construction Division, Hong Kong Housing Authority, Hong Kong.

ABSTRACT

This paper sets out a risk-assessment and risk-pricing method for analyzing and estimating construction project risks in Hong Kong Housing Authority (HA) contracts by means of Conjoint Analysis. The study comprises identification of the major construction project risks, assessment of the part-worths of the risks at different levels of severity, aggregation of the partworths and derivation of an equation representing the relationship between the aggregated part-worths and the contractors’ risk markups. From the study, it is found that HA contractors perceive “Managerial Competence” as amajor and sensitive risk. It brings out an importantway forward that should the employer wish to minimise the riskiness of their projects in an effective way, they should enhance the managerial competence of their contractors in a sustainable manner. In this regard, HA has developed a procurement cycle with built-in Performance-based Controlling Mechanism. The system has successfully enhanced the managerial competence of the HA contractors, bringing sustainable improvements in the performance of HA projects.

Keywords: Constructors’ solvency, Legislation, Contract conditions, Payment terms.



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