Contracting to Appropriately Allocate Risk

doi:10.3850/978-981-08-7920-4_S1-R05-cd

Contracting to Appropriately Allocate Risk

Awad S. Hanna¹ and Justin R. Swanson²

¹Department of Civil and Environmental Engineering, University of Wisconsin-Madison, Madison, WI, USA.

²Bechtel Systems and Infrastructure, Inc., San Francisco, CA, USA.

ABSTRACT

Over the past decades, numerous research efforts have been undertaken concerning the allocation of construction risks. Although the research currently available provides many valuable insights into the issue, industry participants remain concerned over risk associated with construction contracting. Based on this problem, a research product that would aid contracting parties in determining how each risk can best be identified, assessed and allocated was developed. The risk allocation model is called “Single-Party Risk Assessment Worksheet” and is to be used internally to facilitate risk alignment within each party’s organization. The results are later compared in the “Two-Party Risk Assessment Worksheet” in order to begin the cooperative assessment and allocation process. This paper presents the risk assessment tools developed, the details of the worksheets, risk decision trees, and risk allocation principles.

Keywords: Risk allocation, Contract management, Risk management.

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Contracting to Appropriately Allocate Risk

Awad S. Hanna1 and Justin R. Swanson2

1Department of Civil and Environmental Engineering, University of Wisconsin-Madison, Madison, WI, USA.

2Bechtel Systems and Infrastructure, Inc., San Francisco, CA, USA.

ABSTRACT

Awad S. Hanna¹ and Justin R. Swanson²

¹Department of Civil and Environmental Engineering, University of Wisconsin-Madison, Madison, WI, USA.

²Bechtel Systems and Infrastructure, Inc., San Francisco, CA, USA.