Mooney, C and Mooney, E (2014) Risk allocation in construction contracts: Irish public works. Proceedings of Institution of Civil Engineers: Management, Procurement and Law, 167(2), pp. 68-74. ISSN 17514304
Abstract
A properly executed contract is generally understood to be enforceable, regardless of the balance of risk contained in the contract. Allocating risk appropriately between employer and contractor in construction projects is therefore of prime importance, since, once agreed, there are very limited opportunities to reapportion that balance. Standard forms of contract differ primarily in how they allocate the balance of risk between employer and contractor, and some are considered more contractor-onerous than others. This article looks at optimal risk allocation, and compares the Irish government's recent approach to risk allocation in public works with the contractor-onerous FIDIC Silver Book form of contract. It is observed that the Irish government's approach attempts to place more risk onto the contractor than does the FIDIC Silver Book, does so without scope for amendments to the contract clauses, and this has occurred simultaneously with a significant drop in tender prices and an environment in which data is not yet readily available on the critical test of out-turn contract performance.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | contracts and law; procurement; risk and probability analysis |
| Index terms: | public work, risk allocation, form of contract, construction contract, FIDIC, standard form of contract, construction project, probability analysis, tender price |
| Subjects: | statistical analysis, tendering, financial risk, infrastructure engineering, production management, contract type, standard forms of contract, contractual arrangements |
| Topics: | Engineering Principles, Project Management, Procurement, Cost Management, Research Practice |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here