Identification And Nature Of Risks In Construction Projects A Contractor's Perspective

This paper is one of a series of presentations organized by the Conference of American Society of Civil Engineers with the goal of making significant progress toward an equitable and effective allocation of risks in construction undertakings among the principal parties - owner, contractor and designer. The role I have been assigned is principally one of identification of risk while others will devote greater attention to the allocation of these risks and the contractual arrangements necessary to properly make these allocations. Construction projects are joint undertakings by parties who bring different skills and interests toward a common effort, much as this conference does. A project is not an adversary proceeding and does not benefit from establishment of an adversary mode, as our lawyer friends seek in the resolution of legal issues. Accordingly, I urge upon this Conference the adoption of two basic precepts and guidelines as the criteria for sharing of the risks inherent in construction undertakings toward achievement through mutual effort the common goal of a successful project completed in the shortest time and at the least overall cost. These precepts are: (1) that all risks are rightfully the owners unless transferred to or assumed by another party for a fair compensation; and (2) that the principle guideline in determining whether a risk should be so transferred should be whether the receiving party has both the competence to fairly assess the risk and the expertise necessary to control or minimize it. The sponsors of the conference have provided certain guidelines to the authors. There is, however, no constraint in expressing one's bias and I suspect that my contractor's outlook may be inherent in my comments. The guidelines have suggested that I indicate whether the risks identified are ones that can or should be shared or borne by one party alone. In doing so, I will attempt to follow the precepts I have recommended.