- Author
- Construction Industry Institute
- Title
- Contract Risk Allocation and Cost Effectiveness.
- Coporate
- Construction Industry Institute, Austin, TX
- Report
- Publication 5-3, November 1988, 21 p.
- Keywords
- construction | risks | cost effectiveness
- Abstract
- Risk allocation in construction contracts has been the subject of considerable debate in the construction industry for many years. Careful attention to the design of contracts was recommended by The Business Roundtable's Construction Industry Cost Effectiveness (CICE) Project. The Construction Industry Institute (CII) also identified risk allocation as influential in project success and recommended a balanced approach. Nonetheless, many owners and contractors resist modification to their normal practices, unless forced to do so in specific cases by marketplace and competitive pressures. This publication presents results of a study sponsored by the CII Contracts Task Force to evaluate the risk allocation practices and experience of CII members over a range of approaches. The primary objectives were to identify inequities and determine their impact on project performance and on owner-contractor relationships. The study focuses on fixed-price contracts, which are the most problematic.