Overview of Risk Allocation between Construction Parties

Certain risks are inherent in all construction projects. These risks are faced by all parties involved in a project - owners, contractors, designers, suppliers, etc. However, the more important role the parties play in the development and successful completion of the project, the greater risks they have to carry. Such parties are the owner and the contractor who conclude a contract to carry out construction works. Shifting the risk onto one of the parties to a construction contract agreement is inequitable and unreasonable. Equitable allocation of risks among parties is very important. Analysis results shows that in the area of risk allocation between construction parties many research is done and work is still ongoing, the most work in this area is done by scientists of China, USA, Australia and Great Britain. Although, on the one hand, relevant studies emphasise equitable risk allocation, on the other hand, the task of proper allocation of risks among parties is placed within one party only, i.e., the owner. This automatically programmes improper risk allocation results. According to the author, risk allocation among the parties to a construction contract agreement should invoke cooperative game theory which application for the aforementioned purpose is the object of further research of the authors. (C) 2012 The Authors. Published by Elsevier Ltd.