Contractual Risk Framework, Allocation and Assessment in International Construction Projects

To help contractors identify and manage contractual risks during the bidding stage, Yuting Chen has developed a contractual risk framework for systematically assessing risks arising from the tender documents provided by the Employer.

In addition to identifying and assessing risks, the framework also considers risk allocation between the parties. The FIDIC 2017 Red Book (RB), Yellow Book (YB) and Silver Book (SB) have been used as a basis for establishing a recommended and balanced approach to risk allocation. This provides contractors with a practical benchmark against which they can compare the risk allocation set out in the tender documents.

The framework also includes an assessment of the significance of each risk. Since every project is unique and the risks associated with each project may differ, the values provided in the table are illustrative and intended to demonstrate how such an assessment could be applied to a real project.