DECISION ANALYSIS FOR CONSTRUCTION CONTRACT RISK-SHARING

As the risk-sharing provisions in domestic public construction contracts are not completely fair and reasonable, contract disputes often arise as a result which in turn cause delays, quality impacts, and other problems that urgently need improvement. Introduced in this article is the development of a decision system for risk-sharing in public construction contracts. Said system was developed through literature review, questionnaire and interviews of experts, fuzzy synthetic evaluation in conjunction of analytic hierarchy process, definition of risks in public construction contracts, and establishment of decision models for risk-sharing. Subsequently, the “escalation” risk was employed as an example to select suitable decision models for analyzing risk-sharing decisions. The evaluation model of contract risk-sharing performance established in this article can be the basis for authority in its optimal risk-sharing decision-making. According to result of decision analysis made in this article for risk of “rising price and wages,” it is suggested that the authority shall select the sharing program of “adjust the portion with rising/falling amplitude exceeding (5%) according to particular price index” for construction with duration exceeding 1 year. The authority is also suggested to set fair and reasonable contract that regulates rights and obligations for both parties with principle of equal and mutual benefit.