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Comparison of international federation of consulting engineers and general specification for public works contracts from risk management perspective

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2005
Usta, Ergun
Contractors have to construct the projects efficiently in accordance with the contract provisions when they accept a contract. All construction projects involve risk and there is no possibility to eliminate all the risks associated with a specific project. Management of risk requires identification and analysis of risk factors. After this risk assessment step, proper response strategies have to be developed so that an optimum risk-reward structure is ensured. Contracts are the grounds where risk allocation schemes between parties are settled and risk-reward mechanisms are defined. Since contractors are usually unable to influence the contract conditions and clauses, they should understand which risks they are retaining under contract conditions. Thus, succesful management of risk requires understanding of contract clauses and identification of secondary risk factors created due to poorly defined contract clauses. The aim of this thesis is to investigate standard conditions of contract, namely FIDIC and GSPW, which are the most widely utilised contracts by the Turkish contractors, from the risk management point of view. For this purpose an interview form is prepared and interviews are conducted using this structured form. Implications of the contract clauses for the risk management strategy of contractors are discussed based on interview findings. The basic philosophy of FIDIC and GSPW are investigated so that necessary suggestions for the contractors can be made considering the risk allocation schemes defined in these documents.