ABSTRACT
This chapter discusses risk allocation strategies and contracting options from the owner’s perspective. It describes a collaborative approach to addressing risks to encourage trust and innovation by exploiting emerging opportunities. The chapter examines risk allocation practices, contract types and payment structures and outlines a simple collaborative model for effective project delivery and innovation. A fair and proper strategy, regardless of payment structure and contractual arrangements, must bring together the client’s objectives with the interests of other parties in a collaborative manner. The collaborative construction model is specifically designed to address the difficulties unique to major projects, which are typically plagued by cost and time overruns due primarily to misalignment and fragmentation. Construction projects frequently suffer from adversarial relationships, low rates of productivity, high rates of inefficiency and rework, frequent disputes and lack of innovation—resulting in projects that cost too much and/or take too long to build.
