Risk allocation is crucial
subject. It refers to the proper allocation of risks among the contract
parties, predominantly the owner or the contractor. In some circumstances, risk
can not be handled by one party alone, however sharing its responsibility on more
than one party lead to appropriate risk allocation. In general, risks
responsibility should allocated to the proper party that can handle these risk
(EI-Sayegh, 2008).

Moreover, the
use of the most adequate and well-defined risk allocations in construction
contracts provides a basis in achieving improved management efficiency and
helps alleviate adverse impacts associated with risks in construction projects
(Smith et al., 2009).

Researchers have
made use of and developed various risk allocation methodologies relevant to the
construction industry as detailed in (Abrahamson, 1973; Ward et al., 1991; Cheung, 1997). The key
theoretical and foundational principles with respect to risk allocation in the
construction industry must take into account the stipulated contractual
agreements, roles and responsibilities of all parties and key stakeholders
associated with the project. This needs to be managed efficiently and
effectively throughout the project life cycle.

Risk
allocation is an important issue and it must be appropriated to the best party
that can mitigate its effects (Bing et al.,
2005). Research has shown that risk
allocation is mostly attributed to the contractor (Kartam and Kartam, 2001;
Shen et al., 2001; Abednego and
Ogunlana, 2006; El-Sayegh, 2008). This could be as a result of the default use
of the traditional contract type which results in the contractor responding by
increasing their contingency and price strategies with significant influence on
the cost to deliver the project (Kartam and Kartam, 2001; El-Sayegh, 2008).

Managing
risks involves identifying the most probable sources of risk, assessing risk
factors, evaluate mitigating factors and develop an effective risk management
system. This is achieved by continuous monitoring, effective collaboration with
all stakeholders involved in the project and the use of key resources in a
coordinated and economical effort to minimise the probability and adverse
impacts of unfortunate events in projects. This is a critical component to
ensure that construction projects are completed according to their schedule
time and cost.

In
this study, as shown in Appendix C, a questionnaire survey form was developed
to include a part concerned to view the perceptions of a sample of Libyan
construction practitioners in addressing the responsibility of risk factors
associated to the public sector housing projects in Libya among the parties:
owner, contractor and consultant. In this regard, a sample includes fifty-five
Libyan construction professionals were asked to allocate the responsibility of
the eighty-five risk factors that have been identified in this research based
on the literature reviewed and semi-structured interviews outputs.

 

El-Sayegh (2008) assessed the
recommended allocation is for the party that gets more than 50% of the votes
for each risk. If a risk did not have a party with more than 50% of the votes,
it was considered ignored and labelled ”undecided”. Similarly, this approach
was adopted in this research to allocate risks among parties. In addition, a
step further was added to realize more reliable determination of responsibility
among the parties. On other words, risk allocation recommended was evaluated in
terms of two categories; the first if the party had equal or more than 50% of
the votes, while the second had equal or more than 25 % and less than 50% of
the votes. Based on this, these categories were labelled respectively as; the
first responsible party; and the second responsible party. Details of the
recommended allocation as viewed by the respondents are presented in section 5.3.

 

3.12
Brief research methodology

In the light of the
explanations and justification presented in the above sections concerning the
research philosophy, approach and strategy used in this
research to realise the aims and objectives of this research, figure
3.3 illustrates a brief outlines of the research methodology adopted in this study.

 

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