Dispute avoidance through equitable risk allocation

Equitable risk allocation is considered to be the gateway to dispute avoidance. To this ends, allocation of risks in construction projects should conform to accepted principles. This chapter discusses the use of equitable risk allocation to reduce claims and disputes. An allocation tool that can be used for both risk allocation and evaluation is proposed. The tool is adopted from the one developed by the Public Works Department of the Australian State of New South Wales and employs the Abrahamson allocation principles. The evaluation function of the tool is illustrated by an exercise to unveil the risk allocation pattern of the FIDIC contract. The allocation function is demonstrated by an allocation exercise conducted with construction professionals in Hong Kong.