Public Works Advisory, NSW Department...
Author: Ross Altman
Listen to this Ask The Expert: The Price of Risk Transfer and One-Sided Provisions in Construction Contracts, to hear the recent survey results.
The natural inclination when drafting and negotiating a construction contract is to transfer as much risk as possible to the other party. Although benefit might be derived from risk transfer, there often is a price to be paid or absorbed for that privilege. That price needs to be evaluated, as it may outweigh the value of risk transfer, particular if terms are perceived as one-sided and, therefore, fundamentally unfair. Parties to a construction contract may want to consider an allocation of risk that is more balanced, and also use the contract as a tool to facilitate project success. Results of a recent informal survey on the topic conducted by the American College of Construction Lawyers seem to reinforce that proposition and will be summarized.
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