An analysis of the allocation of pertinent risks in the Zambian building sector using Pareto analysis

Abstract

In most instances, the construction client allocates risk by selecting the methods for procurement, payment and the contract form. Nevertheless, how favourably the contractor views the risk allocation has a bearing on the project outcome. This research identifies the pertinent risks in the Zambian context and establishes how they are allocated in terms of types of contract clauses used and response mechanisms employed. A mixed-sequential approach was followed, comprising 15 semi-structured interviews, 198 questionnaire-survey respondents and document analysis (eight projects using various standard forms of contract). The respondents comprised of clients, consultants and contractors involved on medium- to- large-scale building projects. Findings show the pertinent risks in the industry were due to shortcomings of the design team and clients’ shirking. Using a Pareto analysis, a pervasive propensity was found for passive risk acceptance and wanton risk transfer by the client. Modifications were found, aimed at negating the clients’ responsibility for risk. The originality of this research lies in its methodological approach and its focus on how risks are allocated. Findings can help practitioners to better allocate risk and promote the achievement of desired project outcomes through careful selection and utilization of mechanisms, allocation of risk and use of contract clauses.