Examining Risk-Sharing Decisions in Construction Contracts in University of Ghana

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The construction sector involves various activities. This makes it more susceptible to risk compared to other industries. Risk is inevitable in any endeavor; fair and reasonable risk sharing in construction contract is a sure means to enhance successes in construction contracts. The research among other things, sought to explore risk sharing decisions in construction projects and how they can be adopted in University of Ghana so as to enhance the successes of contracts and also reduce the rate at which risk occur. These objectives were set to realize the aim; to identify guidelines for risk sharing decisions in construction contracts; and to document mitigating measures for the allocated risks. The data was gathered through responses from structured questionnaires. Evaluation of responses indicated prevailing risks in construction contract in the University of Ghana. The respondents also provided mitigating measures for the risks assigned to the appropriate risk owners. The study revealed five major risk factors with associated fifteen risks break down structures. The most significant risk factor was financial risk in construction contracts in University of Ghana. Financial risk and delayed payment emerged as predominant major risk factor and risk break down structure respectively. Contractors should submit their cash flow to clients to aid clients’ investments maturity dates; a clause to force clients to pay interest on delayed payments and also a clause in the conditions of contract to allow contractors to find out clients’ availability of funds before signing contracts are some of the measures the respondents gave to mitigate delayed payment. The use of these guidelines in risk sharing decisions as well as their suggested mitigation methods will ensure the success of construction projects. These will thus help eliminate problems such as delayed payment which is likely to occur. The study indicates that, there should be principles and guidelines to be followed when allocating or distributing risk to parties in a contract, confirming the works of Groton et al., (2010) and Teh-Chang et al., (2009
A thesis submitted to the Department of Building Technology, College of Art and Built Environment, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the Degree of Master of Science in Procurement Management.