Abstract:
Risk is an unavoidable phenomenon in construction projects. Proper risk allocation
in construction contracts has therefore come to assume prominence because risk identifi
cation and risk allocation have a clear bearing on risk handling decisions. The proper management
of risks requires that they be identifi ed and allocated in a well-defi ned manner. This
can only be achieved if contracting parties comprehend their risk responsibilities, risk event
conditions, and risk handling capabilities. This research aims at identifying the risk responsibilities
of contractual parties in order to improve their risk handling strategies with regard to
Sri Lankan road projects. Semi-structured interviews were used for the primary data collection.
This was complemented with documentary evidence. The results show that road construction
projects in Sri Lanka are exposed to many risk sources while most risks are borne by parties
who were assigned with risks via contract clauses. However, parties not allocated with risks
too happened to bear the consequences of such risks. Therefore, it is concluded that there is no
one best way to respond to a risk and that different risk handling strategies should be adopted
in order to deal effectively with risks.
