Fair risk allocation in tunneling: A game modelling approach

Tunneling involves risks that are unique. In order to manage risks, the tunneling industry has supported risk sharing approach. However, some private owners may prefer a single-point allocation of all risks to the contractor, particularly for encountered ground conditions. This attitude represents an adverse trend back way of thinking which induces adversarial relationships within the tunneling industry. In consequence, these owners need to be educated with the potential benefits of the 'risk sharing approach'. In this paper, Game Modeling is used as an analysis tool of risk allocation in a tunnel construction contract. Game Theory is a branch of applied mathematics devoted to the logic of decision making in social interactions. The unfair allocation of risk is still affecting the reputation of the tunneling industry. These owners need to be educated with the potential benefits of the risk sharing approach. Game modeling can be used as an effective tool for this education campaign.