Risk allocation in design-build and BOT projects

The complex process of delivering completed and functional projects in developed, developing and under-developed countries is fraught with Risk. The increasing use of design-build contracting complicates the process of allocating appropriately the Risks during project engineering and construction period. The increasing need for rapid infrastructure development through the use of private financing, especially in areas facing rapid economic development and urbanization, also forces projects to face, manage and allocate Risks associated with financing and operating such infrastructure projects. Allocation of Risks is a complex process in itself. Risks must be identified and assessed in a manner that places responsibility on the party who can manage or bear the Risk in the most appropriate or effective manner. Risk Allocation first requires Risk Identification and then Risk Assessment to achieve contractual and management allocation. The paper presents identification of Risks and methods of assessing, prioritizing and allocating Risks in infrastructure Design-Build and BOT projects. The methodologies also focus on precontract, project execution and project operation. The examples come from experience with such projects worldwide, and especially in the Asia-Pacific region recently. The techniques demonstrated are used on projects to allocate and manage Risk on a regular basis.