Riskanalysis in Fixed-Price Design–Build Construction Projects

Available online at www.sciencedirect.com

Building and Environment 39 (2004) 229 – 237

www.elsevier.com/locate/buildenv

Risk analysis in ÿxed-price design–build construction projects

Ahmet Oztas∗ , Onder Okmen

Department of Civil Engineering, University of Gaziantep, 27310 Gaziantep, Turkey

Received 11 June 2003; received in revised form 2 August 2003; accepted 26 August 2003

Abstract

Construction projects are being tendered and implemented under di erent contract systems and payment methods. Design–build has

been a popular contract system in recent years. It provides various advantages through entailing the contractor carrying out and being

responsible for not only construction but also the design of the work. However, design–build turns out to be a risky system for both

owners and contractors unless the risks are identiÿed, analyzed and managed throughout the tender preparation and project execution

stages. In this context, this study aims to present a literature survey on the issues of risk, risk management/analysis and the design–build

contract system, to propose a schedule and cost risk analysis model, and to show the applicability of these models in scheduling and cost

estimation of a ÿxed-price design–build construction project through a case study.

? 2003 Elsevier Ltd. All rights reserved.

Keywords: Risk analysis; Construction; Contract system; Design–build; Monte Carlo simulation

1. Introduction

In a competitive tender, decisions on pricing strategies

are based on contractor’s experience, intuition, and personal

bias. There are a lack of practical models that could quantify risks on construction projects. Xu et al. [1] proposed

an approach to the risk assessment of contractor’s pricing

strategies while Tummala et al. [2] formulated a risk management process (RMP) model to evaluate the risks associated with project cost in di erent phases of the project life

cycle. Songer et al. [3] suggest risk analysis tools like Monte...