A risk identification procedure for construction contracts—a case study of power station projects in Egypt

Abstract

The process of risk management is generally divided into three phases: risk identification, risk analysis and risk response. From these three phases, the concept of risk identification appears to be the most known and practiced. The development of a more formalized, yet easy to use risk identification method is of extreme importance. This research focuses on risk identification as it relates to the Egyptian business environment including its procurement laws and regulations. Egypt is a developing country where the business environment emphasizes certain risks while diminishing others when compared with other countries. This study tackles risk identification by investigating the most significant risks related to construction contracts for two power station projects in Egypt. These had typical characteristics such as large scale, fast track projects where a multi-package contracting plan was utilized. Ultimately, a checklist of risk categories was developed to aid contractors in their risk identification effort. The compilation of this checklist identified seven risk categories: (1) owner's obligations; (2) interface with other contractors; (3) liability risks; (4) financial risks; (5) risks related to changes; (6) technical risks; and (7) consortium risks.