Optimum risk allocation model for construction contracts: fuzzy TOPSIS approach
Volume 30, Issue 4, May 2012, Pages 511-522
The unbalanced allocation of risks among the contracting parties is an important decision leading to increase of the total cost of a specific project and affects the overall relationship between the contracting parties. Due to common risk allocation decision-making process is based on experiential knowledge, is subjective and implicit. This paper presents a fuzzy adaptive decision making model for selection of balanced risk allocation which transforms the linguistic principles and experiential expert knowledge into a more usable and systematic quantitative-based analysis by using the fuzzy logic. The objectives of balanced risk allocation are developed based on the concept of Competence-Tendency trade-off. The proposed model integrates fuzzy logic qualitative approach and analytic hierarchy process (AHP) adaptive capabilities to evaluate allocation of project risks and determine best party to bear each one. Results from this model show its high capability in addressing most proper risk allocation with least contingency applied to the owner.