Model for Managing the Contractual Risks of Construction Firms Imposed by the Procurement System

Managing the risks of project procurement systems is one of the basic problems for construction firms; this applies to contracts with clients and those with third parties. In most cases firms fail to identify risk factors. Sometimes they fail to suggest appropriate contractual arrangements to distribute and minimize the negative impacts of these risks that are basically caused by the procurement system agreed to by the parties. The aim of this study is to develop a model and tool covering both conceptual and practical dimensions so that construction firms will be able to manage the risks of selecting=designing=tailoring the most suitable components=statements=solutions in their contractual arrangements, regardless for whom the contracts are, i.e., the client or third parties, by using a holistic approach. In the literature, selection=design=tailoring problems of the appropriate procurement system focus mostly on the client's interests, since the client seems to dominate in the decisions of the system to be applied to the project. Nevertheless, the contractors should have their own tools to identify and assess the risks of the system imposed and cover their own position by suggesting appropriate contractual arrangements in relation to each of the components mentioned above.