Impact of Owner‐engineer Risk Sharing on Design Conservatism

Abstract

Previous research, funded by the U.S. Department of Transportation and carried out at MIT, demonstrated modeling approaches that could be used to determine the most effective allocation of risk between owner and contractor, where construction buyers were willing to share in the risks of construction. While risk allocation to the designer may have some impact on total project cost through increased design fees, the writers hypothesize that the major consequence of imposing undue risks on designers would be the promotion of overly conservative designs. Furthermore, the writers hypothesize that the overconservatism will be greatest in unique or specialized projects where no “similar” projects exist for comparison of designs. This study carries on the approaches used in the earlier work and investigates whether varying the risks and liabilities imposed upon the designers of rock tunnels for underground mass transit systems will affect the degree of conservatism in the design solutions that they develop. The study finds that nontechnical risks and liabilities imposed upon designers have a significant effect on the degree of conservatism in the designs that they develop. Moreover, the relative cost impact of the “overdesign” caused by imposing large risks on designers is found to be greatest where geological conditions are most favorable.