Building contractors' behavioural pattern in pricing weather risks

Hon Wan Edwin Chan, Maria C Y Au

Research output: Journal article publicationJournal articleAcademic researchpeer-review

24 Citations (Scopus)

Abstract

Inclement weather is a major risk in construction project delay. Employers could transfer such weather risk to contractors by deleting the corresponding contractual provision for extension of time in the contract, but in return, the tender sums would be inflated to reflect the costs of this risk. Previous studies have provided very little guidance for employers to assess the costs involved in such risk transfer. Therefore, knowledge of contractors' pricing behaviour for weather risk becomes essential in the optimization of contract cost. This study aims at finding out contractors' behavioural pattern in pricing weather risk in tenders by investigating the relationships among their risk perceptions, attitudes and behaviours. With questionnaire data collected from different size groups of building contractors in Hong Kong, their behaviours are analyzed statistically. The results reveal that the risk-pricing behaviours of contractors of various sizes are different and smaller contractors are more willing to absorb weather risks in tenders. It is generally more cost efficient for employers to delete the contractual provision for extension of time due to inclement weather as contractors' allowance of weather-caused delays (in monetary terms) in tenders is less than the actual number of days of inclement weather obtained from weather records.
Original languageEnglish
Pages (from-to)615-626
Number of pages12
JournalInternational Journal of Project Management
Volume25
Issue number6
DOIs
Publication statusPublished - 1 Oct 2007

Keywords

  • Attitude
  • Bidding behaviour
  • Decision-making
  • Perception
  • Weather risk

ASJC Scopus subject areas

  • Business and International Management
  • Management of Technology and Innovation

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