Comparison Study Of Risk Sharing Based On Domestic And International Construction Contracts

The inherent features of construction project make it possible that there exists not only exogenous risks caused by uncertainty in the external environment but also endogenous risks generated from opportunism behaviors of both the owner and the contractor due to their bounded rationality and asymmetry information during the construction.The owner and the contractor usually sign contract and then make risk sharing clear based on the standardized construction contracts drew up by relevant government departments.In this paper,the 2013 version of construction project contract(hereinafter,the model text)is compared with the internationally-used FIDIC conditions of contract for construction(hereinafter,the new red book)and risk sharing between the owner and the contractor in engineering construction is analyzed.The main contents are as follows:First,based on the incomplete contracting theory,the incompleteness of construction contract is analyzed.Next,construction project risk is divided into exogenous risk and endogenous risk from the angle of contract economics and then dynamic risk sharing theory is used to study the respective impacts of risks on parties and contract change.Then,the differences of contract change rule,risk sharing principle and risk sharing form between the model text and the new red book are pointedly compared.Last,a comparison of the impacts of the two types of contracts on restraining the occurrence of endogenous risk caused by opportunism behaviors is made in aspects of the structure of contract,the stimulation of contract change,contract breach,contract termination and supervision mechanism.Following results are obtained through a series of comparisons.There is no essential difference regarding exogenous risk sharing principle between the model text and the new red book.However,significance differences exist in both sharing form of specific risks and contract change principle,such as the legal adjustment of civilized construction costs,the provision of construction site and conditions,abnormally bad weather conditions and so on.In terms of restraining the occurrence of endogenous risk,great difference in contract change procedure,benefit sharing mechanism,dispute resolution process,implementation mechanism and supervision mechanism exist between the model text and the new red book.In this paper,the differences between the model text and the new red book are analyzed according to the new red book as well as law,culture and custom,and then some reasonable proposals are put forward to improve construction risk sharing system in China.