Contract Risk Research Articles

Maturity model for evaluating integrity management in public procurement

This article presents the maturity model for evaluating integrity management in public procurement developed from national and international practices for identifying, assessing, and mitigating integrity risks. The model consists of 30 assessment questions weighed across four maturity levels. It was formulated through a comprehensive literature review and validated in four Brazilian public agencies at municipal, state, and federal levels. This model allows for self-assessment of key weaknesses and strengths in contractual risk management and supports the continuous improvement process of internal controls to preserve public value.

Risk Allocation and Mitigation Practices for Building Information Modeling: Addressing Legal and Contractual Risks Associated with Contract Documentation

Risk Allocation and Mitigation Practices for Building Information Modeling: Addressing Legal and Contractual Risks Associated with Contract Documentation

Contractual Limitations of Liability and their Impact on Tort Claims

Abstract By concluding a contract, parties intend to allocate the contractual risk between them. This means that parties must anticipate any future adverse result and determine whether a party will have to cover any loss incurred by the other party as a result of performance or, more often, bad performance. In sales contracts, for example, parties may decide to exclude any liability for defects of goods, especially when selling used goods or for other reasons, or at least to limit liability for some defects or to limit types of possible claims. Similarly, in mergers and acquisitions, parties very strictly determine what is known by the seller in a disclosure letter and give the buyer access to some information in a data room prior to the conclusion of the contract to limit liability to the unknown and the non-disclosed. CA Hill/BJM Quinn/SD Sollomon, Mergers and Acquisitions, Law, Theory, and Practice (2019) 372–403; R Tschäni/H-J Diem/M Wolf (eds), M&A-Transaktionen nach Schweizer Recht (3rd edn 2021) 209–215 (paras 420–431); O Duys/K Henrich in: W Hölters (ed), Handbuch Unternehmenskauf (8th edn 2015) ch 16, paras 16.108–16.116. For each party, much of contractual drafting boils down to limiting risk to the greatest extent possible, or at least to ensure compensation for any risk incurred. If parties are on an equal footing, this may lead to an equitable allocation of risk and a balanced contractual liability regime. Contractual limitations of liability are, therefore, part of this process of adequate allocation of risks. In this contribution, I will briefly address three issues. First, I will look at which principles are applicable to the validity of limitations of contractual liability (I) and then determine to what extent these principles apply to tort claims (II). This will finally lead me to determine whether the Principles of European Tort Law (PETL) need to be supplemented by a further rule dealing with the validity of contractual clauses limiting liability in tort (III).

Legal and Contractual Risks and Challenges for BIM

Legal and Contractual Risks and Challenges for BIM

Perceived risk factors assessment: during pandemic via digital buying

PurposeThe present study is intended to assess the risk factors associated with digital buying. Also aims to design and develop an instrument to assess the digital buyers risk factor score (DBRFS) in light of pandemic.Design/methodology/approachPresent investigation uses a quantitative approach to achieve the stated objectives. The survey instrument for the purpose of assessing risk factors associated with digital buying was developed in two phases. The present study adopts theory of planned behaviour (TPB), built based on the theory of reasoned action (TRA). The data were collected and analysed considering 500 valid responses, sampling unit being digital buyers using social media platforms in tyre-II city of India. The data collection was undertaken between June 2021 and August 2021. The instrument is designed and validated using exploratory factor analysis (EFA) followed by confirmatory factor analysis (CFA).FindingsThe present research identified six perceived risk factors that are associated with digital buying; contractual risk, social risk, psychological risk, perceived quality risk, financial risk and time risk. The DBRFS of male is 3.7585, while female is 3.7137. Thus, risk taking by the male and female is at par. For the age group 15–30, DBRFS is 3.6761, while age group 31–45 noted as 3.7889 and for the 46–50 age groups it is measured as 3.9649.Practical implicationsThe marketers are expected to have the knowledge about how people responds to the pandemic. The outcome of the research helps to understand consumer behaviour but disentangling consumer’s “black box” is challenging especially during global distress. The present study outcome helps the digital shopkeepers to respond positively to meet the needs of digital buying.Originality/valueThe scale development and to quantify the DBRFS. A deeper understanding of about digital consumers during pandemics will help digital shopkeepers to connect issues related digital buying.

Investment risk assessment of social capital in urban rail transit Public-Private Partnership projects

ABSTRACT The Public-Private Partnership (PPP) is one of the crucial ways to promote the advancement of the Urban Rail Transit Project However, investing in such projects exposes social capital to tremendous risks. To analyze and assess the investment risk of social capital (IRSC), this study utilized the system dynamics (SD) approach to construct an investment risk model. Subsequently, combined with the practical project’s information, the investment risk was assessed, and the impact of boundary risks on the different risk subsystems was analyzed. The results demonstrate the following: (1) the investment risk system comprises three risk subsystems, namely, operating cost, operating revenue, and government subsidy. Among them, the subsidy risk subsystem most significantly influences the IRSC. (2) Of the boundary risks, the design risk and the contractual risk are the most vital factors in preventing and controlling the IRSC. (3) Differences exist in the boundary risks that most affect the regulation of the three risk subsystems. These findings can help social capital determine risk changes and effectively mitigate investment risk. This ability can further attract added social capital into such projects to facilitate the sustainable development of urban infrastructure.

Covering the financial risks of companies in the HoReCa field through insurance contracts and methods of alternative dispute resolution (ADR) for these contracts

The issue of financial risks of companies in the HoReCa field has acquired a new dimension with the situation of the COVID-19 pandemic, as they are forced to reevaluate their contractual risk allocation and financial loss coverage mechanisms. This situation generated a reassessment of the importance of insurance contracts, especially business interruption insurance. The interpretation of clauses in existing contracts that did not expressly refer to the pandemic situation increased the number of disputes generated by this lack of clarity. The present article represents a general presentation of the risks of the activity in the HoReCa field, of the insurance contracts specific to this field, as a way of addressing these risks. The article also refers to the methods of out-of-court settlement of disputes in the field of HoReCa insurance, respectively to the arbitration organised in this field, as well as to the alternative dispute resolution methods (ADR) used in Romania and at the level of the European Union.

The Nexus Between Construction Contract Risk Assessment and Big Data in China

The construction market in China is currently showing an increasing trend in terms of project size, complexity, and technical difficulty. With large initial investments and long capital payback periods, construction projects are vulnerable to the external environment during development and risk control is particularly important. Contracts are at the heart of project management and every step of project development revolves around the content of the contract signed by the contractor. Signing contracts to protect the rights of both parties has become the most effective way of controlling project risk. And with big data technology being rapidly developed and widely used, and the amount of data created and accumulated by the internet growing exponentially, big data has the potential to be used for analysis, forecasting and decision making in the construction industry. The aim of this study is therefore to develop a risk identification list for construction project contracts in China, to score the risks within the list according to their incidence and importance, and to find practical applications of big data technology in contract risk assessment. To achieve this goal, this study used qualitative research and in-depth interviews with experts within the Chinese construction engineering industry. The results of this study form a list of risks in Chinese construction contracts, indicating that late payment and government intervention are the most important risks in Chinese construction contracts. This study also identifies TianYanCha, a commonly used big data enterprise risk identification platform in China, which provides big data support in three areas: evaluating owner integrity, enterprise risk identification, and owner relationship knowledge. At the practical level, this study helps contractors to assess project risks and improve contractual contents during the preparation phase of construction projects, thus improving the success rate of projects. At the theoretical level, this study fills the gap in contractual risk assessment for construction projects in China and provides insights for subsequent risk assessment of construction projects based on the contractor's perspective.

Judgment Standards of Chinese Courts when Impediments to Performance of Contracts Arise in International Trade Contracts

Purpose: This paper analyzes trends in court rulings as well as application of the law to China's international trade activities in contract disputes caused by COVID-19.
 Research design, data, and methodology: This paper adopts a case study approach by analyzing the application of legal provisions to the judicial practice of Chinese courts in international contractual disputes for goods related to the pandemic.
 Results: Case analysis shows that COVID-19 is an obstacle to the performance of China's international trade contracts, and Chinese courts still follow the principle of first examining whether there is a force majeure clause in the contract between the parties.
 Conclusions: This paper suggests it is necessary to include specific contractual provisions relating to hardship and force majeure in order to establish the intended allocation of contractual risk well in advance.

Investigating barriers to blockchain adoption in construction supply chain management: A fuzzy-based MCDM approach

This study aims to investigate the barriers to the adoption of Blockchain Technology (BT) within the field of Construction Supply Chain Management (CSCM) by unravelling their interrelationships. In doing so, a Pythagorean fuzzy-set-based DEMATEL method to assess these barriers in a complex environment is proposed. The results of the study suggest that “market-based risks”, “high costs for maintaining sustainability”, and “usage in the underground economy” are the most influential barriers to the adoption of BT in CSCM. Furthermore, the study identifies that “inadequate knowledge/employee training”, “contractual risk”, and “scalability issues” play a pivotal role within the CSCM system. The reliability and validation of the obtained results were also shown using sensitivity analysis and the focus-group-discussion approach. The findings of this study provide valuable insights for stakeholders in the construction industry to design and implement effective measures to overcome the identified barriers to the adoption of BT in CSCM. By addressing these barriers, stakeholders can facilitate the adoption of BT, leading to more efficient and effective construction supply chain management practices.

EVICTION PROBLEMS ARISING FROM TENANCY AGREEMENTS IN GEORGIA CURRENT REALITY AND CHALLENGES (Guarantee institution under French Law)

Police evictions are back – The National Enforcement Bureau under the Ministry of Justice has a new initiative to protect landlords from contractual risks in real estate finance transactions. The idea, which belongs to the Ministry of Justice, will allow legal entities and individuals to register a contract of sale, including lease and tenancy contracts, with the National Enforcement Bureau. The parties can write in the tenancy agreement that the owner will have the opportunity to apply to the enforcement bureau in case of violation of the terms by the tenant and receive enforcement service from it in an expedited manner. As is known, the police eviction from the property no longer exists since 2015, which means that if the person who rented an apartment cannot or does not pay the amount, the landlord must apply to the court instead of the police. What problem did the cancellation of police eviction create, and what will the new initiative of the Ministry of Justice change? Is the mentioned initiative a way to fundamentally solve the problem? The reader will hear the answers to these questions in this article.

GLOSA KRYTYCZNA DO WYROKU SĄDU NAJWYŻSZEGO Z DNIA 24 MAJA 2019 R., I CSK 218/18

The Supreme Court in its judgment of 24 May 2019, I CSK 218/18, ruled that the purpose of increase in a lump sum remuneration under Article 632 § 2 of the Polish Civil Code is only to reduce the loss. The purpose of increasing the lump sum remuneration is not to compensate for the entire imminent loss. Such increase should cover that part of the loss which exceeds the normal contractual risk. The aim of this paper is to comment on the above judgment of the Supreme Court. The author compares the Supreme Court judgment with the views of legal scholars and commentators on the Polish judicial law, and with the previous case law.

Regulation of the Right to Oblivion in Cyberspace: Heterogeneity of Loyalties in the Public Space for Postulation of Legitimate Interests

This article aims to broaden the understanding of the diversification of public responsibilities present in the intention of legislators to regulate the right to privacy and oblivion in Bill 7881/2014 and PLS 181/2014. The text adopts deductive reasoning, descriptive methodology combined with discourse analysis and theoretical framework in the General Theory of the State to explain the course of intervention that flows into the Regulatory State. The study identifies the international and economic inspiration of legislative proposals that aim to meet the demands of technological communication in a new market of data and information appropriation by corporations. The article strengthens the thesis of the diversification of public responsibilities and points out difficulties for the effectiveness of the proposed regulation due to the technical complexity and the asymmetry between users and research providers regarding the access and use of contents stored in the virtual world. The article points out contractual risks of the intense flow of exchanges on the internet and warns of the absence of a transnational State that will protect the right to privacy and oblivion globally, in the face of the power of large corporations.

Early Highway Construction Cost Estimation: Selection of Key Cost Drivers

Cost estimates in the early stages of project development are essential for making the right decisions, but they are a huge challenge and risk for owners and potential contractors due to limited information about the characteristics of a future highway project. Whereas previous studies were mainly focused on achieving the highest possible estimation accuracy, this paper aims to propose cost-estimation models that can provide satisfactory accuracy with the least possible effort and to compare the perspectives of owners and contractors as the key stakeholders on projects. To determine cost drivers (CDs) that have a high influence on highway-construction costs and require low effort for their establishment, a questionnaire survey was conducted. Based on the key stakeholders’ perceptions and collected data set, cost-estimation models were developed using multiple-regression analysis, artificial neural networks, and XGBoost. The results show that reasonable cost-estimation accuracy can be achieved with relatively low effort for three CDs for the owners’ perspective and five CDs for the contractors’ perspective. Additional inclusion of input CDs in models does not necessarily imply an increase in accuracy. Also, the questionnaire results show that owners are more concerned about environmental issues, whereas contractors are more concerned about the possible changes in resource prices (especially after recent high increases caused by COVID-19 and the Russia–Ukraine war). These findings can help owners and potential contractors in intelligent decision-making in the early stages of future highway-construction projects.

Contractual Risks of BIM Implementation and the Proposed Contract Form for DBB and DB Projects

Contractual Risks of BIM Implementation and the Proposed Contract Form for DBB and DB Projects

Identification and stakeholder responsibility mapping of contractual risk factors in oil and gas sector infrastructure projects using Delphi technique

The continuing demand for energy has led to the need for developing and improving the oil and gas infrastructure through the execution of various infrastructure capital projects in many parts of the world, including Pakistan. Oil and gas companies have vast experience implementing these infrastructure projects, yet many such projects face delays and cost overruns. This failure to meet project targets may be attributable to the lack of identifying and addressing the risks at the pre-execution stage in the contract documents. This study aims to identify the risks to address in the contract documentation developed for the infrastructure projects and allocate each factor to a particular stakeholder (Client, design consultant, legal consultant, and bidders) in Pakistan. Risks were identified through literature review and were validated using the Delphi technique applied through surveys. Twenty-four survey respondents were selected based on their qualifications and experience in Pakistan’s Oil and Gas sector. In the first round of the Delphi survey, the level of agreement authenticates the risks applicable to Pakistan's Oil and Gas sector. The level of agreement was reaffirmed in round two of the Delphi survey. It also included a check for stability of responses between rounds using the McNemar test. Results confirmed that sixty-one risk factors are the contractual risk for evaluation when developing contracts for Oil and Gas infrastructure projects in Pakistan.

A comparative analysis of contractual risks in statistical consulting

This study enumerates and compares the risks and rewards of different forms of statistical consulting contracts. We assess three different contract models: project‐based fees, hourly fees, and retainer agreements and three different planned durations: project‐based, time‐based, and evergreen contracts. The requirements of time and effort vary considerably for many aspects of consulting work. The risks of statistical consulting contracts include both the general risks of consulting projects along with the specialized risks of statistical investigations. We enumerate a number of general risks in the categories of unanticipated developments, revisions and collaboration, and changing scopes of projects. Meanwhile, the specialized statistical risks include issues of study design, data quality, statistical investigation, and communication of statistical issues. Because of these concerns, the specialized risks of statistical investigations add considerably to the general risks of consulting projects. Moreover, these issues can be exacerbated or mitigated by the form of the consulting agreement. With a greater understanding of the risks and benefits of each type of contract, statistical consultants and clients can negotiate more mutually beneficial contracts for either or both parties. Through this discussion, we hope to raise awareness of these issues and help to create working conditions with a greater likelihood of a successful project for both statistical consultants and their clients.

Critical Risk Features of Digital Buying: A Quantitative Assessment

Objective: The purpose of this study is to analyse Critical Risk Features via Digital Buying and to quantify the Risk Factor Score (RFS) during COVID 19 Pandemic. Methods: Theory of Planned Behaviour (TPB), Perceived Risk Theory (PRT) and Theory of Acceptance Model (TAM) were considered as a base models for selection the of variables. The survey instrument used in the present study was designed and validated using Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA). Three hundred and twenty-two sample responses from Mysore city, Karnataka, India, were obtained through e-mail survey from digital buyers during May 2021–July 2021. The EFA, CFA and Linear regression models were adopted for quantitative assessment of risk features associated with digital buying. Findings: The critical risk features associated with digital buying were identified as; Contractual Risk (CR), Financial Risk (FR), Psychological Risk (PR), Perceived Quality Risk (PQR) and Social Risk (SR). The Risk Factor Score (RFS) for male and female digital buyers were noted as 3.7056 and 3.663 respectively. Thus, risk taking via digital buying by male is higher comparatively. The RFS for the group 31-45 years is 3.697, lesser than age group 15-30 (3.699), while the age group 46-60 RFS is noted as 3.827 which is higher comparatively. Novelty: The attempts were made to identify the risks features associated with digital buying during the pandemic. The present study outcome helps digital shopkeepers to respond positively to the needs of digital buyers during pandemic. Keywords: Digital consumers; Digital Buyers; Risk factors; Consumer behaviour

Assessment of risk factors causing delays in road construction in Egypt

Delays are a common problem in the global construction industry, affecting the development of the road construction industry, particularly in developing countries. Where, the construction industry faces a lot of risk factors that can contribute to project delays, particularly during COVID-19. The road projects risk management framework was used to identify potential risk categories that could impede the success of road construction in Egypt. On the other hand, road construction in Egypt faces numerous challenges with increasing unexpected parameters throughout the project life cycle. In other words, unanticipated risk factors have a significant impact on the success of project execution. As a result, the study’s primary goals are to investigate the majority of the risk factors that cause road construction delays in Egypt. The impact of numerous risk factors has changed the delays in road projects as the COVID-19 pandemic spread across the world. As a result, the study incorporates previously unstudied factors. As well, the research has sought to investigate the new severity of risk factors during coronavirus infection. Moreover, risk breakdown structures have classified the risk factors into several categories. They include consultant risk, design risk, equipment risk, material risk, owner risk, contract risk, contractor risk, labor risk, external risk [coronavirus effects and others] and operational risk. The strategy employed in the paper is to incorporate the DEMATEL technique and risk analysis into the statistical model. Whereas the risk analysis prioritizes risk based on the evaluation of each specific project risk. Additionally, this approach has been able to create connections between risks, which may make it easier to understand the likelihood and severity of project risk than if the risks were just considered isolated events. Furthermore, the pilot survey is divided into two stages, the first of which is based on risk analysis to identify the most significant risks. As a result, the identification of the high-risk for each category has been researched. The second survey was issued to risk management by evaluating the importance of risk factors and creating causal relationships among components using the decision-making trial and evaluation laboratory (DEMATEL) approach. Finally, it is noticed that operational risk and external risk caused by the effects of the coronavirus have the greatest impact on the delay of road projects.

The impact of the institutional environment of the host country on the perception of compliance risk of the international engineering contractor: the moderating effect of absorptive capacity

PurposeWhile there is a general belief that a defective institutional environment will lead to higher compliance risk, the current state of knowledge about how the institutional environment affects enterprises' compliance is equivocal. This study aims to explore how does the host country's institutional environment affect the compliance risk perception of international engineering contractors and how to mitigate this impact.Design/methodology/approachThis study empirically tests the impact of the institutional environment from the two dimensions of the institutional environment: legal completeness reflects whether the formal regulations are clear, detailed and comprehensive and legal effectiveness reflects whether rules and policies can be implemented effectively when the proper legal codes are provided. Based on 213 questionnaire data, this study uses partial least squares structural equation model (PLS-SEM) and Smart PLS software to test the hypothesis.FindingsThis study finds a negative relationship between the host country's legal completeness (LC) or legal effectiveness (LE) and a contractor's compliance risk perception. Further, the results show potential absorptive capacity (PAC) and realized absorptive capacity (RAC) of a contractor are critical for mitigating the impact of low LC in the host country, but not when LE is low.Practical implicationsThe findings will be useful for international engineering contractors to respond to the compliance risk of the host country, both in choices of overseas investment locations and compliance capacity building.Originality/valueThis study reveals the impact of the host country's institutional environment on the compliance risk perception of international contractors, and provides theoretical guidance for how to alleviate the compliance barriers brought by the host country's institutional environment to international engineering contractors.