the Graph Decision Model for Risk Allocation in Design-Build Contracts; Game Theory approach

Risk allocation, the definition and division of responsibility associated with a possible future loss or gain, seeks to assign responsibility for a variety of hypothetical circumstances should a project not proceed as planned. The result of improper risk allocation is increased costs, project delays and services which fail to deliver value-for-money to the community. A decision support system based on the graph model is presented for systematically resolving construction Risk Allocation. In this model mainly assumed success of a contract needs to agreement on how risks allocated by parties. The Risk Allocation analysis process considers the decision participants, their decision options, and their relative preferences when modeling the negotiation. This model is then used to perform an in-depth stability analysis in order to ascertain the possible compromise resolutions or equilibria. The model predicts the sequence of decisions that took place in the dispute and furnishes an array of useful strategic insights about the Risk Allocation. Moreover, a sensitivity analysis is executed to determine how changes in preferences can affect the equilibrium results. This Risk Allocation procedure is useful for both researchers and practitioners to better deal with the dispute-prone nature of the construction industry.