Risk dumping is the practice of transferring risks to a party who is not in a

position to manage them effectively. This can happen in construction contracts

when the main contractor passes risks down to subcontractors who are not
adequately resourced or experienced to handle them.

There are a number of reasons why risk dumping can occur. One reason is that
the main contractor may be trying to reduce their own exposure to risk. Another
reason is that the main contractor may not be aware of the full extent of the risks
involved in the project. Additionally, the main contractor may be under pressure
from the employer to keep costs down, which may lead them to pass on risks
that they should be bearing themselves.

Risk dumping can have a number of negative consequences. First, it can lead to
poor quality work, as the subcontractor may not have the resources or expertise
to do the job properly. Second, it can lead to delays, as the subcontractor may
not be able to meet the deadlines. Third, it can lead to disputes, as the main
contractor and subcontractor may disagree about who is responsible for the risks
that have been passed down.

To avoid risk dumping, it is important for all parties involved in a construction

contract to carefully consider the risks involved and to allocate them in a fair and
reasonable way. The main contractor should not pass on risks that they should
be bearing themselves, and the subcontractor should only agree to take on risks
that they are able to manage effectively.

Here are some tips for avoiding risk dumping:

 Carefully identify all of the risks involved in the project.

 Assess the capacity of each party to manage the risks.
 Allocate the risks in a fair and reasonable way.
 Document the risk allocation in the contract.
 Monitor the risks throughout the project.

By following these tips, you can help to ensure that risk dumping does not occur
and that the project is completed successfully.