Queen’s University Belfast

MSc. Construction & Project Management Project Management

Dissertation Proposal

Student Name: Rakesh Subramani

Student No: 40309147

Proposed Working Title of Dissertation: COMPARATIVE STUDY OF CONSTRUCTION RISK

MANAGEMENT AND ALLOCATION UNDER UK AND INDIAN LAW, WITH A CRITICAL
ANALYSIS ON THE UK'S CONSTRUCTION CONTRACT PROVISIONS ON RISK

1.0 Background to the Study

“Some risks that are thought to be unknown, are not unknown. With
some foresight and critical thought, some risks that at first glance may
seem unforeseen, can in fact be foreseen. Armed with the right set of
tools, procedures, knowledge and insight, light can be shed on variables
that lead to risk, allowing us to manage them.” -
― Daniel Wagner

Risk can be defined as an uncertain event; it can be measured as a combination of a

probable perceived threat or an opportunity, which if occurs it will have an impact on the
plan and the objectives. (Litten, 2017). In order to ensure success of a construction project,
both the employer and the contractor must be assess and recognize the risks and draft a
plan to manage them. According to Pinset Masons LLP. A leading law firm there are risks
that are inevitable to the construction industry such as risks of tax, interference, site etc.,
and there are risks such as force majeure events like that of COVID-19, impacting the
project in a manner that cannot be foreseen.

A construction risk is allocated between parties based on agreed terms of a contract, a

reasonable risk allocation provision intends to transfer the risk to the party who is in the
best position to evaluate, manage and control the risk, the risks maybe laid-off by weighing
the frequency of the event against the amount of premium paid to transfer the same. This
is crucial to ensure that the participants of the contract are benefitted and to save the
working relationship between parties. A poorly allocated risk can cause many uncertainties,
place one party on a higher pedestal than the other, additional cost contingencies during
pricing of bid etc. (dot, 2012) It is essential that the risk is transferred wisely because for
example, if a risk is transferred to the contractor who lacks the capability to duly assess the
risk may end up increasing the price or just disregard it during bid and suffer later.

Risk management in the words of Jerome F. Lederer “Is a more realistic term than safety. It
implies that hazards are ever-present, that they must be identified, analyzed, evaluated and
controlled or rationally accepted.” (SYSTEMS, 2020) But the difference in the process of
identifying, analyzing, evaluating and controlling are dependent on certain factors and it
even differs based on the country the project is operating in. In this study two countries
United Kingdom, a highly developed nation and India a developing country will be
compared to understand how risk is managed in both countries under different dynamics
and what influences such outcomes and whether the outcome is subject to change when
the status, the law or other factors change and how these differences impact the
international bidders in these two economies, the similarities, and the influences of the
economies on each other.

The United Kingdom uses a standard form of building contracts for more than a hundred
years such as the Joint Contract Tribunal (JCT) which is put in practice since 1930s.
Currently the UK government has endorsed few bodies to produce standard form of
building contracts, SOP and other documents pertinent to the construction industry like the
Joint Contract Tribunal (JCT) a main body producing these standard forms, the New
Engineering Contract (NEC) and Engineering and Construction Contracts (ECC), and the UK
government at present has approved the NEC. There are other bodies as well that govern
the activities of the consultants and produce contracts like the Royal Institute of British
Architects (RIBA), Institute of Civil Engineers (ICE), Institute of Mechanical Engineers
(IMechE) etc.. (PIPER, 2021).

India though doesn’t have a strict regulatory body to govern and endorse standard building
contracts, the legislation of the country has proved sufficient so far. In India a common
practice prevails among parties to allocate risk between each other based on the General
Contract Conditions (GCC) which contains the mandatory clauses and Special Contract
Conditions (SCC) which contains the special terms depending on the nature of the project
that are regulated by the Indian Contract Act 1872 to ensure rightful allocation of
responsibilities and liabilities of the parties. Since, unlike UK, India doesn’t have a standard
form of contract, which might have an impact if implemented in the Indian system, the
scenario here worsens the burden of one party for example the employer tends to transfer
the risk to the developers who subsequently transfer the risk to the contractors through
turnkey contracts. The contractors tend to accept it owing to their commercial compulsion;
this doesn’t necessarily mean that they are capable of handling it. The courts of India on
many occasions have highlighted the importance of claims management though there is
very little to no changes in the situation. (Pai & Varma, 2020).A comparative analysis of the
existing literature on risk management and risk allocation has given us the ground of
research to further read on the reasons for misallocation of risks and how different they
are in these countries and the reasons for such differences.

1.1 Justification of the study

The construction industry in the UK amounts to more than £110 billion per annum
and contributes to 7% of the GDP, (Office, 2011). It is a diverse field that employs a
huge portion of the population. In India the construction amounts to 9% of the
country’s total GDP, the country focuses on its infrastructure like building
highways, renewable energy sources
etc. (Agency, 2020). The difference of two percent in the GDP between the two
countries is something to be assessed because in spite of spending more on
construction, the UK lacks an endorsing body for construction and is yet to have a
standard form of building contracts. The UK on the other spending a large chunk of
the taxpayer’s money, the government is responsible for its management
decisions.

A comparative study and an analysis of the well drafted standard building contracts
can pave the way for understanding the lacunae in both the countries construction
 risk management and allocation mechanisms and how the contracts, the law and
other dynamics play a major role in it. This study can further be developed to draft
legislation or can be used to analyze the existing risk provisions.

2.0 Aim of the Dissertation:

The aim of the study to compare the risk management and risk allocation methods and
provisions of UK and India and further, analyse the standards building contracts of UK and
understand how they play a major role in risk management.

2.1 Objective of the Dissertation:

On establishing the aim of the research it is essential that objectives through

which the aim is strived to be achieved must be set out to formulate the apt
research methodology that helps define the structure of approach. The
objectives of the study will be:

● Understand how the risk management and allocation of risk are

influenced by the standard building contracts and the legislation of the
country.
● The Drawbacks of not having a standard contract or having a standard
building contract.
● What will be the effect of not having a standard contract in the UK
after years of being accustomed to it.
● How different is the Indian system compared to the UK, can the
methods and ways of the UK be implemented in India and vice versa?
● How parties to the contract are affected in both the scenarios, and
how if a change is brought will influence their current positions.
● How far the standard form of contracts in the UK affects the positions
of its parties during risk management and allocation.

3.0 Research Questions

The research questions aimed to study and analyze specific barriers and benefits of the
aim.

● What are the differences between the Legal and contractual in the two countries,
and what are the reasons behind them?
● How do the differences affect the parties to the contracts in both countries?
● What kind of impact does changing the position or scenarios of the two countries
have on the current players?
● How does the standard building contract influence the risk management and risk
allocation in the UK? What are the scope for improvements in the India.
4.0 Outline Methodology

The assumptions so far made using the available literature has given a brief of the
differences between the two economies from a wider perspective. In order to narrow
down the search to attain the aims and objectives mentioned below, the study in its
current position demands for a qualitative approach. Since the objective stated above
needs insights from industry professionals who can give detailed insights on how on the
real side of application these terms affect the parties. A quantitative method is precluded
because of the reason that a mass opinion is currently not preferred in this subject nature.

A sequence is planned to first infer as much details and information as possible from
existing literature and articles and later proceed with the questioning of industry
professionals. The respondents for the study will be from the construction, management
and legal industry, since the study demands the perspective of all these three experts. The
qualitative analysis done by interviewing with professionals in the industry who have a
direct engagement on site, will allow the study to obtain more credible information
(Bryman, 2013).

A qualitative analysis is generally considered more effective to understand different views

and perspective by offering vision to the problems develop concepts that can lead to strong
and potential quantitative research. (Carol, 2016). The unique depth of understanding that
is drawn from a qualitative analyzes surpasses close ended surveys that give average out of
the aggregate. A qualitative analyzes answers in depth the “why” factor of the quantitative
analyzes. (Tiley, 2017). The qualitative data will be collected through a semi-structured
interview through a phone call or a zoom meeting with industry professionals who lie close
with the negotiation of the contracts and who continuously influence the changes in the
legislation through their expertise in the field. Since the negotiation is a flexible arena that
can change depending on the will of the party, the insights will help understand how
certain opinions are framed and what influences the same. This choice of personnel will
ensure that the data collected are from skilled professionals in the construction.
Management and legal industry thus ensure the credibility of the information collected and
thus render the data reasonable and more relatable when compared with the real life
implication of the study. The interview will focus on assessing their general perspective on
how the laws influence the risk management, what they think of a perfect risk managing
provisions, can the parties influence the terms of the contract and many such questions
that will suit the objective of the study. The leads for the interviews will be filtered based
on their position, years of experience (5+ years will be preferred) and the leads will be
through references and LinkedIn contacts and the study aims to interview as many as 8+
professionals while maintaining the balance between the industry they hail from. The
analysis from the literature review and the qualitative research will be clubbed to obtain a
credible and accurate output.

Objective and scope

Data identification

Data collection

Literature Review Questionnaire Open Interviews

 Data Analysis

Result and conclusion

5.0 Proposed Schedule

Sl. Activity Date Scheduled

No.

1 Submission of Proposal 31st May 2021

2 Reading Week 1st June - 20th June 2021
3 Submission of Ethics Form 1st July
4 Connections through LinkedIn 1st June-30th June
5 Scheduling interviews for the Qualitative Method 1st July-5th July
6 Literature Review 6th June
7 Sending out the questionnaire for the 10th July-15th July
Quantitative Analysis
8 Assimilating the questionnaire results 25th July-28th July
9 Sending out the consent forms 7th July-9th July
10 Conducting Interviews (roughly around 5) 16th July-24th July
11 Quantitative Analysis by SPSS 25th July-15th Aug
12 Qualitative Analysis by Decision Explorer 25th July-15th Aug
13 Analysis of case studies in UK 25th June-5th July
14 Document drafting 18th July-25th Aug
15 Document Review 30th Aug
16 Final report preparation 30th Aug-9th Sept
17 Dissertation submission 10th Sept

6.0 Questionnaire

1. Do you think that it is necessary to included risk managing clauses in construction

contracts? If so, Why?
2. Do you think there is a widely accepted way of managing risks that are outside the
scope of contracts?
3. If you say yes, what are they and why is there a system of managing risks that are
not documented?
4. What will be the impacts of not having contractual terms for managing risks?
5. If the answer is no, do you think is it essential to have an out of record conduct to
save relationship between the parties?
6. Since India is a developing nation that aims to improve its infrastructure, do you
think the construction industry is well monitored?
7. Is the business of the parties and the contractual obligations are affected by the
laws and if yes to what extent?
8. What do you believe to be lacunae in the existing system of construction risk
management?
9. What are the ways you suggest to improve the same?
 10. Are there any specific things that the countries can learn from each other to fill the
vacuum?

Refrences
Agency, I. E. (2020) Energy Policy Review, Available at:
https://niti.gov.in/sites/default/files/2020-01/IEA-India%202020-In-depth-
EnergyPolicy_0.pdf (Accessed: 29th June 2021).

Caro T l,. (2016) Why choose qualitative research over quantitative research?, Available at:
https://medium.com/@thomascarol1988/why-choose-qualitative-research-over-
quantitative-research-
8cf3141d99a5#:~:text=It%20offers%20visions%20to%20different,new%20thoughts%20and
%20individual%20views. (Accessed: 11th June 2021).

Dot, N. (2012) RISK MANAGEMENT AND RISK-BASED COST ESTIMATION GUIDELINES,

Available at: https://www.dot.nv.gov/home/showdocument?id=4518 (Accessed: 17th June
2021).

Litten, D. (2017) Risk Theme Changes, Available at:

https://www.prince2primer.com/prince2-2017-risk-theme-
changes/#:~:text=PRINCE2%20defines%20risk%20as%20an,influence%20the%20achieveme
nt%20of%20objectives.&text=The%20overall%20risk%20exposure%20needs,business%20ju
stification%20for%20the%20project (Accessed: 14th June 2021).

Office, C. (2017) Government Construction Strategy, Available at:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment
_data/file/61152/Government-Construction-Strategy_0.pdf (Accessed: 12th June 2021).

SYSTEMS, E. (2021) What is Risk Assessment?, Available at:

https://esposystems.com/blog/what-is-risk-assessment (Accessed: 16th June 2021).

Tiley, C. (2017) QUALITATIVE RESEARCH: WHAT IS IT AND WHY SHOULD YOU USE IT?,
Available at: https://www.onepoll.com/qualitative-research-what-is-it-and-why-should-
you-use-it/ (Accessed: 14th June 2021).