Scholarly Paper

Semantic Risk Assessment for Ad Hoc and Amended

Standard Forms of Construction Contracts
Ahmad Youssef 1; Hesham Osman 2; Maged Georgy 3; and Nabil Yehia 4
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Abstract: In spite of the widespread availability and documented advantages of using standard forms of construction contracts (SFCs),
actual practice and recent evidence suggest that owners still rely on ad hoc (bespoke) or heavily amended SFCs. This practice is problematic
to contractors who are required to submit tenders within tight time frames and hastily assess the risk allocation of these nonstandard forms of
contract. This paper presents a semantic model and quantitative assessment framework to help assess the risk allocation of these contracts and
hence allow more informed decisions to be made by contractors prior to tender submission. The model is based on 9 clause families and 41
construction clause components that were determined based on a detailed analysis of 4 major SFCs as well as several bespoke and heavily
amended SFCs, in addition to a subsequent verification by domain experts. The analytical hierarchy process (AHP) is further used to assign
relative weights to the clause families and components based on collaborative input from 10 construction contract experts. The model was
tested on two case studies for a residential construction and hotel retrofit projects. Results show that the contract risk rating (CRR) computed
by the model closely correlates to the contingency values allocated by contractors into their tender price. DOI: 10.1061/(ASCE)LA.1943-
4170.0000253. © 2018 American Society of Civil Engineers.
Author keywords: Construction contracts; Risk assessment; Semantics; Standard contract forms (SCF); Ad hoc contracts; Analytical
hierarchy process (AHP).

Introduction In spite of these advantages, owners are sometimes tempted to

The complex nature of construction projects has necessitated clear
and balanced definitions of obligations for the contracting parties.
Standard forms of construction contracts (SFCs), usually developed
by professional associations and construction experts, have evolved
to address this need. Examples of well-known standard forms of
construction contracts include the International Federation of
Consulting Engineers (FIDIC), Joint Contracts Tribunal (JCT),
Australian Building Industry Contracts (ABIC), and the American
Institute of Architects (AIA) family of contracts. Advantages of
using standard forms include: (1) contractor familiarity with con-
tract obligations, (2) lack of need to price hidden risks that are
common with bespoke or amended standard forms, (3) less need
for negotiations, and (4) the fact that SFCs are typically based
on a fair allocation of risks among contracting parties (Davis
1986; Rameezdeen and Rajapakse 2007; Rameezdeen and Rodrigo
2014).
1
Graduate Student, Dept. of Structural Engineering, Faculty of Engi-
neering, Cairo Univ., Giza, Egypt; Contracts Manager, Dar Al-Mimar
Group, Cairo 11757, Egypt. E-mail: ahmad.youssef@corp-dmg.com
2
Associate Professor, Dept. of Structural Engineering, Faculty of Engi-
neering, Cairo Univ., Giza 12613, Egypt (corresponding author). ORCID:
https://orcid.org/0000-0002-1940-4676. E-mail: hesham.osman@gmail
.com
3
Senior Lecturer, School of Property, Construction and Project Manage-
ment, RMIT Univ., GPO Box 2476, Melbourne, VIC 3001, Australia;
Associate Professor, Dept. of Structural Engineering, Faculty of Engineer-
ing, Cairo Univ., Giza 12613, Egypt. E-mail: magedgeorgy@yahoo.com
4
Professor, Dept. of Structural Engineering, Faculty of Engineering,
Cairo Univ., Giza 12613, Egypt. E-mail: officeny@gmail.com
Note. This manuscript was submitted on April 29, 2017; approved on
October 2, 2017; published online on January 4, 2018. Discussion period
open until June 4, 2018; separate discussions must be submitted for indivi-
dual papers. This paper is part of the Journal of Legal Affairs and Dispute
Resolution in Engineering and Construction, © ASCE, ISSN 1943-4162.
use ad hoc (bespoke) contracts or amend the standard form to suit
their specific project needs (Bell 2009). An ad hoc contract refers to
a specially tailored construction contract that does not completely
follow any standard form widely used and accepted in the industry.
Ad hoc contracts are sometimes referred to as nonstandard forms of
contract or bespoke contracts. Evidence suggests that such practi-
ces are on the rise (Shnookal and Charrett 2010; Chen et al. 2013).
Amendments to SFCs are typically instigated by the employer in
order to (1) modify the risk allocation structure among the con-
tracting parties, typically placing more risks on the contractor,
(2) better align the contract conditions to meet the requirements
of new project delivery systems, and (3) address project-specific
requirements that are not captured in the typically generic format
of SFCs. A recent study by Chen et al. (2013) in Vietnam docu-
mented numerous problems that were encountered on a power plant
project because of amendments to the FIDIC Silver Book standard
conditions of contracts. Problems that arise from utilizing ad hoc or
amended SFCs can be generally classified into two categories:
(1) semantic issues and (2) readability issues (Rameezdeen and
Rajapakse 2007; Rameezdeen and Rodrigo 2014). Semantic issues
refer to the actual meaning of a contract clause (or group of clauses)
as they relate to the allocation of obligations and risks to a con-
tracting party. These issues usually stem from the desire of the
owner to transfer the risks in a way that better serves his interests.
Readability issues on the other hand relate to the clarity and con-
sistency of a contract clause (or group of clauses). These issues
usually stem from a lack of adequate legal expertise of the
individual(s) rewriting/amending the contract clauses and/or a lack
of proper review of the final document. While several studies
have been undertaken to study readability issues in construction
contracts (Rameezdeen and Rajapakse 2007; Rameezdeen and
Rodrigo 2014), there has been little research relating to semantic
issues in these contracts.
As such, this paper develops a model for assessing the risk
allocation of ad hoc and amended SFCs based on a semantic

© ASCE 04518002-1 J. Leg. Aff. Dispute Resolut. Eng. Constr.

J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002

 assessment of 9 families of clauses and 41 clause components. The
model is based on a review of four common SFCs, several ad hoc
contracts, and input from subject matter experts. The model allows
contractors bidding on projects with ad hoc or amended SFCs
to rapidly assess the risk allocation using a predetermined check-
list and weighted scoring based on the analytical hierarchy pro-
cess (AHP).
Background
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The construction industry is prone to a large number of risks that
affect the intended outcomes of construction projects. In addition,
the size and complexity of construction projects are increasing,
which adds to the frequency and severity of risks typically encoun-
tered in these projects. Any construction project by its very
nature involves certain unavoidable risks. One of the earlier studies
in this area was undertaken by Bunni (1985), in which a compre-
hensive list of risks particular to construction projects was devel-
oped along with their underlying causes. The main risk groups
were (1) physical works, (2) delays and disputes, (3) direction and
supervision, (4) damage and injury, (5) external factors, (6) pay-
ment, and (7) law and arbitration. Recent studies (e.g., Goh and
Abdul-Rahman 2013; Mbachu and Taylor 2014) only reinforce
the same. Indeed, the literature relating to risk and risk management
on construction projects is ample, and hence the rest of this back-
ground review will focus on research relating to risk allocation/
sharing among the contracting parties as per the provisions of
the construction contract itself.
Equitable risk allocation between contracting parties is widely
emphasized (Peckiene et al. 2013). Risk allocation and sharing in
contracts have been examined by researchers in different sectors
of the construction industry, e.g., underground rail (Hwang et al.
2016), road infrastructure (Albalate et al. 2015), water supply
(Ameyaw and Chan 2015), and others.
Risk allocation and sharing were also investigated in particular
contract forms. Balanced risk sharing in target cost contracts was
studied by Chapman and Ward (2008). Chan et al. (2011) identified
the party most preferred to take the risks associated with target cost
and guaranteed maximum price contracts in Hong Kong and re-
vealed that, in general terms, risks on tender documentation and
project design are better borne by clients, whereas construction-
related risks are perceived to be taken by contractors. Bing et al.
(2005) investigated the same for public-private partnerships (PPPs)
and private finance initiative (PFI) procurements.
To help with balanced risk allocation in construction contracts,
Hanna et al. (2013) developed worksheets, as well as supporting
flowcharts, legal advice, and risk allocation principles, to identify
construction risks that have a high potential for conflict and to help
allocate these risks to the appropriate parties of the contract. To
improve the risk allocation among the contracting parties, Lam et al.
(2007) presented a decision model that transforms the linguistic
principles and experiential knowledge expressed by construction
experts into a more usable and systematic quantitative-based analy-
sis by using fuzzy logic. Also, multiagent systems were used by
Karakas et al. (2013) to simulate the negotiation process between
parties (mainly contractors and clients) about risk allocation and
sharing of cost overruns in construction projects. Moreover, the
optimal risk sharing ratio in target cost contracts using ideas
from principal-agent theory was examined by Hosseinian and
Carmichael (2014). To account for situational uncertainties,
Nasirzadeh et al. (2014) incorporated fuzzy principles into sys-
tem dynamics to quantitatively allocate contractual risks. Fuzzy
© ASCE 04518002-2
J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002
principles were further used by Ameyaw and Chan (2015) to
appropriately allocate risks in PPP contracts.
Clauses and provisions of construction contracts generally ad-
dress a big portion of the risk causes. Terms and conditions of
contracts that are concerned with risks, their causes as well as
effects, determine whether the contract or its clauses are risky,
or not, to either party of the contract. Murdoch and Hughes
(2008) emphasized the importance of conducting a thorough re-
view of a contractor’s rights and obligations as described in the
construction contract as part of the risk assessment during project
tendering. One of the earliest studies on risk in relation to contract
obligations is that by Ibbs and Ashley (1987) that mapped 96
clauses to 6 measures of project performance (cost, schedule,
quality, safety, owner satisfaction, and contractor satisfaction).
Khazaeni et al. (2012) developed a quantitative model to deter-
mine the optimal risk sharing in a construction contract among
contracting parties. Their model, which integrates fuzzy logic
and the technique for order of preference by similarity to the ideal
solution (TOPSIS), can be used during contract negotiations. The
model, however, did not include clear reference to specific clauses
in a construction contract. Similar work by Lam et al. (2007) de-
veloped a model to determine the risk rating of a project based on
a linguistic assessment (e.g., extremely likely to occur, likely to
occur, somewhat likely to occur, unlikely to occur, extremely
unlikely to occur) of probability and consequence of failure. Their
work also did not focus on contractual obligations and their effect
on project risks.
Additionally, Bunni (2005) proposed a classification for risks
allocated under construction contracts between employers and con-
tractors, based on their effects. The classification recognized two
types of risks. The first type incorporated risks that could lead
to damage, physical loss, or injury, whereas the second type in-
cluded risks that could lead to economic and/or time losses. Bunni
(2005) further added that the treatment of these two types of risks in
construction contracts is different. The first type encompasses risks
that might be insurable, and they are governed usually by insurance
clauses in the construction contract. On the other hand, the second
type, which is the area this research focuses on, in principle in-
volves uninsurable risks and is typically controlled by the remain-
ing clauses. Apparently, if this type of risk is not understood and
properly addressed in the contractual context, many problems
could arise.
The readability of construction contracts has also been investi-
gated by researchers such as Rameezdeen and Rajapakse (2007),
Rameezdeen and Rodrigo (2014), and Chong and Zin (2010). This
line of work has focused on assessing the clarity of construction
contracts by employing various text analysis algorithms. The aim
is to determine how well a construction contract overall, and its
individual clauses, are readable and hence less prone to misinter-
pretation during contract implementation.
A thorough review of the risk literature related to the semantic
and readability aspects of a construction contract has revealed the
following:
1. The vast majority of research has focused on risks pertinent to
project conditions while less than sufficient attention has been
given to how these conditions relate to the contractual obliga-
tions in a construction contract.
2. A lack of quantitative models that can be used to assess the ex-
tent of risk allocation/sharing among contracting parties and its
effect on contract contingency.
3. Quantitative models that have been developed in the past have
mostly focused on contract readability with little examination of
the semantics (i.e., true meaning) of contract clauses and its
effect on contract management.
J. Leg. Aff. Dispute Resolut. Eng. Constr.
 As such, this research attempts to bridge this gap by developing
a quantitative model for assessing the risks introduced by amending
SFC or using ad hoc contracts.
Approach
The research was conducted in five main steps:
1. Data collection: This step involved a review of literature relating
to construction contract risks; a review of four common SFCs
(FIDIC 87, FIDIC 99, AIA-A201 2007, and JCT 2005); a
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the component addresses certain risks. Components can be in the
form of rights, obligations, or procedures. Finally, the component
option is considered the form at which a clause component can be
found in a construction contract. The component options were
identified based on a review of various types of SFCs, amended
SFCs, and ad hoc contracts. The defined options of each compo-
nent are mutually exclusive.
For example, in the clause family of employer’s entitlement
to termination (EET), there is a clause component relating to
employer obligation to issue the sums due to the contractor if the
employer terminated the contract for convenience. For this clause

review of three ad hoc and three heavily amended FIDIC con-
tracts; and a review of a tender risk analysis template used by a
large Egyptian contractor.
2. Framework development: Based on the aforementioned review,
a model comprising 9 clause families, 41 clause components,
and various clause options was developed. The clause families
were developed through a bottom-up exploration of common
clauses in the data set being studied. Once the clause compo-
nents were initially identified, the researchers commenced a
grouping process to cluster clauses into a family that addresses
a common issue of the contractual obligations of the construc-
tion contract.
3. Framework verification: The model was verified and refined
through interviews with six construction contract experts.
The profile of these experts is listed in Table 1. The process
of refinement involved reviewing to identify (1) clause compo-
nents that were deemed irrelevant, (2) clause components that
were redundant, and (3) clause components that were missing
from the model. The review also included the merging of two
families of contract clauses. The end result was a more compact
model that included 9 clause families and 41 clause components.
4. Quantitative model development: The framework was extended
to include weights for each clause family/component/option
using the analytical hierarchy process (AHP) via interviews with
10 construction contract experts.
5. Model validation: The model was implemented on two case stu-
dies for large-scale construction projects. Quantitative results of
the model were compared to contingency sums allocated by the
contractor as a proxy for risk allocation.
The cornerstone of this research is the identification and defi-
nition of the clause family, clause component, and clause option
(Fig. 1). The clause family is considered a group of contract clauses
that address a certain risk or homogeneous group of risks. A clause
family consists of one or more clause components. Clause compo-
nents are semantic components extracted from the subclauses of
standard contracts, which can be in different forms under construc-
tion contracts. Contractors should assess each component, along
with its applicable options, prior to entering into contracts, as
component, three distinct options in increasing order of preference
to the contractor are possible:
• Sums include the value of executed works and costs
• Sums include the value of executed works, costs, and profit loss
• No entitlement for termination for convenience is defined
Contract Model Framework
This section presents the clause families forming the model frame-
work and examples of the resulted clause components and options.
The three levels of hierarchy forming the model framework are pre-
sented in Fig. 1. The figure shows that each clause family consists
of some clause components, and each component has more than
one option. The model framework consists of 9 clause families
and a total of 41 clause components. The clause families and their
associated abbreviations are
• DD—Delayed drawings or instructions
• UPC—Unforeseeable physical conditions
• DSW—Delays and suspension of work
• ETO—Employer’s taking over
• VA—Variations, adjustments, and evaluations
• IP—Interim payments
• EET—Employer’s entitlement to termination
• STC—Suspension and termination by contractor
• CD—Claims and disputes
Delayed Drawings or Instructions
Contractual risks under this family are attributed to the failure by
the engineer or employer’s representative to issue the required
drawings, instructions, or inputs, as requested by the contractor
within a timely manner. This family comprises two clause compo-
nents. The first component entitles the contractor to an extension of
time (EOT) if he or she suffers delays as a result of said failure. The
second component entitles the contractor to additional sums if he or
she incurs costs as a result of the occurrence of said failure by the
engineer.

Table 1. Profile of Domain Experts

Years of Model AHP weight
Expert Title experience Organization verification determination
E1 Contracts director (head of project management and contract department) 25 Consultant — +
E2 Contracts, claims, and arbitration consultant 20 Consultant + +
E3 Contracts, claims, and arbitration consultant 17 Consultant + +
E4 Contracts manager 40 Contractor — +
E5 Contracts manager 20 Contractor — +
E6 Contracts director 14 Employer — +
E7 Contracts manager 14 Employer + +
E8 Contracts manager 14 Contractor + +
E9 Contracts manager 14 Contractor + +
E10 Contracts manager 10 Contractor + +
Note: — = did not participate; + = participated in survey.

© ASCE 04518002-3 J. Leg. Aff. Dispute Resolut. Eng. Constr.

J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002

 Contract Risk
Model
Clause Clause
Family 1 Family 9
Clause Clause
Component 1.1 Component 1.2
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Option (i) Option (ii) Option (iii)
Fig. 1. Contract risk model framework
Unforeseeable Physical Conditions
Contractual risks under this family are attributed to encountering
unforeseeable physical conditions by the contractor during the ex-
ecution of the works. This family comprises three components.
Delays and Suspension of Works
Contractual risks under this family comprise delays attributed to the
following: force majeure, exceptionally adverse climatic condi-
tions, delay in giving possession of site, and interference by public
authorities, as well as suspension of the works (i.e., the whole
works of the project) by the engineer. Components forming this
clause family give the contractor entitlement to EOT if he or
she suffers delays as a result of any of the previously mentioned
events, as well as a remedy if the contractor incurs costs as a result
of suspension of works.
Employer’s Taking-Over
Contractual risks under this family are attributed to the following:
delay in taking over the works and a partial takeover by the
employer prior to substantial completion of the whole project. This
family consists of three clause components.
Variations, Adjustments, and Evaluation
Contractual risks addressed under this family include the following:
variations to scope, legislative changes, increase in the cost of
works, and changes in executed quantities. This family consists of
eight clause components.
Interim Payments
This clause family addresses contractual risks related to delay in
certifying and issuing the interim payments. The two most signifi-
cant components in the model belong to this family. This family
comprises three components.
Employer’s Entitlement to Termination
This family comprises one component, which addresses the risk
attributed to contract termination by employer for convenience.
© ASCE
J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002
Suspension and Termination by Contractor
This clause family addresses some risks related to defaults by the
employer and engineer. In principal, it addresses risks associated
with delays in payment and prolonged suspension. The selected
components present remedies to the contractor to control the effects
in case of the occurrence of such events, as they give the contractor
the right to suspend the works and to terminate the contract as a
consequence. This family consists of eight clause components.
Claims and Disputes
This clause family addresses the contractual risks related to con-
tractor’s claims and the dispute resolution method provided in
the contract. The relevant components concern high-risk areas in
construction contracts. The components under this family further
exhibit different forms; some represent rights for contractors, while
others represent obligations of contractors. Therefore, sometimes it
is not favorable for the contractor to have these components defined
in the contract. This family consists of seven clause components.
Quantitative Model
Weights for Clause Families and Components
The research applies the AHP to determine the weights between the
clause families and clause components. AHP is based on capturing
expert judgment through a pairwise comparison of alternatives.
This approach has been proven to reduce the subjectivity of deci-
sion making when dealing with a large number of alternatives or
decision criteria (Saaty 1980). The structure of the developed
model that is comprised of 9 clause families and 41 clause com-
ponents lends itself well to AHP because (1) the model structure
is hierarchical as shown in Fig. 1, (2) the relatively large number of
families and components will likely lead to a subjective assessment
using traditional weighting methods, and (3) the method is able to
reconcile differences of opinion among different experts. For full
details of the AHP technique, the reader is advised to refer to re-
lated publications such as those of Brunelli (2014), Saaty (1980),
and Saaty and Vargas (2012).
A total of 10 domain experts with a minimum of 10 years of
experience in construction contract management were interviewed
and asked to conduct a bilevel pairwise comparison using AHP.
The first level was used to determine the weights of the clause fam-
ilies, while the second level was used to determine the weights of
clause components within each family. Feedback from each expert
was checked for consistency using the consistency ratio (Saaty
1980; Saaty and Vargas 2012). A sample of one of the pairwise
comparison matrices compiled from one domain expert relating
to the delays and suspension of works clause family is shown in
Table 2. The 8 × 8 matrix is filled by the expert via a pairwise score
aij , which represents the relative importance of clause i to clause j.
For example, in this table the domain expert believes that the clause
relating to DSW-6 (“Contractor entitlement to additional payment
if the works were suspended by the engineer because of a reason for
which the contractor is not responsible”) is five times as important
as DSW-1 (“Contractor entitlement to EOT as a result of the occur-
rence of force majeure”). The weight of each clause i is calculated
using the nth root method as follows:
vffiffiffiffiffiffiffiffiffiffiffiffiffiffi
uY n
u
vi ¼ t wi;j
n
ð1Þ
j¼1
04518002-4 J. Leg. Aff. Dispute Resolut. Eng. Constr.
 Table 2. Sample Pairwise Comparison Matrix for the “Delays and Suspension of Works” Clause Family and Corresponding Weights Calculated for One of
the Domain Experts
Clause component (pairwise comparison)
Clause Weight
code Clause component DSW-1 DSW-2 DSW-3 DSW-4 DSW-5 DSW-6 DSW-7 DSW-8 (%)
DSW-1 Contractor entitlement to EOT as a result of the 1.00 1.00 0.33 0.33 0.33 0.20 0.33 0.50 5
occurrence of force majeure
DSW-2 Contractor entitlement to EOT as a result of the 1.00 1.00 0.33 0.33 0.33 0.20 0.33 0.50 5
occurrence of exceptionally adverse climatic
conditions
DSW-3 Contractor entitlement to EOT if he or she suffer 3.00 3.00 1.00 0.33 1.00 0.17 0.33 0.50 8
delays attributed to the public authorities
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DSW-4 Contractor entitlement to EOT if he or she suffer 3.00 3.00 3.00 1.00 0.33 1.00 2.00 2.00 17
delays as a result of failure by employer to give him
or her possession of the site
DSW-5 Contractor entitlement to EOT if the works were 3.00 3.00 1.00 3.00 1.00 1.00 1.00 2.00 18
suspended by the engineer because of a reason for
which the contractor is not responsible
DSW-6 Contractor entitlement to additional payment if the 5.00 5.00 6.00 1.00 1.00 1.00 0.50 2.00 20
works were suspended by the engineer because of a
reason for which the contractor is not responsible
DSW-7 The contract defines milestone(s) at which delay 3.00 3.00 3.00 0.50 1.00 2.00 1.00 2.00 18
damages may be applied by the employer in case of
delay by the contractor beyond the corresponding
completion date(s)
DSW-8 Contractor entitlement to treat part of the works as 2.00 2.00 2.00 0.50 0.50 0.50 0.50 1.00 10
an omitted part if such was suspended for a period
defined in the contract

v X
n X
n 0.5
wi ¼ P n i ð2Þ ED ¼ ðai;j − wi =wj Þ 2
ð3Þ
i¼1 vi
i¼1 j¼1

where n = number of clause components or families being com-

pared. The resulting weights (wi ) that represent the importance
of each clause component are shown in Table 2 based on the
opinion of one of the domain experts. Each matrix was checked
for consistency of expert feedback using the well-known consis-
tency ratio (CR). The CR for the pairwise comparisons shown in
Table 2 was calculated to be 6.9%, which is below the typical
10% threshold of acceptance. This implies that the pairwise com-
parison by the experts does not exhibit unacceptable inconsisten-
ces. More information on the CR calculations is given by Saaty
(1980).
For each expert, one matrix for the relative importance of clause
families and eight matrices for the relative importance of the clause
components within each clause family were compiled. No matrix
was required for the employer entitlement to termination family, as
it contained only one clause component.
In order to compile the results from the 10 experts, a group
decision-making technique called the weighted geometric mean
(WGM) was used. The WGM is a popular method that has pre-
viously been used in several application domains to combine input
from different respondents to an AHP exercise (Cortés-Aldana
et al. 2009; de Luca 2014; Srdjevic et al. 2013; Groselj et al.
2015). The WGM relies on two main measures of consistency.
The first is the well-known CR. The other consistency measure
is the Euclidean distance (ED). In the ED measure, the error
criterion takes into consideration the entries of the comparison
matrix (aij ), as entered by the decision maker (DM), and related
ratios wi =wj of the computed weights. In a perfectly consistent
situation, aij ¼ wi =wj .
The ED measures the total distance between all judgment ele-
ments in the comparison matrix and the related ratios of the weights
contained in the derived column vector. Therefore, according to
Srdevic et al. (2011), the ED is calculated as follows:
where n = number of attributes in the pairwise comparison
matrix; aij = priority given for attribute (i) over attribute (j);
and wi = weight of attribute i.
According to Srdevic et al. (2011), the procedures to derive
weights of the group decision making are
1. Compute CR and ED values for all comparison matrices for
each DM.
2. Sum the CR values for all matrices separately for each DM; do
the same for ED values.
3. Compute reciprocals of sums obtained in Step 2 for each DM.
4. Perform additive normalization in a way that the individual re-
ciprocals from Step 3 are divided by the sum of all reciprocals
obtained in Step 3; perform normalization separately for CR
and ED.
5. Adopt the averages of the normalized values for CR and ED
obtained in Step 4 as the final weights of the DMs.
The previous procedures were conducted to derive the impor-
tance ratio of each expert and subsequently derive the concluding
weights of the clause families and components. The resulting
weights for clause components and options are shown in Table 3.
Contract Risk Rating
The model and its constituent weights can be used to compute an
overall contract risk rating (CRR) for any ad hoc or amended SFC.
The CRR ranges from 100% (least favorable to the contractor) to
0% (most favorable to the contractor). In order to implement the
model, the contract in question is examined to determine the appli-
cable clause option for each of the 41 clause components listed in
Table 3. Because of space limitations, this paper cannot present
options for all clause components. Illustrative samples for clause
options are presented in Table 4. Model use relies on selecting

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J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002

 Table 3. Clause Family and Clause Component Weights
Clause family Clause Clause component
Clause family weight (fw) (%) code Clause component weight (cw) (%)
Delayed 7.00 DD-1 Contractor entitlement to EOT if he or she suffers delays as a result of failure by the 50
drawings engineer to issue the required drawings or instructions
or instructions DD-2 Contractor entitlement to additional payment if he or she incurs costs because of failure by 50
the engineer to issue the required drawings or instructions
Unforeseeable 7.20 UPC-1 Employer obligation to make available to contractor all site data obtained by him or her 8
physical UPC-2 Contractor entitlement to EOT if he or she suffers delays from encountering unforeseeable 45
conditions physical conditions
UPC-3 Contractor entitlement to additional cost if he or she incurs costs because of encountering 47
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unforeseeable physical conditions

Delays and 14.80 DSW-1 Contractor entitlement to EOT as a result of the occurrence of force majeure 7
suspension of DSW-2 Contractor entitlement to EOT as a result of the occurrence of exceptionally adverse 7
works climatic conditions
DSW-3 Contractor entitlement to EOT if he or she suffers delays attributed to the public 9
authorities
DSW-4 Contractor entitlement to EOT if he or she suffers delays as a result of failure by employer 16
to give him or her possession of the site
DSW-5 Contractor entitlement to EOT if the works were suspended by the engineer because of a 16
reason for which the contractor is not responsible
DSW-6 Contractor entitlement to additional payment if the works were suspended by the engineer 19
because of a reason for which the contractor is not responsible
DSW-7 The contract defines milestone(s) at which delay damages may be applied by the employer 18
in the case of delays by the contractor beyond the corresponding completion date(s)
DSW-8 Contractor entitlement to treat part of the works as an omitted part if such was suspended 8
for a period defined in the contract
Employer 7.40 ETO-1 Engineer obligation to issue the taking-over certificate for part of the works, if such part 32
taking-over was used by the employer before project completion.
ETO-2 Engineer obligation to issue his or her decision/determination pertaining to works’ 42
substantial completion within a defined period from contractor request.
ETO-3 Contractor entitlement to receive payment if he or she incurs additional costs as a result of 26
using part of the works by the employer prior to completion
Variations, 17.80 VA-1 The contract includes an approach for evaluating variation orders in which no rates under 6
adjustments, the contract are applicable
and evaluation VA-2 Contractor entitlement to EOT in connection with the variation order 8
VA-3 Contractor entitlement to EOT if he or she suffers delays attributed to legislation changes 8
announced after contract award
VA-4 Contractor entitlement to additional costs if he or she incurs costs attributed to legislation 11
changes announced after contract award
VA-5 Contractor entitlement to additional costs because of the rise of cost of work inputs 21
VA-6 The unit rate of work item shall be revisited by the engineer in case the measured quantity 20
changed by a certain limit beyond the bill of quantity (BOQ) amount
VA-7 Contractor’s entitlement to on account payment if the rate of varied work executed by the 9
contractor was not evaluated by invoice submission
VA-8 Engineer shall not be entitled to omit a work and give it to another contractor 17
Interim 12.00 IP-1 Engineer obligation to certify the interim payment within a defined period 24
payments IP-2 Employer obligation to issue the interim payment within a certain period defined from 39
invoice submission
IP-3 Contractor entitlement to finance charges if he or she did not receive the interim payment 37
after the due date for payment
Employer 2.70 EET-1 Employer obligation to issue the sums due to the contractor if the employer terminated the 100
entitlement to contract for convenience
termination
Suspension and 13.70 STC-1 Contractor entitlement to suspend works if he or she did not receive interim payment after 16
termination by the due date for payment
contractor STC-2 Contractor entitlement to additional payment if he or she has suspended the works 20
because of not receiving the interim payment
STC-3 Contractor entitlement to terminate the contract if he or she did not receive interim 21
payment after the due date for payment
STC-4 Contractor entitlement to terminate the contract if the employer has become bankrupt 11
STC-5 Contractor entitlement to terminate the contract if the works were suspended for a certain 14
period defined in the contract
STC-6 Contractor entitlement to profit loss for remaining works if he or she has terminated the 18
contract because of the employer’s default (prolonged suspension and failure to issue the
interim payment)

© ASCE 04518002-6 J. Leg. Aff. Dispute Resolut. Eng. Constr.

J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002

 Table 3. (Continued.)
Clause family Clause Clause component
Clause family weight (fw) (%) code Clause component weight (cw) (%)
Claims and 17.40 CD-1 Contractor obligation to give notice about his or her intention to claim additional time/ 14
disputes payment within a defined period
CD-2 Contractor obligation to submit the claim particulars within a certain period after the event 16
has arisen
CD-3 Contractor entitlement to additional payment as a result of failure by the employer to give 14
him or her possession of the site
CD-4 Contractor entitlement to additional payment as a consequence of the incorrect reference 12
points given for setting out
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CD-5 Engineer obligation to issue his or her decision pertaining to a submitted claim within a 10
certain period after receiving the particulars
CD-6 Contractor entitlement to additional cost if he or she suffers delays attributed to the public 12
authorities
CD-7 Arbitration is the dispute resolution method under the contract 22

the applicable option for each component, under the contract in X

hand, from the defined options for this component in the model.
The CRR is the summation of the risk rating of all clause fam-
ilies, as shown in the following equation:
X
n
CRR ¼ fwi  Zi
i¼1
where n = number of clause families (n ¼ 9 in the existing model);
fwi = weight of clause family i; and Zi = risk score for family i
calculated based on Eq. (5).
Components under each family are linked to each other by the
sum of products of the weight of a component and the option score
for this component as detailed below
mi
Family Risk ScoreðZi Þ ¼ cwj  yj ð5Þ
j¼1
where mi = number of clause components under clause family i;
ð4Þ cwj = weight of clause component j under clause family i;
yj = score of selected option of clause component j; and yj is
determined based on two- and three-point scales assumed by the
researchers ranging from 0–100%. For components with two op-
tions, one of these two options represents an entitlement, an obli-
gation, or some other form, whereas the other one represents the
complete opposite position. Accordingly, a two-point scale was
assumed so that the score of one option is equivalent to 0, while
the score of the other option is equivalent to 1. The risky option to

Table 4. Sample Clause Options and Scores

Clause Option
code Clause component Clause option score (y)
DD-2 Contractor entitlement to additional payment Not defined 1
if he or she incurs costs because of a failure by Cost 0.5
the engineer to issue the required drawings or Cost + profit 0
instructions
ETO-2 Engineer obligation to issue his or her Not defined 1
decision/determination pertaining to works’ Period is defined, and engineer shall issue such decision during this period 0.5
substantial completion within a defined period Period is defined, and if engineer fails to issue such decision and the works are 0
from contractor request completed, they shall be deemed completed
VA-8 Engineer is not entitled to omit a work and Defined 0
give it to another contractor Entitled to omit work and give to another one; however, the contractor shall be entitled 0.5
to profit loss
Not defined 1
IP-2 Employer obligation to issue the interim Not defined 1
payment within a certain period defined from Issuing payment by employer is within defined period defined from date of engineer’s 0.5
invoice submission certification, not directly from invoice submission date
Issuing payment by employer is within period defined directly from invoice 0
submission
STC-2 Contractor entitlement to terminate the Not defined 1
contract if he or she did not receive the interim To terminate for delay that starts after period defined directly from invoice submission 0.5
payment after the due date for payment To terminate for delay that starts after period defined from date of engineer’s 0
certification, not defined directly from invoice submission date
CD-1 Contractor obligation to give notice about his Shall submit notice and will lose right to claim if he or she fails to submit notice within 1
intention to claim additional time/payment this period
within a defined period Defined 0.5
Not defined 0

© ASCE 04518002-7 J. Leg. Aff. Dispute Resolut. Eng. Constr.

J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002

 the contractor takes a score of 1 and the favorable option takes a
score of 0.
To exemplify, if the component that entitles the contractor to
EOT as a result of the occurrence of force majeure is defined under
the concerned contract, the option score in this case is equivalent to
0 and the risk rating of the clause family—comprising this compo-
nent—will be computed based on this score. If this right is not de-
fined under the contract, the family rating is computed based on the
component option score equivalent to 1. For components with three
options, the assumed point scale comprises the following scores:
0, 0.5, and 1. The risky option for a contractor takes a score of
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1, the favorable option takes a score of 0, and the intermediate
or less favorable option takes a score of 0.5.
Model Application
Model Application on FIDIC Form of Contract
The contract risk model was implemented based on the General
conditions of contract, for construction for building and engineer-
ing works designed by the employer, First Edition 1999, issued by
the International Federation of Consulting Engineers.
When the contract model was implemented in the General
conditions of FIDIC 1999, the contract risk rating was computed
to be equal to 14% as per Eq. (4). Although said form of the con-
tract is distinguished by a risk-sharing concept, the risk score for
its conditions is 14%, not 0%, which means no risk, as it com-
prises some components not counted as favorable to contractors.
Among these are the time-barred component for serving the
notice of claim (CD-1), the component concerning the employer’s
entitlement to terminate the contract for convenience (EET1),
and finally the component that entitles the contractor to additional
cost only, without profit, as a result of suspension of works
(DSW-5).
For the previously mentioned components, Table 5 presents the
favorable options in the model framework versus ones presented in
said form of the contract.
Model Application on Selected Case Studies
This section presents a study of two cases for construction projects
in Egypt. This study is based on discussing the contractual quali-
fication (or exception) to the conditions of tender submitted by the
contractors at the precontract stage. It is primarily based on a com-
parison between the presented contractual qualification/exception
and the clause components in the form of different options.
Additionally, for each case, two trials were implemented using
the model based on two different sets of contract conditions, and
the differences in risk ratings were calculated.
Table 5. Options in FIDIC 99 versus Favorable Options in Contract Model
Clause component
CD-1 Contractor obligation to give notice about his or her intention
to claim additional time/payment within defined period
EET-1 Employer obligation to issue sums due to the contractor if
employer terminated the contract for convenience
DSW-6 Contractor entitlement to additional payment if the works
were suspended by the engineer because of a reason for which the
contractor is not responsible
© ASCE
J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002
Case Study (1): Ad Hoc Contract
The contract comprises the carrying out and completion of the civil,
electromechanical, and finishing works of nine residential build-
ings at a gated compound. The employer is a major Egyptian
real estate developer that builds luxurious residential and tourism
compounds. For confidentiality, the parties will not be named as
requested by the employer and the contractor.
The contract used was the FIDIC’s Conditions of Contract for
construction for building and engineering works designed by the
employer, 1999, with particular conditions prepared by the em-
ployer. Based on said conditions, the contractor submitted his offer
for the execution of these buildings with limited commercial
qualification.
Thereafter, the employer proposed a new ad hoc contract to be
used that was not balanced like the previously mentioned SFC.
After this major change in the conditions of the contract, the con-
tractor submitted extensive contractual qualifications. During the
negotiation meetings, the employer accepted some of the above
contractual qualifications while rejecting others. Based on the ac-
cepted contractual qualifications, the contractor’s pricing was set at
51,043,820 EGP (US$6.7 million).
Contractor’s Qualification and Significance of Clause
Components. Only about one-fourth of the clause components
of said ad hoc contract were favorable to the contractor. This is
based on the fact that one-fourth of the contract clauses’ compo-
nents being analyzed had the clause option that most favors the
contractor. An example of favorable versus unfavorable options
can be found in Table 5, with the most favorable option from
the perspective of the contractor having a score of zero. Meanwhile,
the remaining components were either not defined in the contract or
were defined in their risky options. Hence, the contractor submitted
an extensive basis of proposal (qualification) to negotiate the terms
and conditions of the ad hoc contract.
The points forming such a qualification that affect the clause
components, based on their original wording, and the affected
clause families are presented below:
1. In order to meet the time for completion, the contractor’s
time schedule is based on technical documents issued by the
contractor for approval, or comments shall be returned within
(3) calendar days from the receipt date and (2) calendar days
from the resubmittal date for reapproval, and in response to in-
spection requests placed by the contractor no later than 24 h
from the date of submission. (Impacted Family: DD)
2. The contractor’s bid is based on biweekly invoices to be paid
within 15 days maximum from days of submission. (Impacted
Family: IP)
3. In case the employer delays paying the contractor invoices more
than 15 days from the date of invoice submission, then the con-
tractor shall be entitled to an extension of time for the contract
equivalent to the days of delay. Also, the contractor shall be
Option in FIDIC 1999 Favorable option in model
Time barred (contractor shall lose No obligation to submit notice
entitlement if he or she fails to within defined period
submit notice within such period)
Sums include value of executed No entitlement to termination
works and costs for convenience
Cost Cost plus profit
04518002-8 J. Leg. Aff. Dispute Resolut. Eng. Constr.
 Table 6. Different Options for Affected Components in the VA Family
Affected clause component
Engineer is not entitled to omit work and to give it to another contractor
The contract includes an approach for evaluating variations in which no rates under the
contract are applicable rates
Contractor entitlement to additional cost if he or she incurs costs attributed to legislation
changes announced after contract award
Contractor entitlement to EOT if he or she suffers delays attributed to legislation changes
announced after contract award
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Contractor entitlement to additional costs because of the rise of cost of work inputs
entitled to a time-related cost to cover his or her indirect costs
during the extended period. (Impacted Family: STC)
4. No omission of contract work shall be deducted from the con-
tract and assigned to others. In the case of any variation to the
contract that causes variation to items that are not included in
bill of quantity (BOQ) the evaluation of the variation to the
contractor shall be based on 20% overhead and profit over
the built-up rate. (Impacted Family: VA)
5. Should changes in legislation from the date of tender submission
result in unforeseeable additional costs or time being incurred
by the contractor, then in such case the contractor shall notify
the employer with such additional costs for reimbursement, and
to receive a time extension. (Impacted Family: VA)
6. The contractor’s prices are based on the current rates of con-
struction materials and equipment announced at the date of sub-
mission as listed in this qualification. At any time if there is a
price increase that would exceed the specified prices, the calcu-
lation references in the escalation formula will take effect. The
escalation formula will be applied starting with the next invoice
after the price increase takes place. (Impacted Family: VA)
7. In the case that the contractor encounters adverse physical con-
ditions, especially related to the soil conditions, which are un-
foreseeable, and suffers delays and/or additional costs, then the
contractor shall be entitled to an extension of time for any delay
and an equitable adjustment in payment of any such cost. (Im-
pacted Family: UPC)
Contract Model Application. Following the extensive reference to
the contractual qualification and corresponding clause families, the
contract model was used to evaluate two different scenarios, each
depicting a distinct set of conditions, and to calculate the corre-
sponding CRR for each. The two scenarios are (1) rejecting all sub-
mitted qualifications and (2) accepting all submitted qualifications.
Additionally, the contractor has provided an estimated pricing for
each of the two scenarios in consideration.
Trial 1 involved calculating the CRR for Scenario (1), which
concerns rejecting all points under qualification prior to contract
signing. For this scenario, the calculated CRR was 73%, with pric-
ing equivalent to 52,524,090 EGP. Trial 2, on the other hand, in-
volved calculating the CRR for Scenario (2), which concerns
accepting all points under qualification, prior to contract signing.
In this scenario, the calculated CRR was 45%, with pricing equiv-
alent to 50,022,943 EGP.
The variance in these risk ratings is due to changes in the com-
ponents’ options, which correspond to a difference in the contrac-
tor’s pricing values in the amount of 2,501,147 EGP. Examples of
differences between components of the VA Family based on con-
ditions of the ad hoc contract and the submitted qualification are
presented in Table 6.
© ASCE
J. Leg. Aff. Dispute Resolut. Eng. Constr., 2018, 10(2): 04518002
Option presented Option based on
in ad hoc contract requested amendment
Not defined Defined
Based on engineer’s Based on contractual percentage
determination for overhead and profit
Not defined Defined
Not defined Defined
Not defined/shall Defined
not be entitled
Case Study (2): FIDIC RED BOOK 1987/92 with Particular
Conditions
The project involves the retrofit of a major hotel in Cairo, Egypt.
The work comprises several construction packages and is executed
by an international contractor that works in Egypt and the Middle
East at large. For confidentiality, the parties to the contract and the
project manager will not be named.
The contract is based on the Conditions of contract for works
of civil engineering construction (FIDIC RED BOOK 87,
reprinted 1992), with the particular conditions prepared by the
employer.
Contractor’s Qualification and Significance of Clause
Components. The contractor submitted the financial offer accom-
panied with contractual qualification with value of 552,954,309
EGP. After submitting the offer, some negotiation meetings were
conducted at the precontract stage between the parties involved
to discuss some contractual and technical details.
Discussions between the parties during negotiation meetings
resulted in waiving the contractual qualifications submitted by
the contractor and other technical ones. An additional sum of
5,050,000 EGP was agreed to be added to the contractor’s submit-
ted offer against waving the said qualifications.
The contractor’s submission of the contractual qualification
prior to signing the contract was simply an attempt to change
certain clauses under the contract. The concerned points of such
qualification as per the original wording are presented below:
1. “Monthly payment application to be certified and paid within
42 days from submission.” (Impacted Family: IP)
2. “Although the contract conditions Sub-clause 60.10 entitle the
contractor for interest on late payment, a considerable delay in
payment may not be remedied through this provision. Due to
maximum finance facilities of any contractor, the Contractor
will have no choice, in case of delay in payment for more than
4 weeks, but to slow down the progress of the works and then to
completely stop the work if the period of delay reaches 8 week
in addition to Contractor’s entitlement to associated costs.”
(Impacted Family: STC)
3. “With reference to item 11 of the tender clarifications approx-
imate dates for the Contractor’s possession of Sections of the
Site and access will be issued in a tender addendum which
was not received till now therefore the Contractor assumed dates
of milestones for possession of Sections in the submitted time
schedule. Any change to these milestones dates will entitle the
contractor for EOT along with associated costs.” (Impacted
Family: DSW)
4. “With reference to item 23 of the tender clarifications regarding
the movable furniture and fixtures contractor package. In all
cases, prior to the start of any works by other contractors in
04518002-9 J. Leg. Aff. Dispute Resolut. Eng. Constr.
 any finished area the Engineer shall issue a partial handing over
Certificate for this area.” (Impacted Family: ETO)
5. “Sub-clause 51.1 (b) (Variations) need to be modified so that the
Contractor shall be entitled to compensation in case of omitting
works amounting to more than 15% of the Contract Price.”
(Impacted Family: VA)
Contract Model Application. In order to estimate the effect of this
change, two trials were undertaken. Trial 1 is the calculation of the
CRR based on the original conditions of the contract along with the
qualifications when the first submission of a financial offer was
made. Trial 2 is the calculation of the CRR based on the original
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conditions of the contract only and when additional sums were
agreed upon to be added to the financial offer.
For each trial, the options of the affected clause components
were selected. The calculated risk ratings are equivalent to 31
and 47% for Trial 1 and Trial 2, respectively. As noted before,
the lower risk rating means less contractual risk for the contractor.
The variance between these risk ratings reflects the difference be-
tween the applicable options of the concerned components for both
trials.
As referred to earlier, the contractor waived all the submitted
qualifications against additional sum of 5,050,000 EGP, which
was added to the value of the submitted offer. When focusing
on the contractual qualification highlighted above, a sum equivalent
to 1,100,000 EGP as part of the overall amount of 5,050,000 EGP
was agreed upon between the parties against waiving the concerned
points. The resulting variance between the different risk ratings
reflects this agreed sum of 1,100,000 EGP.
Summary and Conclusion
This paper presents a model for assessing the risk allocation of ad
hoc and amended SFCs based on a semantic assessment of 9 fam-
ilies of clauses and 41 clause components. The model is based on a
review of four common SFCs, three particular conditions to SFCs,
three ad hoc contracts, and input from subject matter experts. The
model allows contractors to bid on projects with ad hoc or amended
SFC to rapidly assess the risk allocation using a predetermined
checklist and weighted scoring based on the AHP. The model
was used for two case studies involving a residential and hotel
project in Egypt. Results show obvious correlation between the
CRR computed by the model and the magnitude of contingency
included in the contractor’s tender price. The model can be used
by both contractors and employers to assess the magnitude of risk
introduced in their contracts by relying on ad hoc (bespoke) con-
tracts or introducing significant amendments to a standard form of
construction contract. The presented model in this paper attempts to
reduce the extent of subjectivity in the process of evaluating con-
tractual risk allocation from the contractor’s point of view by (1) de-
veloping a structured approach to review key contract clauses by
developing a master list of clause families, components, and op-
tions and (2) combining the collective knowledge of several domain
experts rather than relying on the expertise of a single individual.
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