Contingency Perception of Traditional versus Collaborative-Based Differing Site Condition Construction Contract Clauses
Article
Dardoon, D, Gad, GM, Elzomor, M. (2026). Contingency Perception of Traditional versus Collaborative-Based Differing Site Condition Construction Contract Clauses
. JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION, 18(2), 10.1061/JLADAH.LADR-1392
Dardoon, D, Gad, GM, Elzomor, M. (2026). Contingency Perception of Traditional versus Collaborative-Based Differing Site Condition Construction Contract Clauses
. JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION, 18(2), 10.1061/JLADAH.LADR-1392
Despite the fact that contracts are viewed as legal documents whose main objective is to manage risk, their clauses reflect the level of collaboration that is expected between the different contracting parties. The objective of this paper is to investigate the contracting parties' perception of collaboration in contract clauses, and their correlation to the risk allocation (depicted by the contingency percentage allocated by contracting parties). Using surveys that addressed both parties in construction contracts, owners and contractors, survey participants were presented with different project scenarios, with varying degrees of: (1) risk allocation in contract clauses (contract collaboration level), (2) project site conditions (project risk level), and (3) prior working relationship with the other contracting party (trust level). Based on these scenarios, participants were asked to allocate a contingency percentage (perception of risk). Results from the survey show that clauses identified as low-level collaborative clauses are highly correlated with high contingency percentages. In general, participants representing owners tend to place a lower contingency percentage compared to contractors in all the presented scenarios. This finding reinforces the need to communicate risk expectations between parties to align their expectations, and thus, their estimates of an adequate contingency percentage, ultimately reducing unnecessary project costs. The study also highlights the importance of development of balanced contracts that reflect the trust level exhibited between the parties. The contribution of this paper is that it empirically provides evidence on the significance of trust levels, risk allocation, collaboration level, and parties' perception on the amount of contingency allocated for construction contract.
