Towards an approach for measuring the risk-bearing capacity of construction contracts

The purpose of this research is to define a novel concept, termed risk-bearing capacity, and develop its quantitative measure as a decision aiding tool to help the project investor decide what financial protection to take. Drawing on the economic concept of quasi rent, the new approach provides a direct measurement of the maximum risk exposure a contractual arrangement can withstand and holds the potential to evolve into a framework enabling the project investor to integrate the choice of financial protection in a coherent way.