Abstract:
Construction contracts are rather different from other commercial agreements – the object of
the contract (the construction) has a high degree of uncertainty as it is not there at the time of
contract execution and at the same time is an expensive product, with a high level of technical
and technological complexity. The absence of a proper contract to provide clear terms and
procedures regarding all relevant aspects and a balanced distribution of risk between the
parties may leave client or contractor exposed to the risks associated with construction
projects and a potentially severe compromise regarding desired outcomes.This study
examined risk allocation in the standard form contract between the employer and contractor in
the public road construction industry with a view to determining efficiency of the clauses. The
study examined selected risk elements in the contract provisions and in actual practice, the
degree of fairness/reasonableness of the risk allocation clauses, and the effects of risk
allocation clauses in the General Conditions of Contract on project performance.The study
was carried out in Ondo state, Nigeria. Questionnaire was administered in a survey conducted
among the construction industry participants and stakeholders involved in public contracts
formation in the study area. The study combined primary survey based data with secondary
information from contractual records. The idea behind this is to obtain cross-referencing data
and some independent confirmation of data.A random sampling technique was employed for
this study. Using Yamane (1973) sample size formula, a sample size of one hundred and
eighty-eight (188) was calculated from three hundred and fifty-two (352) identified as the
population of the study. Paired samples T-test, mean ranking, ANOVA, and simple linear
regression were used in analyzing the data. Findings from the study shows that the difference
between the contract provisions and actual practice of the selected risk elements in
construction contracts were found to be significant (Sig. value = 0.000). Also, the degree of
fairness and reasonableness of all the selected risk elements was calculated to be 3.02 and
rated “moderately reasonable”. The study concluded that most construction contracts in Ondo
state, if not properly designed, would lead to disputes among construction stakeholders in the
state. The study recommended that risk allocation clauses should be properly enforced and
construction participants should be properly orientated on contractual clause
