Developing a Risk Management Process for General Contractors in the Bidding Stage for Design–Build Projects in Vietnam

Abstract

Design–build (DB) projects have become increasingly popular for construction projects in developing countries due to the cost and scheduling advantages and their design optimization ability. As a result, much research has been conducted on improving DB efficiency in terms of cost, scheduling, risk management, etc. However, the existing studies have mainly focused on the owner’s roles, whereas general contractors (GCs) must also take many risks on behalf of owners in DB projects. The adequate identification and assessment of risks before engaging a contractor can increase the likelihood of a project’s success, at least from a DB contractor’s perspective. Therefore, this study interviewed procurement experts to conduct a survey at the local level, then analyzed, developed, and proposed an additional risk management process (RMP) for use by GCs during the bidding process of DB projects. A case study was conducted with a large Vietnamese GC to evaluate the effectiveness of the process and find ways to optimize it in the future. The results of the study showed that risk management during a DB project is imperative. Nevertheless, preparing bids is time-consuming and increases the contingency costs, reducing the competitiveness of the bid prices for contractors. Therefore, depending on the specific project and risk management objectives, an RMP is recommended for adjusting the risk management target to reduce the risk, while still maintaining the competitiveness of the bid prices.

Assessing Risk Factors Affecting the Accuracy of Conceptual Cost Estimation in the Middle East

“…The risk identification process is very crucial for preparing or developing cost contingency regardless of the contract type for the construction project. Pham D. H. et al [2] assures the importance of developing the risk-management process in the Design-Build contracts. The proper identification and risk assessment in the early stage can increase the probability of a project's success [2].…”

“…Pham D. H. et al [2] assures the importance of developing the risk-management process in the Design-Build contracts. The proper identification and risk assessment in the early stage can increase the probability of a project's success [2]. Thus, this paper reviewed previous literature studies related to cost estimation and cost contingency to get the common risk factors that may affect cost-contingency estimation.…”

“…Construction projects are more complex than before, technically and contractually, with the negative impacts on their execution having become higher due to increased risks. Thus, in order to manage the project's risks properly, it is mandatory to identify and analyze risks in a timely manner [1,2]. Cost estimation is an essential process in construction project management.…”