The University of Southampton
University of Southampton Institutional Repository

The efficient allocation of risk in contracts

Chapman, C.B. and Ward, S.C. (1994) The efficient allocation of risk in contracts Omega, 22, (6), pp. 537-552. (doi:10.1016/0305-0483(94)90046-9).

Record type: Article


This paper considers how project risk should be allocated between clients and contractors, where significant project risk is characterized as uncertainty about project costs requiring explicit attention and policy or behaviour modification.
The risk efficiency of cost reimbursement and fixed price contracts given different degrees of client and contractor risk aversion is considered first, using a novel form of model. Then the potential for efficient risk sharing is considered in a mean-variance framework. The concern in both cases is with clarifying the rationale for conventional wisdom and resolving conflicting rules of thumb. Finally, practical application of the analysis with a mixture of controllable and uncontrollable risks is discussed.

Full text not available from this repository.

More information

Published date: 1994
Keywords: risk allocation, contracting, dominance, utility, decision making
Organisations: Management


Local EPrints ID: 35674
ISSN: 0305-0483
PURE UUID: 115cfc87-d230-4f8d-8d27-a206794595d2

Catalogue record

Date deposited: 26 Jun 2006
Last modified: 17 Jul 2017 15:47

Export record



Author: C.B. Chapman
Author: S.C. Ward

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton:

ePrints Soton supports OAI 2.0 with a base URL of

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.