A Model for Sharing the Costs of Uncontrollable Risks Among the Contracting Parties

The allocation of risk among the contracting parti es in a contract is an important decision leading to the project success. some risks in a project are uncontroll able; they are imposed to the proje ct by extern al factors. since contracting parties can neither affect on occurrenc e nor control of such risks, allocation of them to a party would be inequitable. therefore the cost overrun related to uncontrollable risks should be shared between contracting parties with a ratio which makes a win-win relationship between them in contract. this paper presents a mathematical model to achieve an equitable cost sharing ratio for uncontrollable risks between an owners and a contractor before contract conclusion using multi attribute utility theory.