Contractual Risk Allocation in Construction Contracts in Nigeria

Introduction

In today’s construction industry, navigating an increasingly volatile and unpredictable business landscape has become a significant challenge. Economic fluctuations, regulatory changes, supply chain disruptions, and unforeseen project complexities create a heightened level of uncertainty for construction projects. As a result, the need for robust risk allocation and comprehensive risk management strategies has never been more critical in construction projects.’

To effectively manage these uncertainties, it is important to understand what constitutes a risk in the context of construction projects. A risk is the potential of a situation or event impacting on the achievement of specific project delivery or objective. Risk can be perceived either positively (upside opportunities) or negatively (downside threats).

This article aims to examine how contractual risk is allocated in Nigerian construction contracts and its impact on the construction industry.