Compare traditional, design-and-build, and management contracting procurement routes in terms of risk allocation.

• A. All routes distribute risk equally among parties.
• B. Traditional: client bears design risk; design-and-build transfers design and construction risk to contractor; management contracting places some design risk with client and management contractor; risk allocation varies by contract.
• C. Design-and-build keeps all risk with the client.
• D. Management contracting eliminates construction risk.

Answer: (B)

Risk allocation shifts with how the project is procured, and the pattern isn’t the same for every route. In the traditional route, design and construction are let as separate contracts. The client controls and carries the design risk because they are responsible for the design, its adequacy, and any design changes, while the contractor takes on construction risk under a separate construction contract. In design-and-build, the contractor is responsible for both design and construction, so design risk and construction risk effectively move to the contractor; this reduces the client’s exposure to design faults and build problems, though the client still bears some residual risk around scope changes and performance targets. In management contracting, a management contractor is brought in to coordinate design and the overall construction program, with specialist subcontractors carrying the actual works. The client retains more design responsibility and hashes out risk through the management contract and the subcontracts, so risk is shared and contract terms vary. The key idea is that risk distribution is not equal across routes; one route concentrates risk with the contractor, another with the client, and a third splits it in different ways depending on the contract specifics.

The other options don’t fit: risk isn’t distributed equally across all routes; design-and-build does not keep all risk with the client; and management contracting does not eliminate construction risk.