Risk-Based Profit-Sharing Analysis in a Collaborative Land Development Project

Undertaking land development projects entails huge investments and the market is uncertain once completed. With the contracting parties needing to work together for a long time, the collaborative delivery approach is ideal for keeping the relationships intact, involving the stakeholders at the earliest stages of the project, and sharing the risks and incentives. Having high risks at the earliest stages, it is necessary to identify the main risk factors as the basis for the profitability and feasibility of the land development project for contract agreement purposes. However, the risk ownership at this stage is ambiguous at best and the proportioning of incentives is contentious. Moreover, there is a strong proclivity to adapting the competitive negotiation approach in splitting the returns on investment, which contradicts the philosophy of the collaborative system. This study attempts to provide a framework for an objective means of calculating the stakes of each contracting party as a basis for their respective incentives. With Fuzzy-AHP decision-making criteria, each field expert contributes to the preferences of the group using their linguistic expert opinion. Furthermore, the risk ownership is assessed with the Fuzzy Inference System (FIS), which is capable of handling vague expert inputs and converting them to crisp and numerical risk scores.