Post by Ivo Michalick, PMP, PMI-SP

The Risk Transfer Illusion: Key Insights from Our Discussion Thank you for the incredible engagement on my recent post about Ed Merrow's "Contract Strategies for Major Projects" - 22,000+ impressions and 55 thoughtful comments that deserve a follow-up. One theme dominated the conversation: the illusion of risk transfer (Principle #4). As John Hollmann insightfully noted, when public infrastructure funding models force owners to finalize contracts before properly funding front-end work, the obsession with "transferring risk" becomes the primary strategy. The result? As Felix Parodi reminded us, "the contract price is not the ceiling but the floor." Richard Stack's observation captured it perfectly: owners are often amateurs playing contract games against professional contractors. The power asymmetry is real, and expensive. This connects directly to Nassim Taleb's "Skin in the Game": True accountability can't be transferred through contract language alone. The owner ultimately owns the outcome - the political heat, the operational consequences, the reputation damage - regardless of what the contract says. In my work at TSX Engineering I see this play out repeatedly. The most successful projects aren't those with the most aggressive risk transfer language, but those where all parties understand their true skin in the game and design collaborative allocation strategies that align incentives. If you haven't read Taleb's book yet, it's essential reading for anyone involved in major projects. The principles apply directly to how we structure contracts and allocate risk. What's been your experience with risk allocation strategies? Where have you seen them work well - or spectacularly fail? #CapitalProjects #ConstructionManagement #RiskManagement #ContractStrategy