5.2. Identify and manage risks

Risks identified previously may be relevant at this stage of the cycle and should be considered along with any risk management plan that has been developed.

Risks to the management of individual contracts can include the following:

Sources of risk	Examples of risks
Contract management capability	Failure to have sufficiently skilled and experienced resources to effectively manage the contract(s) Lack of recognition of the importance of contract management Failure to act on contractor underperformance
Contractor performance	Failure to provide contract deliverables on time, to the agreed quality standards Failure to adhere to the agreed budget Failure to comply with all contract provisions, for example, privacy, security, recordkeeping Fraud and/or unethical conduct by the contractor
Changes in circumstances and/or requirements	Contract changes not dealt with as contract variations Contractor not prepared to agree to contract variations to accommodate changes in entity requirements Changes in circumstances not managed in a timely manner
Stakeholder relationships	Stakeholders not consulted and/or kept informed about contract performance Changes in stakeholder expectations not communicated to contract manager Differing and/or conflicting stakeholder expectations

Ensuring that any identified risks are dealt with appropriately may require a specific risk mitigation plan to be developed. Such a plan need not be long and cumbersome; it may consist of a simple checklist or it may be a detailed plan that requires periodic review and updating throughout the life of the contract. Where a contract is to be managed by a team over a longer period of time, a plan may assist with coordination among team members and stakeholders. The issues discussed below should be addressed by any plan or checklist developed to guide the contract management.

In addition, consideration should be given to the need to develop appropriate contingency plans to address unplanned or unexpected events. Such plans may be required where the consequence of contract failure is critical to a range of stakeholders, such as members of the public.

 

The Example Risks and Risk and Treatments at the end of this part can be used in developing a risk plan for individual contracts.

Contract Management Plan

As discussed in Part 2 of this Guide, irrespective of the size, nature and duration of the contract, a contract management plan is a useful tool to assist in managing and administering the contract, including risks to the success of the contract. Such a plan may be a checklist or a formal plan that addresses in detail the issues discussed in this part of the Guide.

As noted earlier, much of the work required to develop the contract management plan can and should have been done at the time the contract was being developed. Thereafter, the plan should be routinely reviewed and updated.

 

Example Contract Management Plan templates are at the end of this Guide.

 

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