As with other phases of the procurement cycle, there are risks to successfully formalising a contract. Risks assessments conducted at earlier points of the cycle should be reviewed at this stage for relevance.

Risks to successfully formalising the contract can arise from a number of sources. These include:

Sources of risk

Examples of risks

Actions of the acquiring entity

•  Unknowingly entering into a contract

•  Work commencing before the contract is signed

Contract negotiations

•  Failure to focus negotiations on key outcomes

•  Failure of negotiating team to understand the extent of their authority

• Negotiating team not having sufficient skills and experience and/or not having required access to specialist advice

•  Final negotiated position adversely affects the value for money outcome

•  Agreeing to unnecessary or undesirable outcomes during negotiations

•  Failure to behave fairly and ethically

Final contract drafting

•  Agreed outcomes not reflected in the final contract

•  Failure to obtain all necessary approvals by those delegated to give them

•  Failure to include all necessary contract clauses or including inappropriate clauses

•  Failure to establish the legal status of the contractor