| Contract management risks will often be included in a risk assessment undertaken at the commencement of the procurement cycle. Where this is the case, the risks should be reviewed and updated as necessary once the contract is signed. Risks to successful contract management are likely to arise from a number of sources. These include: |
| Sources of risk | Examples of risks | Examples of risk treatments |
| Contract management capability | 1. Failure to have sufficiently skilled and experience resources to effectively manage the contract(s) | • Recruit staff with relevant skills • Provide training to address skills' gaps • Obtain expert advice or assistance in relevant areas • Set priorities in relation to funding • Stage project stages over financial years |
| 2. Lack of recognition of the importance of contract management | • Brief senior management about the contract and any issues • Discuss and establish roles and responsibilities | |
| 3. Failure to act on contractor under-performance | • Have monitoring plans or checklists in place • Ensure all staff understand their responsibilities in relation to performance management • Establish and maintain a sound relationship with the contractor • Hold regular meetings with the contractor to discuss progress and any problems • Agree on remedial action • Provide positive feedback when warranted • Identify any problems at an early stage • Provide any negative feedback in a professional manner | |
| Contractor performance | 1. Failure to provide contract deliverables on time, to agreed quality standards | • Establish a shared understanding of the contract and the responsibilities of each party • Monitor contractor performance regularly including of deliverables and all contract conditions |
| 2. Failure to adhere to agreed budget | • Hold specific performance review meetings • Only make payments for satisfactory performance | |
| 3. Failure to comply with all contract provisions e.g. privacy, security, recordkeeping | • Ensure proper documentation and recordkeeping to provide necessary evidence to underpin actions or non-compliance | |
| 4. Fraud and/or inefficient conduct by the contractor | • Ensure risk assessment specifically addresses fraud and/or discuss alleged fraud with in-house fraud control unit • Review the need to end the contract for breaches of conditions or non-performance • Seek relevant advice on possible causes of action to end the contract | |
| Changes in circumstance and/or requirements | 1. Contract changes not dealt with as contract variations | • Only discuss possible changes with those who have the authority to agree on changes • Document all proposed contract changes and keep a central record of them • Seek advice on when a contract variation is necessary • Liaise at an early stage to foreshadow the need for changes |
| 2. Contractor not prepared to agree to contract variations to accommodate changes in entity requirements | • Ensure proposed changes are possible within the existing contract • Discuss any proposed changes at the appropriate level both an enquiring entity and contractor's organisation and have them agreed • Explain reasons behind the need for changes • Negotiate any changes to payments or conditions to bring about changes | |
| 3. Changes in circumstances not managed in a timely manner | • Establish roles and responsibilities and priorities schedule tasks with the future and hold regular meetings | |
| Stakeholder relationships | 1. Stakeholders not consulted and/or kept informed about contract performance | • Maintain informal and formal contact with important stakeholders • Provide regular tailored briefings at the appropriate level of detail to ensure stakeholders are kept informed |
| 2. Changes in stakeholder expectations not communicated to contract manager | • Invite, record and discuss feedback from stakeholders | |
| 3. Differing and/or conflicting stakeholder expectations | • Discuss competing requirements with stakeholders and negotiate a compromise |