H.6  Contract risk management resources

To ensure that the value-for-money outcome obtained in the initial contractual allocation of project risks is not compromised and risk is managed over the life of the contract, the government party must devote adequate resources to contract management activities. Inadequate resourcing can lead to inappropriate contract management strategies and skill levels to control and mitigate risks borne by government. In addition, a lack of adequate contract management capabilities can lead to the unintentional 'take-back' of risks that have been allocated to a private party through the earlier procurement process.

The resources required for good contract management include:

•  an adequate budget;

•  personnel with the knowledge and experience to manage relationships with the private party and other stakeholders;a standing arrangement providing access to senior advisors experienced in the project.

As good contract risk management starts during the procurement phase with the development of appropriate risk management strategies, contract risk management resources should be available for use during the procurement stage, not simply after contract execution.

Where feasible, the Project Director (who has overall responsibility for delivery of the project through the procurement process) should either be the inaugural contract director, or should be engaged until commissioning, working with the inaugural contract director during this period.