Course Overview
A contract is an agreement that is enforceable at law. It is the primary tool through which organisations manage relationships and understanding with the other party. The risk is a critical consideration in the contracting process. A thoughtful and proactive approach toward risk, as it relates to specific contract actions, contributes to the success of contract performance. The risk is directly related to the successful achievement of targeted goals and objectives.
The emphasis of this course is on developing a solid understanding of the complexities of risk management. The course content recognizes the importance of planning, monitoring, and proactive insight and oversight into risk areas related to the contracts stated performance outputs and outcomes. Participants will learn how to integrate risk management practices into contract administration.
Course Duration
5 Days
Who Should Attend
- Contracts, Tendering, Purchasing, Procurement, and Project personnel
- Contract Administration, Engineering, Operational, and Maintenance personnel
- Risk, Claims, Financial, and Audit personnel
- And all others who are involved in the planning, evaluation, preparation and management of tenders and specifications
Course Objectives
By the end of the Effective Contract Risk Management Masterclass, participants will be able to:
- Identify the components of the risk management process.
- Apply useful techniques to identify, analyze, mitigate and monitor risks in the contracts.
- Describe each phase of the four-phase process model for managing risk.
- Review the impacts of different approaches to risk allocation
- Explore different contract types to transfer risks.
- Consider the contractual techniques to ensure effective risk allocation.
- Learn how to create an effective risk monitoring plan and risk management strategies.
- Reduce contract failure, costly changes, and cost overruns resulting from poor understanding and management of risk
- Effective use of the total cost of ownership method to properly identifying and managing the risks
- Integrate risk management practices into contract administration.
- Drive up the quality of the service delivered by their team
Course Outline:
Module 1 - Overview of Risk Management
- The Need for Contractual Relationships
- Defining Risk
- The development of Risk Management
- Gaining a Competitive Advantage Through Risk Management
- Categories of Risk for Both Sides of a Contract
- Risk Assessment Process
- Managing Risk
- Qualifying Suppliers
- Defining Internal Control
- Proportionality of Control
Module 2 - Risk Mitigation and Management
- How to establish contracts with well-balanced risks between customer and contractor?
- Transferring Risk through Contract Types
- Firm Fixed Price or Lump Sum Contracts
- Cost Reimbursable Contracts
- Incentive Contracts
- Award-Fee Pricing Arrangements
- Using Risk Management post contract to reduce conflict
- Using Risk Management with the Parties to Improve the Contract during Tendering
- Indemnities
Module 3 - Risks Associated Clauses
- External Events
- Force Majeure
- Strikes and Other Labor Disputes
- Risk and Title
- Assignment and Novation
- Other Clauses that Need Managing Risks between Parties
- Other Clauses that Need to Flow Down to Sub-Contractors
- Risks Associated with Sub-Contractors
Module 4 - Management of Financial Risks
- Controlling Risk Associated with Payments
- Currency Risk
- Economic Risk
- Fraud and Corruption
- Limiting or Excluding Liability
- Distinctions between Liability in Contract, and the General Law
- Gross Negligence
- A Review of Some Sample Clauses from Standard Contracts, and other Real Documents
Module 5 - Contingency Measures
- Mistakes and Misrepresentations
- Impracticability of Performance
- Remedies Generally
- Types of Remedies
- Liquated Damages
- Warranties
- Cover
- Discussion of Real Examples (delegates are encouraged to bring real or made up examples for discussion)
