Risk Management

Monday, May 28th, 2012

We have been researching project risk management to identify where procurement sits in regard to detailed risk management plans for a project. Unsurprisingly, there is a widely varying emergent position. Our research shows that:

  1. Many projects have little expert procurement support due to lack of resource skills and availability.
  2. Stakeholder risks are badly managed, specifically where the project impacts on the public, e.g. banking services I.T. system changes.
  3. Contracts are awarded before designs are completed thus leading to exceptional project costs increases and at another
    extreme, ending the project and paying compensation to the contractor(s).
  4. Memoranda of Understanding issued that are unclear on which facets are obligations
  5. Contractors appointed without a robust procurement process, in some cases without any competitive tendering.
  6. Inadequate project management and contract management resulting in key milestones being missed, costs to increase and resultant poor relationship management.
  7. Fraudulent use of sub-contractors that is not visible until remedial action threatens project delivery
  8. Advance payments made to contractors without appropriate security being in place
  9. Contract includes provision for the payment of damages for delays to project but never applied.
  10. There is often a lack of formal close out, leaving uncertainties in regards to release of bonds and when guarantee periods commence.

Procurement can play an essential pro-active role in identifying and managing many risks. Procurisk™ is a tool that can be
of great assistance.If you would like to know more about Procurisk™  please give me, Ray Gambell, a call on +44 (0) 1744 20698 or email me [email protected]