A risk is a potential event, created by a defined hazard, that, if it occurs, could cause the project to fail to meet some or all of its objectives

Risk assessment is a key element of the risk management process alongside – risk analysis, risk reduction and mitigation – which enable decisions making and agreed risk reduction measures to control risk as far as possible and hence provide more project cost and operational certainty.

Risk analysis aims to identify all foreseeable issues with an activity and then assess the probability of each happening. It is a key element of every contract management process regardless of project size and is a fundamental part of determining the tender strategy and pricing of the ITT.

Best practice for all tenders involves the establishment of a comprehensive tender risk register and, following contract award, the transfer of the register to the contract management team for use in risk assessment.

In addressing risk in contract management, the team should look to challenge every element of the design, construction methodology, procurement strategy and contract to identify all elements of risk in whatever form they exist.  The team must harness the knowledge and analytical skill of the group to objectively identify, analyse and reduce the risks before agreeing the mitigation measures which will need to be held in place to address any risks that materialise through the contract period. 

The risk register incorporated into the tender is the public face of this risk management process, it maybe that the process identified other risks which the contractor may choose to incorporate into their price rather than define within the risk register.  This is a point for careful consideration prior to submitting the tender.

The submitted risk register should clearly define the proposed owner of each risk so that the Employer is able to identify what the tenderer sees as his liability.  This enables the Employer to form a true view of the overall cost and risk exposure he will have to manage if he chooses a particular contractor.  Risk owners should be those who are best placed to manage and mitigate the risk.

Ellipsis International Solutions can deliver structured risk workshops and support the adoption of a continuous “what if” mentality – to challenge and consider all risks and potential mitigation measures, ensuring the development of a sound tender proposal that the contractor and client can have confidence can be delivered.