Contract Risk Management

Course length: 5 days

 Course description

Increasingly complex contracts and procurement structures often make
it difficult to fully appreciate risk allocation and its implications.
Prevention is better than cure. Late delivery, defects and cost overruns,
damage to reputations, client relationships and the bottom line, can all be
reduced or avoided through risk management. Unforeseen changes often occur to
the design and scope which can cause further calls to increase investment. One
of the major functions of contracting is to ensure that risks to owners and
contractor are identified and managed in a way that both parties are satisfied
with the project outcome. While a contract cannot, of itself, make risk “go away”, it can, and should, identify
the risks, determine who is responsible for managing each individual risk, and
for the consequences should the risk occur. This course is intended to provide
a good grounding in the essentials of contracts risk management arising out of
renewable energy resource contracts in an international and Kenyan context

 Objectives

•       Critical
understandings of the risk mitigation process

•       Knowledge to move
contracts from the tactical to a more important strategic focus

•       Ability to
identify risks that can arise

•       Skills in
allocating contract and procurement risk

•       Examples of
Contract Terms and Conditions which allocate
risk

 Who should Attend

·        
Contracts, Tendering, Purchasing, Procurement, and
Project Personnel

·        
Contract Administration, Engineering, Operational,
and Maintenance Personnel

·        
Risk, Claims, Financial, and Audit Personnel

·        
Project Management
Professionals

·        
And all others who are involved in
the planning, evaluation, preparation and management
of tenders, specifications, awards, and contracts that cover the acquisition of
materials, equipment, and services and who are in organizations whose
leadership want high levels of competency in those involved in these activities

 What you will learn

·        
Expanding the expertise of
personnel involved in contract development and
management will allow project and general management teams to be more effective

·        
The total cost of ownership will be
understood and reduced by properly identifying and managing the risks

·        
Clear allocation of risk will
reduce the possibility of disputes, and any that do arise should be settled more quickly, with less cost, delay
and disruption

·        
Reducing project failure, costly
changes, and cost overruns resulting from poor understanding

·        
Critical understandings of the risk mitigation process

·        
Knowledge to move contracts from the tactical to a
more important strategic focus

·        
Ability to identify risks that can arise

·        
Skills in allocating contract and procurement risk

·        
Examples of Contract Terms and Conditions which
allocate risk

 Course Outline DAY
1

Types and Management of Risk

 ·        
The Need for Contractual Relationships

·        
Defining Risk

·        
Categories of Risk for Both Sides of a Contract

·        
Risk Assessment Process

·        
Managing Risk

·        
Qualifying Suppliers

·        
Defining Internal
Control

·        
Proportionality of
Control

 DAY 2

 Minimizing
and Transferring Risk

 • 
Transferring Risk through Contract Types

•  Firm Fixed Price
or Lump Sum Contracts

•  Cost Reimbursable Contracts

•  Incentive Contracts

•  Award-Fee Pricing Arrangements

•  Indemnities

•  Cross Indemnities

•  Insurance

 DAY 3

 Risk
Related Terms & Conditions

 ·        
External Events

·        
Force Majeure

·        
Strikes and Other Labour Disputes

·        
Risk and Title

·        
Use of ICC Incoterms

·        
Assignment and Novation

·        
Other Clauses that Need to Flow Down to Sub-contractors

·        
Risks Associated with Sub-Contractors

 DAY 4

 Dealing with
Financial Risks

 ·        
Controlling Risk Associated with Payments

·        
Currency Risk

·        
Economic Risk