Introduction

This seminar focuses on managing and mitigating risks in contracting to ensure successful project outcomes. Participants will gain insights into the risk mitigation process, strategies to elevate contracts to a strategic level, and skills to identify and allocate risks effectively. The course also provides examples of contract terms and conditions designed to address risk management comprehensively.

Objectives

• Provide an understanding of how risk arises·

• Compare different methods of identifying and assessing 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·

• Review risk management techniques during the life of a contract·

Methodology

• Participants will increase competencies through a variety of instructional methods including a lecture by an experienced practitioner and consultant, cases/exercises, reviewing published articles, checklists, and group discussions covering current practices and their relationship to the implementation of new concepts.

• Delegates are encouraged to bring real problem examples with them, for discussion on a confidential basis, and to share their experience of particular issues in their company or industry. Time will be allowed for general discussions, and for one-to-one discussion with the trainer.

Organizational Impact 

• 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 and management of risk.

• Implementing better risk management which improves the chance of project success.

• Developing an appreciation of the true effect of contractual indemnities which will enable better decision-making as to contract structures and ensure that risk is passed to others properly and in a cost-effective manner.

Personal Impact

• Increased understanding of risk

• Better ability to allocate risk, and to select the appropriate contractual regime to achieve your aim

• Develop risk identification and assessment skills

• Heighten understanding of the alternative methods of allocating risk

• Improve understanding of different approaches to managing risk during a contract

• Improve the ability to reduce the negative impact of poorly-managed risk on a project or a company

Outlines

Day 1: Types and Management of Risk

• The Need for Contractual Relationships

• Defining Risk

• Categories of R 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 labor 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

• 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

Day 5: Remedies When Bad Stuff Happens

• 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)

• Review of course and question and answer session