Procurement and Financial Risks

Running head: PROCUREMENT AND FINANCIAL RISKS 1
NAME
INSTITUTION
PROFESSOR

Procurement and financial risks 2
Introduction
One of the most critical parts of the procurement cycle is contract management. The
management plan of a contract aids the contract and project managers in managing the contracts
by focusing on transition management, monitoring performance as well as ensuring that all the
involved groups or parties achieve their contractual as well as commercial obligations. Contract
management entails the administration of contracts involving a given company and vendors
(Edquist, 2014). The contract management process follows a laid down criteria that ensure the
success of the entire process. Some of the steps involved include creation, negotiation,
adherence, the service level agreements, documentation as well as analysis of the advantages that
may arise from a given contract. Contract management takes into account all the management
activities that ensure that the relationships between a vendor and the company are profitable and
efficient.
Procurement risks
Procurement risk refers to the potential for the possible occurrence of failures associated
with a procurement process which is aimed at purchasing resources or products as well as
services the notable types of procurement risks include, cost, fraud as well as quality and
delivery risks (Johnson, 2011). The process of procurement planning helps in reducing risks,
high quality of service delivery and better value for money. The new Royal Adelaide hospital
faced various risks related to the procurement and project management during the life of the
project. One of the key risk that faced the project is the constant change in scope owing to the
lack of clearly defined goals. The risk caused by changing scope leads to delays in project
completion. Another critical risk that faced the hospital is lack of full participation by
stakeholders leading to the indifference that threatened the completion of the project. The setting