PROCUREMENT RISK

MANAGEMENT PLAN

Project Name/Description

Reference Number

Department/Agency

Prepared by

Date

(For procurements that are high in complexity

and/or value)
Table of Contents

1. PURPOSE OF DOCUMENT ............................................................................. 2

2. PROCUREMENT CONTEXT ............................................................................ 2

3. IDENTIFY, ANALYSE, EVALUATE AND TREAT RISKS ................................ 3

4. RISK REGISTER .............................................................................................. 5

State Procurement Board Procurement Risk Management Plan Version 1.0

Issue Date: April 2013
Page 1 of 5 Review Date: April 2015
 1. PURPOSE OF DOCUMENT

Risk management in procurement is about identifying, assessing and managing the risks
associated with the purchase of goods or services to ensure unexpected or undesirable
outcomes are minimised whilst achieving the objectives of the procurement.

Risk management is an essential part of good procurement. Practitioners who manage

procurement risk well are more likely to achieve the project outcomes and objectives.

In accordance with the State Procurement Boards Acquisition Planning Guideline, and Risk
Management Guideline, a procurement risk management plan must be developed for all
procurements that are considered high in complexity and/or value (quadrant 2, 3 or 4
procurements). The level of detail to be recorded will be commensurate with the value and
complexity of the procurement.

The recommended risk management approach is based on the Australian Standards on Risk
Management AS/NZS 31000 and the State Procurement Boards Risk Management
Guideline.

There are six steps in the procurement risk management process:

establish the context;
identify the risks;
analyse the risks;
evaluate risks;
treat risks; and
monitor and report the risks.

This document is to be read in conjunction with the following documents:

Insert document names and file reference. For example, acquisition plan, evaluation plan
and tender documents.

2. PROCUREMENT CONTEXT

Objectives of Procurement

Insert details on:

Objectives of the procurement (what is the procurement hoping to achieve)

Scope of Procurement

Insert details on:

Scope of the procurement

Key Stakeholders

Insert details on:

Key stakeholders both internal and external

State Procurement Board Procurement Risk Management Plan Version 1.0

Issue Date: April 2013
Page 2 of 5 Review Date: April 2015
Procurement Strategy

Insert details on:

procurement strategy

Procurement Context

Insert details on:

Other issues within the procurement context (refer to SPB Risk Management
Guideline):
o Legislation, standards, policy relevant to the procurement objectives;
o External elements including the economic and competitive environment
o Cross-agency, lead agency or individual agency responsibilities;
o Timeframes to undertake the procurement activity
o Specialist knowledge or other knowledge required; and
o Lessons learnt from previous similar procurements.

Risk Management Responsibilities

Insert details on:

Governance committee / project team (key staff members who will manage the
procurement risks)

3. IDENTIFY, ANALYSE, EVALUATE and TREAT RISKS

Identify Risks

Identify the risks for this procurement and document (refer risk register). This will include
risks that are common to the procurement process, and risks that are specific to this
particular procurement.

Risks have been identified through the following methods:

List the methods used to identify the risks including the involvement of appropriate
discipline or risk experts

Risks have been identified through the following methods:

List the methods used to identify the risks including the involvement of appropriate
discipline or risk experts

Analyse Risks

When analysing risks, account for the effect of controls built into existing procedures (refer to
the risk register to document current controls). The residual risk is the risk remaining after
considering the current controls in place.

Analyse the risk using the key criteria of:

Likelihood how likely is it that the risk may arise?
Impact / consequence what will be the impact if the potential risk eventuates?
Refer to your organisations ratings for the measures of likelihood and consequence.

Determine the level of risk or risk rating based on the measures of likelihood and
consequence again refer to your organisations risk rating levels.

State Procurement Board Procurement Risk Management Plan Version 1.0

Issue Date: April 2013
Page 3 of 5 Review Date: April 2015
Evaluate Risks

Evaluate each risk identified and:

For each risk rated as low, they may be accepted with no or minimal treatment
For each risk rated as moderate or high, ensure a treatment is assigned in
accordance with your organisations risk tolerance.
For each risk rated as moderate or high, identify who is responsible for managing
that risk and the timeframe.

Treat Risks

Identify treatments for risk:

For each risk rated as low, they may be accepted with no or minimal treatment
For each risk rated as moderate or high, ensure a treatment is assigned in

Monitor Risks

Risks must be monitored and if appropriate, revised throughout the procurement process.
Risks will be monitored by the following methods:
List the methods used to monitor the risks

Risk Register

For each risk identified, record the likelihood, consequence, associated risk rating and
treatment in the attached table (refer section 4).

State Procurement Board Procurement Risk Management Plan Version 1.0

Issue Date: April 2013
Page 4 of 5 Review Date: April 2015
 4. RISK REGISTER

Risk Assessment Risk Treatment

Risk Name & Risk Depending on risk rating -
Current Controls Impacts Likelihood Consequence Responsibility
Description Are there current Impact if the risk Rating
additional controls /
What could happen and controls for the risk eventuates
mitigation strategy to be / Due Date
why? Refer to your organisations ratings for measures implemented (to reduce risk
rating)
Example: Ensure funding approvals
Insufficient funding none Delays to purchasing C Possible 4 Major High obtained at start of project

State Procurement Board Procurement Risk Management Plan Version 1.0

Issue Date: April 2013
Page 5 of 5 Review Date: April 2015