Fundamentals of Contract Management

Risk management for Contracts” Article Review

 The article Risk Management for contracts asks the ultimate question, what is the objective of any contract? According to Massey (2008), one side, the argument is that a contract defines the rights and responsibilities of each party in a contract. While on the other, others believe that contracts define the way parties act in case an uncertain event happens in future. Nonetheless, both arguments notwithstanding the contracting process are designed to help in the management of risk in its various forms. The article defines risk as the uncertainty that may affect the desired outcomes of the contract. For instance, a contract helps avert the risk of doing a job and not being paid. Another reason may be due to the limited availability of skilled labor, forcing employers to undertake the risk management for contractors to ensure a reasonable flow of work so that they can make some considerable amounts of return from the work.  Additionally, risk management protects the contractors from employers who embark on a contract and later abort it in case they notice they are not culturally aligned. The risk management works in the same way as the alternative dispute resolution because working together is not easy. The adoption of more stringent terms protects the employers and limits the exposure from potential claims from the contractor. The contractors also have various tools at their disposal to help in managing the risks that contractors are exposed to. Unfortunately, contractors rarely use these tools. When something goes wrong, it is because of either an incompetent programme or no agreement applicable to the scope of work for the contractor. However, as Massey elaborates, the use of risk assessment and management in all the phases of a contract can eliminate such risks and ensure a smooth working relationship.

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Application of Information

Within the organization setting, circumstances will always force parties will enter into a contract such sales agreements, leases, affiliation agreements, and service contracts among others. A contract is an agreement enforceable by the law and binding to all the parties involved in the agreement. However, contracting might create several risks and care in managing such risks can protect the organization against loss. According to Massey (2008), it protects both parties from risks arising from one party breaching the terms of an agreement. The article on risk management for contracts explores the various ways a contractor and an employer can avert the risks arising from contracts in case one party breaches the terms. It also elaborates on the importance of risk management as a form of insurance against undesired outcomes on the objectives of the contract. Consistently, the information acquired in this article can be applied in the design of a contract such understanding that all requirements of a contract must be written and clearly indicated. Ensure that the designated authorities negotiate and sign contracts to ensure that all parties are binding to the agreement. Along with that, it is important to understand the obligations that come together with a contract and the risks that can arise in case a contract is not clearly written and understood by both parties. As a potential contractor and an employer, the information can also be applied in both settings to ensure that the employer does not breach the terms and the contractor respectively.


Massey, I. (2008). Risk management for contracts. Civil Engineering: Magazine of the South African Institution of Civil Engineering, 16(1), 34.

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