Information
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Tender No.
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Tender Title
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Conducted on
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Conducted by
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Personnel
1. Risk - Identifying the need and planning the purchase
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1. Is there a potential understatement of the need?
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Likely Consequences
- Purchase of unsuitable product or service
- Money wasted
- Need not satisfied
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Risk Mitigation Strategies
- Analyse the need accurately
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Level of Risk
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2. Is there a potential to overstate the need?
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Likely Consequences
- Greater expense
- Poor competition
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Risk Mitigation Strategies
- Analyse need accurately
- Use functional and performance requirements
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Level of Risk
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3. Could potential tenderer's misinterpret Councils requirements?
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Likely Consequences
- Goods/Service not fit for purpose
- Time lost
- Increased costs
- Possible downtime
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Risk Mitigation Strategies
- Improve consultation with users
- Obtain a clear statement of work
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Level of Risk
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4. Could there be Insufficient funding?
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Level of Risk
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Likely Consequences
- Delay in making the purchase
- Additional costs to re-tender
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Risk Mitigation Strategies
- Obtain appropriate approvals before undertaking process
- Improve planning
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5. Is the time frame impractical?
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Likely Consequences
- Inadequate responses from tenderers
- Reduced competition
- Delivery schedule not met
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Risk Mitigation Strategies
- Improve forecasting, planning and consultation with users
- Improve communication with potential tenderers
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Level of Risk
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6. Are there any known Probity issues?
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Likely Consequences
- Increased procurement costs
- Misuse of resources
- Most suitable product not obtained
- Unethical conduct
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Risk Mitigation Strategies
- Implement best practice policies, guidelines and practices
- Maintain ethical environment
- Improve training of personnel
- Put suitable controls and reviews in place
- Appoint Local Government Procurement to assist with the tender
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Level of Risk
2. Risk - Developing the specification
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1. Is there a potential that the specification defines an inappropriate product or service?
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Likely Consequences
- Need not satisfied
- Time lost
- Increased costs
- Possible downtime
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Risk Mitigation Strategies
- Ensure specification is consistent with needs analysis
- Improve market knowledge
- Use functional and performance specifications
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Level of Risk
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2. Could the specification be seen as biased?
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Likely Consequences
- Inadequate responses from tenderers
- Claims of unfair dealings
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Risk Mitigation Strategies
- Use functional and performance specifications
- Implement a control mechanism to review specification before release
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Level of Risk
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3. Are the statement of requirements inadequate?
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Likely Consequences
- Variety of offers
- Insufficient responses
- Products offered not meeting needs
- Difficult to evaluate
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Risk Mitigation Strategies
- Be familiar with requirements
- Use functional and performance specifications
- Use an Expression of Interest or Request for Information to clarify requirements (be careful not to infringe intellectual property rights or copyright)
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Level of Risk
3. Risk - Selecting the purchasing method
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1. What if Council fails to identify potential sources?
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Level of Risk
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Likely Consequences
- Lack of offers from suitable tenderers
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Risk Mitigation Strategies
- Improve procurement planning processes
- Improve market knowledge
- Seek industry participation
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2. Is there a potential for Council to select an inappropriate sourcing method?
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Risk Mitigation Strategies
- Improve implementation of procurement policies, guidelines and practices
- Improve tender documentation and clearly identify the evaluation criteria in Request for Tenders
- Provide staff with appropriate training and experience
- Local Government Procurement to assist in making the decision
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Likely Consequences
- Need to seek offers again
- Possible cost variations
- Failure to obtain value for money
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Level of Risk
4. Risk - Purchasing documentation
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1. Are the terms and conditions/Contract unacceptable to tenderers?
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Likely Consequences
- Loading of costs in offers
- Having to modify tender terms and conditions
- Disruption
- Low response
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Risk Mitigation Strategies
- Use standard documentation prepared by Council
- Select appropriate documentation for purchase type (ie. goods,services, goods and services, or information technology related)
- Improve tender planning
- Assess and allocate risks appropriately
- Consult with a legal firm or internal legal
- Use commercially acceptable terms
- Provide staff with appropriate tender planning and procurement skills
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Level of Risk
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2. Is there a potential of providing inadequate information?
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Likely Consequences
- Loading of costs in offers
- Variations in offers
- Having to provide clarifying information, causing delays in tender closing
- Additional costs
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Risk Mitigation Plan
- Ensure staff have appropriate tender planning and documentation training and experience
- Improve tender planning and preparation
- Review tender documents before issuing them and ensure evaluation criteria contain the critical factors on which assessment of tenders will be based
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Level of Risk
5. Risk - Inviting, clarifying and closing offers
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1. Failure to adequately address enquiries from tenderers
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Likely Consequences
- Claims of unfair practices
- Offers with qualifications by tenderers
- Withdrawal of offers
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Risk Mitigation Strategies
- Implement standardised procedures for responding to enquiries
- Provide staff with appropriate tender management training and experience
- Respond in a timely manner to enquiries
- Allow adequate time for tenderers to respond
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Level of Risk
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2. Actual or perceived favouritism in providing information
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Likely Consequences
- Complaints from tenderers
- Withdrawal of offers
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Risk Mitigation Strategies
- Provide staff with appropriate tender management training and experience
- Answer queries in writing and provide copies to all potential tenderers
- Ensure that all potential tenderers are provided with any addenda
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Level of Risk
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3. Actual or perceived breach of confidentiality
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Likely Consequences
- Complaints from tenderers
- Mistrust by tenderers
- Not tender for future work
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Risk Mitigation Strategies
- Establish formal security procedures
- Train staff in their obligations
- Perform regular audits and reviews of security processes
- Advise tenderers of security measures
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Level of Risk
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4. Insufficient number of responses
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Likely Consequences
- Need to undertake process again
- Increased costs
- Delayed delivery to the client
- Poor value for money due to limited competition
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Risk Mitigation Strategies
- Use appropriate tender advertisement strategy to increase competition (eg. consider advertising tenders in other publications as well as the local paper)
- Provide potential tenderers with advance notice of tender requests
- Improve tender documentation and specifications
- Allow sufficient time for tenderers to respond
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Level of Risk
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5. No response from known quality suppliers
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Likely Consequences
- Reduced competition
- Increased costs of products or services
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Risk Mitigation Strategies
- Improve market knowledge
- Review specifications or conditions
- Seek feedback from known suppliers on their nonresponse
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Level of Risk
6. Risk - Evaluating offers
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1. Failure to follow effective evaluation procedures
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Likely Consequences
- Inconsistent evaluations
- Possible complaints from tenderers
- Subjective not objective evaluation of offers
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Risk Mitigation Strategies
- Provide staff with appropriate tender assessment and evaluation training and experience
- Improve tender assessment and evaluation processes
- Maintain, audit and review evaluation procedures
- Ensure that Evaluation Committee members declare any conflicts of interest
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Level of Risk
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2. Breaches of security
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Likely Consequences
- Claims of unethical or unfair practices
- Loss of faith with tenderers
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Risk Mitigation Strategies
- Maintain, audit and review security procedures
- Provide staff with appropriate training and experience and monitor performance
- Ensure that Evaluation Committee members understand and sign
- Confidentiality/Conflict of interest deed polls
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Level of Risk
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3. Offers fail to meet needs
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Likely Consequences
- Need to call tenders again
- Additional costs
- Delay in delivery
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Risk Mitigation Strategies
- Improve market knowledge
- Improve tender documentation
- Conduct market research
- Develop functional and performance specifications
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Level of Risk
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4. Failure to identify a clear winner
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Likely Consequences
- Claims of unethical and unfair behaviour
- Complaints from tenderers
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Risk Mitigation Strategies
- Ensure evaluation criteria contain the critical factors on which the assessment of tenders will be based and that they are clearly identifiable to tenderers in tender documents
- Ensure evaluation criteria are appropriate and measurable
- Ensure that Evaluation Committee members sign Confidentiality/Conflict of interest deed polls.
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Level of Risk
7. Risk - Selecting the successful tenderer
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1. Selecting an inappropriate supplier
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Likely Consequences
- Failure to fulfil the contract
- Contract/performance disputes
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Risk Mitigation Strategies
- Failure to fulfil the contract
- Contract/performance disputes
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Level of Risk
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2. Selecting inappropriate product
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Likely Consequences
- Failure to meet the client’s need
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Risk Management Strategies
- Ensure users are involved in the evaluation/selection process
- Improve technical evaluation procedures and train staff as appropriate
- Procurement Review
- Committee to review tender and selection process prior to awarding contract
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Level of Risk
8. Risk - Negotiations
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1. Not matching the expectations of buyer and tenderer
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Likely Consequences
- Contract disputes
- Delivery delays
- Cost variations
- Reduction in value for money
- Purchase of less suitable product
- Inefficient use of resources
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Risk Mitigation Strategies
- Improve communication, including ensuring that Conditions of Contract form part of the Request for Tender
- Provide staff with training in contract planning and management
- Define terms carefully
- Record each party’s obligations
- Clarify all ambiguities before signing the contract
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Level of Risk
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2. Deadlock on details of agreement
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Likely Consequences
- Delays in delivery
- Need to restart procurement
- Possible cost of legal action
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Risk Mitigation Strategies
- Look at alternatives to share risk
- Distinguish between essential and non-essential goals and requirements
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Level of Risk
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3. Failure to secure mandatory conditions
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Likely Consequences
- Inability to finalise contract
- Delays in delivery
- Variations in cost
- Inefficient use of resources
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Risk Mitigation Strategies
- Establish baseline before negotiations
- Distinguish essential goals from others
- Consider variations to contract
- Provide negotiators with adequate training
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Level of Risk
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4. Failure to secure agreement
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Likely Consequences
- Inability to finalise contract
- Delays in delivery
- Inefficient use of resources
- Requirement to negotiate with other ranked suppliers
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Risk Mitigation Strategies
- Ensure potential suppliers aware of Policy requirements before submitting responses
- Recommend to council to reject all offers and seek negotiations
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Level of Risk
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5. Unfair or onerous requirements on the tenderer in the contract conditions
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Likely Consequences
- Contract disputes
- Invalidity of contract
- Legal action
- Poor supplier/customer relationship
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Risk Mitigation Strategies
- Provide negotiators with adequate training and support
- Negotiate commercial terms
- Terms should be fair and reasonable
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Level of Risk
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6. Failure to reflect the terms offered and agreed in the contract
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Likely Consequences
- Contract disputes
- Legal action
- Poor supplier/customer relationship
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Risk Mitigation Strategies
- Check final draft of contract with successful tenderer
- Keep records of all negotiations and agreements
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Level of Risk
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7. Inadvertently creating a contract without the delegate’s prior approval
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Likely Consequences
- Expense of negotiating out of the contract and paying damages
- Committing to other associated work prior to main contract existing
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Risk Management Strategies
- Procedure in place to ensure delegate’s approval obtained first
- Ensure only trained officials conduct negotiations
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Level of Risk
9. Risk - Contract management
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1. Variations in price and foreign exchange
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Likely Consequences
- Cost overruns
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Risk Mitigation Strategies
- Agree on prices and the basis of prices
- Agree on a formula for calculating variations
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Level of Risk
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2. Unwillingness of the supplier to accept the contract
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Likely Consequences
- Delays in delivery
- Need to restart procurement
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Risk Mitigation Strategies
- Yes
- No
- N/A
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Level of Risk
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3. Failure of either party to fulfil the conditions of the contract
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Likely Consequences
- Contract disputes
- Failure to satisfy needs
- Delays in delivery
- Downtime
- Legal action
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Risk Mitigation Strategies
- Ensure good contract administration and performance management
- Hold regular inspections / meetings and ensure progress reports
- Ensure all staff know responsibilities and conditions
- Ensure good record keeping and documentation
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Level of Risk
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4. Inadequately administering the contract
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Likely Consequences
- Cost increases
- Failure of contract
- Full benefits not achieved
- Delivery of unsatisfactory product
- Contract/supply disputes
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Risk Mitigation Strategies
- Maintain up-to-date agency procedures and practices
- Ensure all staff are suitably trained and experienced in contract planning and management
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Level of Risk
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5. Commencement of work by the supplier before contract is exchanged or letter of acceptance issued
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Likely Consequences
- Potential liability to pay for unauthorised work
- Possibility of legal action for perceived breach of contract
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Risk Mitigation Strategies
- Confirm verbal acceptance of contract with written advice
- Accept all contracts in writing
- Ensure approvals are received before allowing work to start
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Level of Risk
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6. Unauthorised increase in scope of work
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Likely Consequences
- Unanticipated cost increases
- Contract disputes
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Risk Mitigation Strategies
- Ensure all contract amendments are issued in writing
- Record all discussions and negotiations
- Confirm instructions in writing
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Level of Risk
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7. Loss of intellectual property
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Likely Consequences
- Loss of commercial opportunity
- Unwarranted reliance on supplier for product support
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Risk Mitigation Strategies
- Ensure suitable clauses are included in the contract
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Level of Risk
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8. Failure to meet liabilities of third parties (eg. Royalties or third party property insurance)
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Likely Consequences
- Legal action
- Damage to the agency’s professional reputation
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Risk Mitigation Strategies
- Check that all obligations are covered in the contract
- Agree on responsibilities
- Implement appropriate safety standards and programs
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Level of Risk
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9. Loss or damage to goods in transit
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Likely Consequences
- Delays in delivery
- Downtime
- Liability disputes
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Risk Mitigation Strategies
- Include appropriate packaging instructions in specification
- Agree on insurance cover for supplier to provide
- Accept delivery only after inspection
- Know when title of goods is transferred to buyer
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Level of Risk
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10. Fraud
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Likely Consequences
- Misuse of resources
- Legal Action
- Disruption to procurement activities
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Risk Mitigation Strategies
- Maintain an ethical environment
- Follow and maintain fraud control procedures
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Level of Risk
10. Risk - Evaluating the procurement process
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1. Failure to evaluate procurement and management processes
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Likely Consequences
- Failure to improve procurement and management processes
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Risk Mitigation Strategies
- Develop systematic evaluation methods, techniques and evaluation criteria
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Level of Risk
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2. Failure to identify and address problems
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Likely Consequences
- Procurement objectives not achieved
- Possible failure in the future
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Risk Mitigation Strategies
- Agree on performance criteria (with supplier and customer)
- Develop good relationships with suppliers
- Include evaluation clause in the contract
- Implement performance management strategies
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Level of Risk
11. Risk - Disposals
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1. Collusive bidding at auction
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Likely Consequences
- Not achieving best return
- Claims of unethical and unfair practices
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Risk Mitigation Strategies
- Set reserve prices
- Deal with reputable firms
- Include disposal clause in initial contract
- Maintain ethical environment
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Level of Risk
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2. Inadequate tender management
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Likely Consequences
- Claims of bias and favouritism to organisations or individuals
- Reduction in value for money
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Risk Mitigation Strategies
- Sell by open tender
- Document reasons for decision
- Provide staff with appropriate training
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Level of Risk
