Procurement Management: Analyzing Key Risk Management Factors

Abstract

Today, uncertainty represents a threat to any business and/or project; however, it can be handled with risk management to reduce its effects. Many industries have taken and driven an approach to risk management in their companies, triggered by problems related to the actual crisis. Worldwide, the mining industry has had a sustained increase in investment, operational expenses and in outsourcing contracts, and has made of procurement and contract management, an opportunity to obtain savings and developing competitive advantages, particularly when procuring construction services. This work presents the results of a research effort that has established key risk management factors in the procurement and contract management process, through a review of existing risk management maturity models, employees’ opinions, and a literature review. It describes characteristics of the identified factors and relationships between them, along with a detailed description of its segmented features on a scale of 5 levels. It was concluded that the most leveraging factors for proper risk management in procurement and contract management are both, organizational culture and a structured risk management process. The ultimate goal of this work is to present the key risk management factors to highlight them and raise awareness about the importance of managing risks, so that benefits can be received by the company, its projects, and its stakeholders.