Contract - Risk Mitigate or Transfer response strategy?

Submitted by Geethika on Tue, 03/19/2013 - 09:38

Can someone please tell whether Contracts are Risk Mitigate or Transfer response strategy? Which is best option when both are given? Is it dependent upon specific type of contracts?

In some places, I see its Mitigate strategy.

But in Pmbok (Pg 303), Contracts can be used to transfer liability of some risk to seller. Cost-plus contracts may transfer cost risk to the buyer. And FP contracts may transfer cost risk to the seller.

Thanks.

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sspawar

Tue, 03/19/2013 - 12:40

 can you append those examples here.

Geethika

Tue, 03/19/2013 - 13:52

Sir,

I have read this in brainbok, which also seems to be a renowned site recommended by our fellow pmp's

If an Organization decides to use a contract in order to reduce a project risk, what kind of risk response strategy are they using? MITIGATE

So got confused on this..

Thanks.

 

 

sspawar

Tue, 03/19/2013 - 14:04

 thats why I asked the real (word to word) , question.

here key word is to reduce the risk , hence answer will be mitigate.

Geethika

Tue, 03/19/2013 - 14:43

Thanks Sir, Really great and kind of you!!

Can I assume in this case it is Mitigate, otherwise generally contracts are to be used to Transfer risks?

sspawar

Wed, 03/20/2013 - 04:09

Generally contracts are to be used toTransfer risks --- it is true

But  correct option may depend on core subject of question.

sangc (not verified)

Sun, 04/07/2013 - 22:29

 Won't you reducing the risk when you "transfer risk"?

sspawar

Mon, 04/08/2013 - 00:28

 Follow PMBOK sense.

sandeepdel

Tue, 04/09/2013 - 00:02

It depends on perspective. For example, you have a project to design a car and during planning you found that QC for car safety can not be done by organization as lacks capability. So it's transfer. But if you put a contract to get infrastructure and train you resources..then it's mitigation.

So if risk response plan still stays with project then it's mitigation otherwise transfer.

mitigation - probability or impact is reduced

transfer - risk for which you don't care any much :)