Development of Risk Management Model for Public Tenders
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Date
2013-11
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The British University in Dubai (BUiD)
Abstract
Due to the major investments made and proposed for large scale infrastructure developmental projects in the UAE by the government, public procurement has become not only challenging but also poised several identified, anticipated and unidentified risks that may lead to collusion, bid-rigging, fraud, corruption, mismanagement and or inefficient management prevail in the tender cycle management. This research aims to review and explore the influencing risk factors for risks in the public tenders, the use of risk management methodologies and techniques like EC, NIGP, OECD, and UNOPS, and the recently evolved international risk management standard ISO 31000:2009.
The methodology used with this research involved developing a Risk Management Model with an emphasis on public tenders based on the review and evaluation, applying that to the tender cycle that followed one of the UAE government major Infrastructure Project Dubai – Fujairah Highway linking Fujairah with the northern emirates and Abu Dhabi, and the determination of the risks experienced and ignored with their actual or potential impact.
The resulted outcome of this risk assessment study show that throughout the procurement cycle of the tender, various influencing risk factors whose level of risk impact was falling in “not acceptable limits” were ignored and that lead to several limitations in the procurement including financial loss and reputation impacts. The study also concluded that the model’s criteria can be used and applied for any major public procurement process with varying or redefining the consequences and likelihood of occurrence score and manage the risks associated with the procurement process effectively and efficiently. The research also recommended third party certification for procurement as it enables the organization to claim credibility in achieving competency in procurement, validates their risk assessment and management process, get the value for money for their procurement and win good reputation in the public.
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Keywords
risk management, risk assessment, risk management model, procurement in public sector, public tenders