THE RISK REGISTER IN NEC3

The first objective of the Risk Register is to identify the risks inherent in a project. Some of these risks are generic, and will apply to whatever work is carried out. An example is the risk of errors in pricing of the tender. Other risks will be specific to a particular operation. An example is the risk of foundation failure due to ground conditions being worse than expected.

The second objective of the Risk Register is to set out how the risks should be managed. It describes who will take what action to manage the risk or to minimise the likelihood of the risk event happening. The Risk Register will refer to other, more detailed documents setting out specific procedures to be implemented. These procedures will include the Contractor’s quality management system.

The third objective of the Risk Register is to identify the time and cost consequences to the Parties and Others if the risk event occurs. Whilst the Risk Register allocates the actions needed to manage the risk, the rest of the conditions of contract deal with the allocation of the cost and time consequences of that risk. For contracts based on Options A or B, the allocation is straightforward – the total cost and time resulting from the event is borne by the Contractor unless it is covered by a compensation event or is an Employer’s risk listed in Clause 80.1. If it is covered by either of these, the total cost is borne by the Employer through the operation of the compensation event procedures.

The key objective of the Risk Register is to apply pre-assessed and documented risk management procedures to specific, identified hazards. The information provided with the Risk Register, including the allowances made for risk, provide a much greater understanding of basic costs and the cost of risk transfer. This helps in both cost assessment of future work and budgetary management. The Employer lists the risks that he wants to be included in the Risk Register in the Contract Data part one; the tenderer adds other risks in the Contract Data part two. Following contract award, the Risk Register is updated and reviewed as part of the early warning process – see Clause 16.