A contract risk review examines proposed agreement terms that may affect a firm’s scope, schedule, payment, liability, insurance, or disputes.
Definition
A contract risk review is a structured check of an agreement before the firm accepts it or commits project staff. Owners or designated reviewers look at the scope, deliverables, schedule, payment terms, changes, indemnity, liability limits, insurance requirements, dispute process, and other provisions tied to the work. Firms may set review thresholds based on contract value, client, project type, or terms that require escalation; practices differ by firm. The review helps the business understand obligations and route concerns to the right people. It is not a substitute for legal advice, an insurance coverage analysis, or a guarantee that every risk has been identified. Nor is it just a technical scope check, since commercial and legal terms also matter. The ACEC has resources for engineering business owners, and federal engineering procurements may also involve FAR Part 36.
How owners use it
- An owner assigns review responsibilities and escalation thresholds for nonstandard liability, insurance, payment, or scope language.
- For a $250,000 agreement, a firm routes the contract to a principal because its policy requires review above $200,000.
- Reviewers compare the agreement’s scope and change process with the proposal assumptions and project staffing plan.
- The firm records open issues and resolved terms before project authorization and kickoff.
