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Use the value/risk matrix

The value/risk matrix (VRM) tool helps you determine the level of complexity associated with:

  • a contract or group of contracts (helps with contract management)
  • the sourcing of specific goods/services (helps with developing a sourcing strategy) 
  • a category of goods or services (helps with developing category management plans).

The level of complexity is assessed as either:  

  • routine—low value, low risk
  • leveraged—high value, low risk
  • focused—low value, high risk
  • strategic—high value, high risk.

Use the value/risk matrix (XLSX, 114KB)

Apply the VRM to contract management

The way you manage contracts will vary depending on their value, risk and complexity. 

You should classify a contract as routine, leveraged, focused or strategic with the VRM to:

  • help define the right approach to effectively manage a contract
  • inform the activities and focus required to manage performance and achieve value for money 
  • help ensure that people with the right capability and experience are appointed to manage and administer contracts and suppliers.

Apply the VRM to sourcing

The VRM can guide your decision-making throughout the sourcing process, including:

  • sourcing strategy
  • contract type
  • contract requirements (such as performance measures and reporting requirements)
  • contract development
  • contract management approach
  • resource allocation 
  • approval processes.

Apply the VRM to category management plans

You should start your category management planning by assessing the goods or services category to determine its value/risk classification.

You can then develop your category management plan to make sure effort is focused on the right activities, for example: 

  • defining risk management strategies
  • defining supplier and performance management strategies
  • identifying strategic initiatives, partnerships and suppliers
  • recommending sourcing strategies
  • identifying resourcing requirements.

Helpful resources

Contact

For queries about category management, email betterprocurement@hpw.qld.gov.au

For matters relating to sourcing and contract management, contact your agency procurement lead or visit your agency intranet.