What is a key risk associated with contract management?

Non-compliance with contract terms and conditions is a key risk associated with contract management because it can lead to significant legal and financial repercussions for the organizations involved. When parties to a contract fail to adhere to the agreed-upon terms, it can result in disputes, potential litigation, and damage to business relationships. This non-compliance can stem from various factors, including a lack of understanding of the contract terms, oversight in monitoring compliance, or intentional breaches.

Ensuring compliance requires diligent monitoring and a thorough understanding of the contract’s requirements. Organizations must implement robust contract management practices to mitigate this risk, including regular reviews and audits, training for personnel involved in contract administration, and clear communication channels related to the contract's obligations. By prioritizing compliance, businesses can safeguard against the negative consequences that arise from failing to fulfill contractual commitments.

The other options do reflect challenges that can affect the efficiency or effectiveness of contract management but do not carry the same level of risk to the organization’s legal and financial standing as non-compliance does. For instance, while excessive paperwork can lead to inefficiencies, it does not directly affect the contractual obligations. Delayed negotiations may slow down project initiation but do not necessarily lead to breach of terms. Overestimation of project costs can