The risk to the hospital is that the contractor's personnel are not technically qualified and unable to meet the technical specifications. Therefore the contractor is closely inspected and managed by the hospital's project managers. In the best value risk management model, the risk is not the technical requirement described in the specification, because a best value contractor knows how to do their job, and is planning on exceeding the minimum requirement. In the best value environment, the risk is what the best value contractor cannot control. It is the risk in the interfaces between the parties, the gray areas dependent on outside variables that are usually ignored. It includes factors that the contractor does not control, such as:

1. Coordination between parties.
2. Inaccurate or incomplete design.
3. Conditions that are not addressed in the specifications.
4. Environmental conditions (i.e. weather).
5. Concerns/risks identified by the client

A successful risk management plan will pass simplified project information to the appropriate entities in a manner that accurately reflects the status of the project including swift resolutions. This can be facilitated through a weekly risk management report which records risks impacting the project's schedule, budget, or quality.

The risk management model has three main phases: Selection, Preplanning/Quality Control, and Management through Risk Minimization.

1. Selection (Identifies the "best value" contractor):
a. Measures all key/critical project components.
b. Contractors demonstrate relative expertise and value by identifying the project risk that they do not control and their "dominant" value added contribution.
c. Key personnel are interviewed to identify if they have the capability to minimize risk that they do not control, rather than passing the risk to others.
d. The best value contractor is selected, based on performance and price.

2. Preplanning/Quality Control (QC) (Transfers project risk, accountability, and control to the "best value" contractor)
a. The "best value" contractor preplans the project, and creates a Quality Control (QC) plan that identifies and minimizes the risk (time and costs) that the contractor does not control before the project begins.
b. The "best value" contractor's QC plan and schedule are incorporated into the contract, and the contractor is awarded the project.

3. Management by Risk Minimization (Information Environment). Throughout the execution of the project, the contractor documents critical risk information/contract deviations through a weekly risk report.
a. The risk report is documented by the contractor and not the client's project manager.
b. When the project is completed, all critical elements (contractors and their personnel) of the project are measured. The measurement becomes 50% of their past performance rating used to compete for future projects. This allows the best value system to regulate itself, as performance becomes requisite to future competition.

The new risk management model also has measurements, minimized flow of information which leads to a minimization of decision making. It also emphasizes alignment, preplanning, documentation of risk by the contractor, self regulation, and the construction of a performance information environment that quickly identifies risky contractors through dominant information.