Risk and contract management in space programs

Space industry sector plays one of the key strategic roles for economic and technical progress worldwide and in particular within the European Union especially considering areas of space operational programs such as telecommunications, navigation and Earth observation. The aim of present paper is to investigate specifics of contract and risk management for the space industry with a focus on the European commercial programs. Taking into account increasing number of placements with public customers on the space market worldwide and emphasizing the fact that space industry is significantly exposed to technical and business risks, the importance of risk management and its contractual implication becomes evident. Considering European space programs, author demonstrates mapping and coordinating of project risks in the contracting practices within relevant regulatory framework and legal context as well as possibilities for industry to cover and at least mitigate project risks within the frame of the contractual conditions. The example of ESA procurement contracts illustrates that, the pricing practice with relation to the contract type significantly depends programmatic constraints. In its turn, business risks in case of commercial programs determine cost dependent uncertainty as a decisional factor for both contractual parties. Risk analysis, assessment and management concept, investigated in this paper, is based on a fundamental approach for successful project risk management, which starts not when the contract is signed but already begins in the phase of project planning and tender preparation, considering cost, schedule and performance risks mitigation measures within the contractual provisions, which directly influence overall program success.