Which value added process involves negotiating prices and terms to mitigate contract performance risk?

The process that involves negotiating prices and terms to mitigate contract performance risk is the forming of a contract. This stage is critical because it establishes the foundation for the contractual relationship between the parties. During this phase, all terms, conditions, pricing, performance metrics, and risks are discussed and agreed upon. By meticulously negotiating these aspects, both parties can reduce uncertainties and potential disputes that might arise during the contract's execution.

Key elements addressed during contract formation include the allocation of risks and responsibilities, which is essential to ensure that both parties understand their obligations and the consequences of failing to meet them. A well-structured contract can significantly diminish performance risks by clearly delineating how issues will be handled, thereby fostering a smoother interaction between the contracting parties.

Plan Negotiations focus more on strategizing the approach to negotiations rather than actually conducting them. Administer Contract pertains to managing the contract post-award, ensuring compliance and monitoring performance, while Select Source involves identifying and evaluating potential suppliers or partners before any formal commitments are made. These processes are essential but do not directly engage in the negotiation of contract terms which is a fundamental aspect of forming a contract.