Procurement Flashcards
What is the definition of Procurement
The process by which products and services are acquired from an external provider for incorporation in to the project, programme or portfolio.
What does procurement typically cover?
-Standard ‘off the shelf’ goods and services.
-Goods or services that are designed and provided specially for the purchaser.
-Professional advice or consultancy.
What are the typical contents of a procurement strategy?
-‘Make’ or ‘Buy’ the solution.
-Use of a single, integrated or multiple suppliers.
-Required provider relationships.
-Provider selection.
-Conditions or forms of contract.
-Types of pricing or methods of reimbursement.
-Roles and responsibilities.
What are the stages of the provider selection and management process?
-Research.
-Pre-qualification.
-Tender.
-Award.
-Manage.
-Close.
What are the different forms of contract?
-One comprehensive contract.
-Sequence of contracts.
-Parallel contracts.
-Subcontracts.
-Partnering and alliances.
-Turnkey.
What happens in the ‘Research’ stage of Provider selection?
-Suppliers who have the requisite capability are sought.
-May already be defined if part of a programme.
-May need to advertise for providers.
-Could result in there being no providers available leading to a ‘Make’ decision.
What happens in the ‘Pre-Qualification’ stage of Provider selection?
-Questionnaire may be sent out to prospective suppliers.
Questionnaire could ask:
-Capacity to fulfil the putative contract.
-Financial position.
-Testimonial relating to similar work.
What happens in the ‘Tender’ stage of Provider selection?
-A shortlist is drawn up from pre-qualification information.
-Invitations to tender for the work are sent out.
-Potential suppliers will submit responses to be evaluated.
-Bidders conference may be held to give potential suppliers opportunity to question the customer.
-Typically suppliers will be informed of the evaluation criteria.
What happens in the ‘Award’ stage of Provider selection?
-Enter contract negotiations with the supplier who comes top of the tendering process.
-Useful to have a reserve should contract agreement not be reached with the top supplier.
What happens in the ‘Manage’ stage of Provider selection and why?
The ‘Manage’ stage is to ensure that the supplier is performing adequately.
This involves:
-Monitoring and control processes in the project.
-Reminders and communication with the supplier on terms should they be close to breaching them.
What happens in the ‘Close’ stage of Provider selection?
-Once work has been accepted satisfactorily the contract can be closed.
-This may occur aftwer a time period to allow for ‘snags’ to be identified and rectified.
-Retention money clause in the contract would provide a method of doing this.
FORMS OF CONTRACT
What are the characteristics of One comprehensive contract?
-One supplier provides everything.
-Risk as customer is dependent on one supplier.
-Less work for customer (single person to deal with).
FORMS OF CONTRACT
What are the characteristics of Sequence of contracts?
-Two or more contracts on a stage by stage basis.
-Limits risk to customer.
-Disadvantage that final costs are not known; stage to stage handover needs planning.
FORMS OF CONTRACT
What are the characteristics of Parallel contracts?
-Different specialist providers.
-Direct communication customer to supplier.
-Customer has to manage the supplier relationship.
-Risk can be lower as multiple suppliers can assist.
FORMS OF CONTRACT
What are the characteristics of subcontracts?
-Very common.
-Need to assess how customer gains access to subcontractor.
-Capacity of subcontractors to fulfil the contract should be examined or assurances given by the main contractor sought.
