Procurement Flashcards
(14 cards)
What is procurement?
Procurement is the securing of external resources and materials.
What is the purpose of a procurement strategy?
The procurement strategy sets out the process for acquiring goods/services and their subsequent management.
What are the benefits of a procurement strategy?
- Value for money
- Compliance with regulations
- Clear delegated responsibilities
- Delegated risk management
What is the content of a procurement strategy?
- Make or buy decision
- Supplier selection - e.g. process, use of single/multiple/integrated suppliers, plan for negotiation.
- Decision on contractual relationship - e.g. conditions of contract, reimbursement terms.
What are the steps for supplier selection?
- Research the market
- Pre-qualify suppliers
- Issue an invitation to tender (ITT)
- Respond to queries from bidders
- Receive and evaluate bids
- Award contract to successful bidder
- Enter into contract management
What are the negotiation techniques?
- BATNA - identify best alternative action or supplier
- ZOPA - this is the difference between project maximum and supplier minimum target values
- Win-win - collaborative approach where both parties reach mutually beneficial agreement
What is a single contract relationship?
One supplier provides all goods and services. There is one contractual relationship.
What is a prime contract relationship?
The project has one contract, and one contractual relationship however the supplier sub-contracts some or all of the goods/services.
What is a parallel contract relationship?
Several suppliers are providing goods/services. The project is managing several contractual relationships.
What is a sequential contract relationship?
An activity is reliant upon the previous phase - e.g. a builder is reliant upon the architect finalising design before construction begins.
What is fixed price reimbursement?
Best used in linear lifecycle.
The scope of the project determines the cost.
Risk sits with supplier, and therefore cost may be higher.
What is cost plus reimbursement?
Best for iterative lifecycle.
The client agrees to pay supplier costs plus an agreed fee. This may be fixed.
Scope is under development.
What is per unit quantity reimbursement?
The client pays per unit - e.g. travel claim for miles travelled.
Risk sits with client.
What is contract target reimbursement?
Best for linear lifecycle.
There is a defined scope of work.
Client and supplier work together to achieve pre-agreed target cost for delivery of goods/services.
Share of pain/gain.
