Contract Management Process at NNPC Limited

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Questions and Answers

What is the withholding tax rate for technical services?

10%

Who is responsible for preparing a term sheet/draft contract according to the Contract Management Procedures?

Contract Manager (N-5)

What is the consequence of commencing work prior to the review and approval of a formal contract?

Indemnification of NNPC Limited

When should the Contract Manager request a performance guarantee?

Upon contract initiation Signup and view all the answers

What is the VAT payment requirement when retention money is paid?

Relevant value of VAT shall also be paid Signup and view all the answers

Who approves and awards contracts/variations?

Tenders Committee Signup and view all the answers

What is the basis of measurement for timeliness of contract initiation request?

Latest date for completion of request Signup and view all the answers

Who is responsible for ensuring compliance with established policies in contract review?

Contract Manager (N-5) Signup and view all the answers

What must be adjusted from the WHT due on the next payment in respect of the certificate of work done issued?

Amount deducted from mobilization fee WHT Signup and view all the answers

Who must never commence performance of work, ordering of goods, or contracting of services prior to contract review and approval?

Vendor Signup and view all the answers

What is a prerequisite for contracts with mobilization fees?

Performance guarantee Signup and view all the answers

What is the maximum percentage of the contract sum that requires GMD's approval if variations exceed it?

15% Signup and view all the answers

What can replace retention money held to ensure performance?

Bank guarantee Signup and view all the answers

When can NNPC Limited pay a mobilization fee to a supplier or contractor?

Before work begins Signup and view all the answers

What is the purpose of a formal letter of acceptance and contract execution?

Formally accept the terms Signup and view all the answers

What does NNPC Limited pay Value Added Tax (VAT) on?

All goods and services provided by VAT-registered contractors, vendors, or suppliers Signup and view all the answers

What follows once the winning bidder is determined?

Award notification and contract form with performance security requirements sent to the bidder Signup and view all the answers

What should be available before contract award to minimize variations?

Detailed scopes of work and accurate bills of quantities Signup and view all the answers

What can NNPC Limited delegate related to a contract?

Awarding of contracts Signup and view all the answers

What is the objective of the Contract Management process at NNPC Limited?

To maximize operational and financial performance while minimizing financial risk Signup and view all the answers

Who is responsible for updating the contract plan annually based on the progress reported at the quarterly meetings?

SCM Signup and view all the answers

How often should quarterly contract progress meetings take place?

Quarterly Signup and view all the answers

What does SBU stand for in the context of the text?

Strategic Business Unit Signup and view all the answers

What is the purpose of appointing a Contract Manager for contracts covered by this Policy?

To carry out the responsibilities of contract management with appropriate skill and experience Signup and view all the answers

What should the contract plan detail?

The contracts for the procurement of goods, works, and services Signup and view all the answers

How often should SCM update the contract plan based on progress reported at quarterly meetings?

Annually Signup and view all the answers

What is the purpose of monitoring and reviewing performance against the plan?

To ensure that performance aligns with the plan Signup and view all the answers

What is one of the objectives of Contract Management Policies at NNPC Limited?

To establish and maintain standards for contract management activities Signup and view all the answers

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Study Notes

The Contract Manager can delegate functions or tasks related to a contract but remains the responsible manager.
Before creating a contract, considerations include needs assessment, clear procurement objectives, cost estimates, procurement method, and contract type.
A contract should fully describe the agreement between NNPC Limited and vendors, including provisions for administration, finance, risk allocation, scope of work, termination, payment terms, work product ownership, and dispute resolution.
Once the winning bidder is determined, NNPC Limited notifies the bidder of the award and sends a contract form and performance security requirements.
A formal letter of acceptance and contract execution follow the bidder's acceptance of terms.
In some cases, a mobilization fee of up to 15% of the contract value may be paid to a supplier or contractor before work begins.
Retention money, a portion of due payments held to ensure performance, can be replaced by a bank guarantee or irrevocable letter of credit.
To minimize contract variations, NNPC Limited ensures detailed scopes of work and accurate bills of quantities are available before contract award.
If variations exceed a contingency provision (up to 15% of the contract sum), approval from GMD is required.
A performance guarantee is a prerequisite for contracts with mobilization fees.
NNPC Limited pays Value Added Tax (VAT) on goods and services provided by VAT-registered contractors, vendors, or suppliers, unless exempted or excluded.