Podcast
Questions and Answers
Which of the following is not a main category or type of commercial contract or agreement?
Which of the following is not a main category or type of commercial contract or agreement?
- Long-term contracts (correct)
- Call offs
- Framework agreements
- Spot-purchase contracts
What is the primary factor that defines the type of contract in commercial agreements?
What is the primary factor that defines the type of contract in commercial agreements?
- Nature of the contract itself (correct)
- Complexity of the engineering works
- Nature of the goods or services being purchased
- Subject matter of the contract
What is the key difference between 'contracts' and 'agreements'?
What is the key difference between 'contracts' and 'agreements'?
- Contracts are detailed agreements, while agreements are single documents (correct)
- Contracts involve business cases, while agreements do not
- Contracts are legally binding, while agreements are not
- Contracts are for goods, while agreements are for services
In what way does the text describe the formation of a contract?
In what way does the text describe the formation of a contract?
What is a key benefit for the purchaser of spot purchases?
What is a key benefit for the purchaser of spot purchases?
What is a risk for purchasers of spot purchases?
What is a risk for purchasers of spot purchases?
What can undermine the position of a term contract supplier?
What can undermine the position of a term contract supplier?
What is a disadvantage for suppliers in spot purchases?
What is a disadvantage for suppliers in spot purchases?
What are term contracts often used for?
What are term contracts often used for?
What does a term contract specify?
What does a term contract specify?
What may payment for term contracts be agreed as?
What may payment for term contracts be agreed as?
What is a disadvantage for both purchasers and suppliers in spot purchases?
What is a disadvantage for both purchasers and suppliers in spot purchases?
What is a benefit for suppliers in spot purchases?
What is a benefit for suppliers in spot purchases?
What is a risk for the use of spot purchasing in the public sector?
What is a risk for the use of spot purchasing in the public sector?
What is a risk for spot purchase suppliers?
What is a risk for spot purchase suppliers?
What is a benefit for purchasers of term contracts?
What is a benefit for purchasers of term contracts?
Which of the following is NOT true about spot purchasing?
Which of the following is NOT true about spot purchasing?
What is legal capacity in a contract referring to?
What is legal capacity in a contract referring to?
What are the necessary elements for a contract to exist?
What are the necessary elements for a contract to exist?
In what situations can spot purchasing be suitable?
In what situations can spot purchasing be suitable?
What is the distinction between spot purchasing and contracts crucial for?
What is the distinction between spot purchasing and contracts crucial for?
Can verbal spot-purchase contracts occur for simple arrangements?
Can verbal spot-purchase contracts occur for simple arrangements?
What does outsourcing invoice processing to a finance company lead to?
What does outsourcing invoice processing to a finance company lead to?
What percentage of indirect spend in organizations can spot purchasing account for?
What percentage of indirect spend in organizations can spot purchasing account for?
What type of contracts may be suitable for simple spot purchases?
What type of contracts may be suitable for simple spot purchases?
Are spot-purchase contracts for complex activities considered good practice?
Are spot-purchase contracts for complex activities considered good practice?
What does legal capacity in a contract refer to?
What does legal capacity in a contract refer to?
What is spot purchasing suitable for?
What is spot purchasing suitable for?
What is a key benefit for buyers in term contracts?
What is a key benefit for buyers in term contracts?
What is a risk for purchasers in term contracts?
What is a risk for purchasers in term contracts?
What does a framework agreement set the terms and conditions for?
What does a framework agreement set the terms and conditions for?
What type of agreement does not itself create a commitment to buy or deliver?
What type of agreement does not itself create a commitment to buy or deliver?
What is the process of setting up a framework agreement typically involve?
What is the process of setting up a framework agreement typically involve?
What is a key characteristic of panel agreements?
What is a key characteristic of panel agreements?
What may purchasers issue using the terms set out in a framework agreement?
What may purchasers issue using the terms set out in a framework agreement?
What type of system are framework agreements considered to be?
What type of system are framework agreements considered to be?
What can help mitigate risks and disadvantages for both purchasers and suppliers in term contracts?
What can help mitigate risks and disadvantages for both purchasers and suppliers in term contracts?
What do framework agreements include mechanisms for determining?
What do framework agreements include mechanisms for determining?
What is a potential risk for suppliers in term contracts?
What is a potential risk for suppliers in term contracts?
What type of agreement can be one-to-many, many-to-one, or many-to-many?
What type of agreement can be one-to-many, many-to-one, or many-to-many?
What is the primary purpose of framework agreements?
What is the primary purpose of framework agreements?
When can call offs be applied?
When can call offs be applied?
What is a characteristic of blanket orders?
What is a characteristic of blanket orders?
In what situations are frameworks particularly useful?
In what situations are frameworks particularly useful?
What is a characteristic of call offs?
What is a characteristic of call offs?
How do blanket orders reduce administration costs?
How do blanket orders reduce administration costs?
What is a key difference between blanket orders and term contracts?
What is a key difference between blanket orders and term contracts?
What is the purpose of call offs?
What is the purpose of call offs?
What is the primary function of blanket orders?
What is the primary function of blanket orders?
In what situations are frameworks not guaranteed to provide work for suppliers?
In what situations are frameworks not guaranteed to provide work for suppliers?
What is a characteristic of call offs in relation to term contracts and framework agreements?
What is a characteristic of call offs in relation to term contracts and framework agreements?
How do frameworks manage risks of urgent needs?
How do frameworks manage risks of urgent needs?
What is a key purpose of framework agreements?
What is a key purpose of framework agreements?
What type of contracts do call offs apply to?
What type of contracts do call offs apply to?
What is a characteristic of blanket orders?
What is a characteristic of blanket orders?
When can call offs be complex?
When can call offs be complex?
What is the primary function of blanket orders?
What is the primary function of blanket orders?
What is a key benefit of frameworks for small buyers?
What is a key benefit of frameworks for small buyers?
What is a risk for suppliers in spot-purchase contracts?
What is a risk for suppliers in spot-purchase contracts?
What do call offs relate directly back to?
What do call offs relate directly back to?
What is a key difference between term contracts and blanket orders?
What is a key difference between term contracts and blanket orders?
What can blanket orders be for?
What can blanket orders be for?
What is a characteristic of call offs in relation to term contracts and framework agreements?
What is a characteristic of call offs in relation to term contracts and framework agreements?
What is a characteristic of framework agreements?
What is a characteristic of framework agreements?
What is the most important core element of both the procurement process and the resulting contract?
What is the most important core element of both the procurement process and the resulting contract?
What is the primary function of blanket orders in commercial contracts?
What is the primary function of blanket orders in commercial contracts?
Which element, if defined incorrectly, can cause the entire contract to fail?
Which element, if defined incorrectly, can cause the entire contract to fail?
What is the foundation on which everything else in a commercial contract is built?
What is the foundation on which everything else in a commercial contract is built?
What are the three main types of measurement for KPIs?
What are the three main types of measurement for KPIs?
What is the advisable number of important variables to focus on when setting KPIs?
What is the advisable number of important variables to focus on when setting KPIs?
Who should set the KPIs before approaching the suppliers?
Who should set the KPIs before approaching the suppliers?
When should KPI targets be reviewed during the contracting process?
When should KPI targets be reviewed during the contracting process?
What should KPIs embedded in the contract allow for?
What should KPIs embedded in the contract allow for?
What is the impact of KPI targets on service delivery?
What is the impact of KPI targets on service delivery?
What is the primary purpose of measuring performance?
What is the primary purpose of measuring performance?
What is the impact of collecting unnecessary data for KPIs?
What is the impact of collecting unnecessary data for KPIs?
What is important in data collection for KPIs?
What is important in data collection for KPIs?
Who should collect KPI data?
Who should collect KPI data?
What is the impact of having too many KPIs?
What is the impact of having too many KPIs?
What is the impact of setting KPIs on contract delivery?
What is the impact of setting KPIs on contract delivery?
What are the essential characteristics of a well-written specification?
What are the essential characteristics of a well-written specification?
What is the primary purpose of including optional extras in a specification?
What is the primary purpose of including optional extras in a specification?
What is the main benefit of a performance management framework for the purchaser?
What is the main benefit of a performance management framework for the purchaser?
What is the primary factor in selecting the measures for a performance management framework?
What is the primary factor in selecting the measures for a performance management framework?
What are the key benefits of key performance indicators (KPIs) for both purchasers and suppliers?
What are the key benefits of key performance indicators (KPIs) for both purchasers and suppliers?
What is the primary role of key performance indicators (KPIs) within a performance management framework?
What is the primary role of key performance indicators (KPIs) within a performance management framework?
What should a well-designed performance management framework allow for?
What should a well-designed performance management framework allow for?
What should a specification consider in addition to regulatory compliance and quality standards?
What should a specification consider in addition to regulatory compliance and quality standards?
What is the importance of distinguishing between essential needs and 'nice to have' items in a specification?
What is the importance of distinguishing between essential needs and 'nice to have' items in a specification?
What should a well-written specification be understandable to?
What should a well-written specification be understandable to?
What are the considerations for a specification?
What are the considerations for a specification?
What is the primary purpose of a performance management framework?
What is the primary purpose of a performance management framework?
What is the primary purpose of a well-thought-out specification in the procurement process?
What is the primary purpose of a well-thought-out specification in the procurement process?
What serves as the basis for designing the invitation to tender and identifying evaluation criteria and methodology?
What serves as the basis for designing the invitation to tender and identifying evaluation criteria and methodology?
What is the key for getting the pricing right and ensuring that the buyer gets what they want in the procurement process?
What is the key for getting the pricing right and ensuring that the buyer gets what they want in the procurement process?
What type of specification focuses on the system's capabilities?
What type of specification focuses on the system's capabilities?
What does specifying brands in a technical specification potentially limit in the supply chain?
What does specifying brands in a technical specification potentially limit in the supply chain?
What is a characteristic of the technical specification in relation to flexibility and competitiveness?
What is a characteristic of the technical specification in relation to flexibility and competitiveness?
What is essential to consider when designing a specification?
What is essential to consider when designing a specification?
What type of specification is more flexible but could create compatibility issues with existing equipment or processes?
What type of specification is more flexible but could create compatibility issues with existing equipment or processes?
What is the choice between performance-related and technical specifications dependent on?
What is the choice between performance-related and technical specifications dependent on?
What is the primary factor that a well-thought-out specification serves as during the contract period?
What is the primary factor that a well-thought-out specification serves as during the contract period?
What is the main purpose of the technical specification?
What is the main purpose of the technical specification?
What is a potential way to get around limiting competition in regulated procurement when specifying brands?
What is a potential way to get around limiting competition in regulated procurement when specifying brands?
What is the purpose of KPI measurements in a contract?
What is the purpose of KPI measurements in a contract?
What is the criterion used to determine whether a term should be included in a contract?
What is the criterion used to determine whether a term should be included in a contract?
What is the key characteristic of KPIs in a contract?
What is the key characteristic of KPIs in a contract?
What is the impact of the purchasing organization's behavior on the contract's success?
What is the impact of the purchasing organization's behavior on the contract's success?
What are implied terms in a contract?
What are implied terms in a contract?
What is the role of KPIs in measuring performance?
What is the role of KPIs in measuring performance?
What is the distinction between express and implied terms in a contract?
What is the distinction between express and implied terms in a contract?
What is the primary function of KPIs in a contract?
What is the primary function of KPIs in a contract?
What is the basis for establishing implied terms in a contract?
What is the basis for establishing implied terms in a contract?
What should KPIs embedded in the contract allow for?
What should KPIs embedded in the contract allow for?
What is the role of KPI weighting in a contract?
What is the role of KPI weighting in a contract?
What is the purpose of the Business Efficacy Test in contract terms?
What is the purpose of the Business Efficacy Test in contract terms?
What is the primary purpose of using schedules in a contract?
What is the primary purpose of using schedules in a contract?
What does the specification schedule cover in a contract?
What does the specification schedule cover in a contract?
What is the purpose of the property/site lists schedule in a contract?
What is the purpose of the property/site lists schedule in a contract?
Why are schedules effectively attached as appendices to a contract?
Why are schedules effectively attached as appendices to a contract?
Who is typically restricted from signing a contract according to the text?
Who is typically restricted from signing a contract according to the text?
What is the purpose of a tender acceptance letter?
What is the purpose of a tender acceptance letter?
In what situation is a tender acceptance letter not necessary?
In what situation is a tender acceptance letter not necessary?
What does a tender acceptance letter help to reduce?
What does a tender acceptance letter help to reduce?
What is the primary purpose of a 'schedule of delegated authority'?
What is the primary purpose of a 'schedule of delegated authority'?
What is the consequence of a contract being signed by someone other than very senior personnel?
What is the consequence of a contract being signed by someone other than very senior personnel?
What does a tender acceptance letter enable the purchaser to do?
What does a tender acceptance letter enable the purchaser to do?
What is the purpose of setting a timescale for signing the contract documents?
What is the purpose of setting a timescale for signing the contract documents?
What is the purpose of the procurement process overview?
What is the purpose of the procurement process overview?
What is the recommended method for holding quotations/tenders?
What is the recommended method for holding quotations/tenders?
What is the recommended approach for the transparent opening of quotations/tenders?
What is the recommended approach for the transparent opening of quotations/tenders?
What is the key factor in evaluating tenders/quotations?
What is the key factor in evaluating tenders/quotations?
What is the recommended requirement for the formal written contract for complex contracts?
What is the recommended requirement for the formal written contract for complex contracts?
How many original identical versions of the contract are needed for complex contracts?
How many original identical versions of the contract are needed for complex contracts?
What is the primary consideration for issuing requests to potential suppliers?
What is the primary consideration for issuing requests to potential suppliers?
What is the recommended method for receiving responses to requests for quotation (RFQ)/tender enquiries?
What is the recommended method for receiving responses to requests for quotation (RFQ)/tender enquiries?
What is the purpose of using electronic systems to hold quotations/tenders?
What is the purpose of using electronic systems to hold quotations/tenders?
What is the key requirement for the transparent opening of quotations/tenders?
What is the key requirement for the transparent opening of quotations/tenders?
What is the recommended approach for evaluating tenders/quotations?
What is the recommended approach for evaluating tenders/quotations?
What is the primary purpose of the procurement process overview?
What is the primary purpose of the procurement process overview?
What is the primary purpose of requests for information (RFI) in the contract process?
What is the primary purpose of requests for information (RFI) in the contract process?
What distinguishes requests for quotation (RFQ) from invitations to tender (ITT) in the contract process?
What distinguishes requests for quotation (RFQ) from invitations to tender (ITT) in the contract process?
What marks the beginning of forming a contract in the contract process?
What marks the beginning of forming a contract in the contract process?
What is the purpose of issuing potential suppliers with all relevant documentation when requesting a quotation or inviting a tender?
What is the purpose of issuing potential suppliers with all relevant documentation when requesting a quotation or inviting a tender?
What guides the mechanism for agreeing prices and delivery terms in the contract process?
What guides the mechanism for agreeing prices and delivery terms in the contract process?
What are quotations typically used for in the contract process?
What are quotations typically used for in the contract process?
When are RFQs used in the contract process?
When are RFQs used in the contract process?
What are tenders typically used for in the contract process?
What are tenders typically used for in the contract process?
What is the primary function of requests for quotation (RFQ) in the contract process?
What is the primary function of requests for quotation (RFQ) in the contract process?
What is the primary function of invitations to tender (ITT) in the contract process?
What is the primary function of invitations to tender (ITT) in the contract process?
What is the primary purpose of commercial organizations having internal rules for requesting formal tenders and quotations?
What is the primary purpose of commercial organizations having internal rules for requesting formal tenders and quotations?
What is the primary purpose of requests for information (RFI) in the contract process?
What is the primary purpose of requests for information (RFI) in the contract process?
What distinguishes requests for quotation (RFQ) from invitations to tender (ITT) in the contract process?
What distinguishes requests for quotation (RFQ) from invitations to tender (ITT) in the contract process?
What marks the beginning of forming a contract in the contract process?
What marks the beginning of forming a contract in the contract process?
What is the purpose of issuing potential suppliers with all relevant documentation when requesting a quotation or inviting a tender?
What is the purpose of issuing potential suppliers with all relevant documentation when requesting a quotation or inviting a tender?
What guides the mechanism for agreeing prices and delivery terms in the contract process?
What guides the mechanism for agreeing prices and delivery terms in the contract process?
What are quotations typically used for in the contract process?
What are quotations typically used for in the contract process?
When are RFQs used in the contract process?
When are RFQs used in the contract process?
What are tenders typically used for in the contract process?
What are tenders typically used for in the contract process?
What is the primary function of requests for quotation (RFQ) in the contract process?
What is the primary function of requests for quotation (RFQ) in the contract process?
What is the primary function of invitations to tender (ITT) in the contract process?
What is the primary function of invitations to tender (ITT) in the contract process?
What is the primary purpose of commercial organizations having internal rules for requesting formal tenders and quotations?
What is the primary purpose of commercial organizations having internal rules for requesting formal tenders and quotations?
What is the purpose of non-disclosure agreements in contracts?
What is the purpose of non-disclosure agreements in contracts?
What do non-disclosure agreements cover?
What do non-disclosure agreements cover?
What do method statements outline in a contract?
What do method statements outline in a contract?
What is the purpose of technical specifications in a contract?
What is the purpose of technical specifications in a contract?
What do common schedules in contracts include?
What do common schedules in contracts include?
What is the role of performance specifications in a contract?
What is the role of performance specifications in a contract?
What are the stages involved in forming and executing contracts in purchasing and supply crucial for?
What are the stages involved in forming and executing contracts in purchasing and supply crucial for?
What do non-disclosure agreements protect?
What do non-disclosure agreements protect?
What are non-disclosure agreements generally characterized by?
What are non-disclosure agreements generally characterized by?
Where can samples of non-disclosure agreements from different jurisdictions be found?
Where can samples of non-disclosure agreements from different jurisdictions be found?
What is the impact of non-disclosure agreements on the tender process or contract negotiations?
What is the impact of non-disclosure agreements on the tender process or contract negotiations?
What is the key purpose of understanding the stages involved in forming and executing contracts in purchasing and supply?
What is the key purpose of understanding the stages involved in forming and executing contracts in purchasing and supply?
What is the purpose of non-disclosure agreements in contracts?
What is the purpose of non-disclosure agreements in contracts?
What do technical specifications dictate within the contract?
What do technical specifications dictate within the contract?
What is the key purpose of method statements in contracts?
What is the key purpose of method statements in contracts?
What do performance specifications allow the purchaser to do at the contract acceptance stage?
What do performance specifications allow the purchaser to do at the contract acceptance stage?
What do non-disclosure agreements cover?
What do non-disclosure agreements cover?
What is the primary purpose of common schedules in contracts?
What is the primary purpose of common schedules in contracts?
What is the primary focus of technical specifications in contracts?
What is the primary focus of technical specifications in contracts?
What is the key factor in understanding the process of contract creation and management?
What is the key factor in understanding the process of contract creation and management?
What is the primary purpose of the UK government publishing examples of non-disclosure agreements?
What is the primary purpose of the UK government publishing examples of non-disclosure agreements?
What is the primary purpose of distinguishing between essential needs and 'nice to have' items in a specification?
What is the primary purpose of distinguishing between essential needs and 'nice to have' items in a specification?
What is the primary purpose of the stages involved in forming and executing contracts in purchasing and supply?
What is the primary purpose of the stages involved in forming and executing contracts in purchasing and supply?
What is the primary purpose of the process of contract formation and execution in purchasing and supply?
What is the primary purpose of the process of contract formation and execution in purchasing and supply?
What is the purpose of a delivery note in the context of goods received?
What is the purpose of a delivery note in the context of goods received?
When purchasing goods, what should purchasers be cautious about when signing delivery notes?
When purchasing goods, what should purchasers be cautious about when signing delivery notes?
In what situation is an order acknowledgement for services rarely a single formal document?
In what situation is an order acknowledgement for services rarely a single formal document?
What is the primary purpose of order acknowledgements for services?
What is the primary purpose of order acknowledgements for services?
What is an example of core data for contract registers?
What is an example of core data for contract registers?
What is the primary use of the contract register?
What is the primary use of the contract register?
What is not listed on the contract register due to their frequency, short lifespan, and low risk?
What is not listed on the contract register due to their frequency, short lifespan, and low risk?
What is an example of optional data for contract registers?
What is an example of optional data for contract registers?
What should be carefully considered before publishing parts of the contract register?
What should be carefully considered before publishing parts of the contract register?
What is the purpose of the contract register's core data?
What is the purpose of the contract register's core data?
What is a key consideration for what parts of the contract register should be published?
What is a key consideration for what parts of the contract register should be published?
What is a significant value call off from frameworks?
What is a significant value call off from frameworks?
What is an additional core data for contract registers?
What is an additional core data for contract registers?
What is the primary use of the contract register's optional data?
What is the primary use of the contract register's optional data?
What does the contract register serve for reporting purposes?
What does the contract register serve for reporting purposes?
What is a core data for contract registers?
What is a core data for contract registers?
What typically occurs after the GRN has been issued or within the contract's specified time period?
What typically occurs after the GRN has been issued or within the contract's specified time period?
When does contract completion occur for fixed delivery contracts such as construction projects?
When does contract completion occur for fixed delivery contracts such as construction projects?
What happens at the end of a fixed term for term contracts?
What happens at the end of a fixed term for term contracts?
Under what circumstances can contracts be terminated?
Under what circumstances can contracts be terminated?
What is the primary purpose of contract registers?
What is the primary purpose of contract registers?
What should be the approach towards managing contract termination?
What should be the approach towards managing contract termination?
What is the consequence of late payments to suppliers?
What is the consequence of late payments to suppliers?
What is the potential outcome of not extending a term contract beyond the initial or extended term?
What is the potential outcome of not extending a term contract beyond the initial or extended term?
What is the role of contract termination due to break clauses?
What is the role of contract termination due to break clauses?
What is the purpose of stage payments in contracts?
What is the purpose of stage payments in contracts?
What is the primary consideration for managing contract termination?
What is the primary consideration for managing contract termination?
What is the significance of contract completion for fixed delivery contracts?
What is the significance of contract completion for fixed delivery contracts?
What is the purpose of a goods received note (GRN) in the payment process?
What is the purpose of a goods received note (GRN) in the payment process?
What is the key information needed on all invoices as per the text?
What is the key information needed on all invoices as per the text?
What is the consequence of late payment as per the text?
What is the consequence of late payment as per the text?
What is the primary purpose of an acknowledgment in the payment process?
What is the primary purpose of an acknowledgment in the payment process?
What is the primary purpose of a delivery note in the payment process?
What is the primary purpose of a delivery note in the payment process?
What is the primary purpose of an invoice in the payment process?
What is the primary purpose of an invoice in the payment process?
What is the purpose of specific information required to be included on the invoice as per the text?
What is the purpose of specific information required to be included on the invoice as per the text?
What is the typical method of payment as mentioned in the text?
What is the typical method of payment as mentioned in the text?
What is the purpose of an electronic invoice as mentioned in the text?
What is the purpose of an electronic invoice as mentioned in the text?
What is the consequence of late payment according to the text?
What is the consequence of late payment according to the text?
What is the purpose of a delivery note in the payment process?
What is the purpose of a delivery note in the payment process?
What is the purpose of a goods received note (GRN) in the payment process?
What is the purpose of a goods received note (GRN) in the payment process?
What is the purpose of the Executive summary in a business case?
What is the purpose of the Executive summary in a business case?
What is the primary purpose of the Background and introduction section in a business case?
What is the primary purpose of the Background and introduction section in a business case?
What is the key aspect of a business case that the Options appraisal focuses on?
What is the key aspect of a business case that the Options appraisal focuses on?
What is one option that is easily discounted in the options appraisal of a business case?
What is one option that is easily discounted in the options appraisal of a business case?
What is the primary purpose of a business case in the procurement process?
What is the primary purpose of a business case in the procurement process?
What is the primary function of a framework agreement in the contract process?
What is the primary function of a framework agreement in the contract process?
What is the key consideration for determining the duration of term contracts?
What is the key consideration for determining the duration of term contracts?
What is the primary purpose of non-disclosure agreements in contracts?
What is the primary purpose of non-disclosure agreements in contracts?
What serves as the basis for designing the invitation to tender and identifying evaluation criteria and methodology?
What serves as the basis for designing the invitation to tender and identifying evaluation criteria and methodology?
What is the primary function of a delivery note in the contract process?
What is the primary function of a delivery note in the contract process?
What is the primary purpose of a contract register in procurement?
What is the primary purpose of a contract register in procurement?
What is the primary purpose of requests for information in the procurement process?
What is the primary purpose of requests for information in the procurement process?
What is the primary function of spot purchase contracts in procurement?
What is the primary function of spot purchase contracts in procurement?
What is the primary purpose of an options appraisal in the procurement process?
What is the primary purpose of an options appraisal in the procurement process?
What is the primary purpose of a performance management framework in procurement?
What is the primary purpose of a performance management framework in procurement?
What is the primary function of call-offs in the contract process?
What is the primary function of call-offs in the contract process?
What is a crucial consideration when evaluating a procurement business case?
What is a crucial consideration when evaluating a procurement business case?
Which type of costs should be considered when evaluating procurement costs?
Which type of costs should be considered when evaluating procurement costs?
What is an important factor in aligning a procurement business case with an organization's strategies and policies?
What is an important factor in aligning a procurement business case with an organization's strategies and policies?
What is a potential benefit of procurement besides financial savings?
What is a potential benefit of procurement besides financial savings?
What should be thoroughly evaluated in a procurement business case?
What should be thoroughly evaluated in a procurement business case?
What should be considered when evaluating various procurement options?
What should be considered when evaluating various procurement options?
What should be detailed in a separate section of the business case called 'resources'?
What should be detailed in a separate section of the business case called 'resources'?
What should be identified when considering potential savings from renewing or replacing a contract?
What should be identified when considering potential savings from renewing or replacing a contract?
What should a business case align with to be approved?
What should a business case align with to be approved?
What do price indexes for various sectors and industries show?
What do price indexes for various sectors and industries show?
What should be considered in the evaluation of different methods of acquisition?
What should be considered in the evaluation of different methods of acquisition?
What is a potential consequence of not thoroughly evaluating the financial impacts of a proposal in a business case?
What is a potential consequence of not thoroughly evaluating the financial impacts of a proposal in a business case?
Study Notes
Framework Agreements, Call Offs, and Blanket Orders in Procurement
- Framework agreements can be direct call off or mini-competition
- Frameworks are useful for regular purchases with minor differences or when small buyers come together
- They can also manage risks of urgent needs where spot-purchase contracts are inadvisable
- Frameworks may not guarantee work for suppliers but reduce costs of repeated tendering
- Call offs apply to term contracts and framework agreements, not spot-purchase contracts
- A call off must relate directly back to the term contract or framework agreement and cannot change its terms
- Call offs can be simple (e.g., purchase order for desks) or complex (e.g., detailed contract for building works)
- Blanket orders reduce administration costs by consolidating orders for the same goods or services
- They can be for regular requirements (e.g., lunch for training sessions) or irregular requirements (e.g., varying training sessions)
- Blanket orders set out quality and price terms at the outset and can have a maximum spend limit
- They differ from term contracts as there is no facility to vary terms during the order's duration
- Blanket orders maintain control by having a maximum spend limit attached to individual orders or the total spend during the year
Framework Agreements, Call Offs, and Blanket Orders in Procurement
- Framework agreements can be direct call off or mini-competition
- Frameworks are useful for regular purchases with minor differences or when small buyers come together
- They can also manage risks of urgent needs where spot-purchase contracts are inadvisable
- Frameworks may not guarantee work for suppliers but reduce costs of repeated tendering
- Call offs apply to term contracts and framework agreements, not spot-purchase contracts
- A call off must relate directly back to the term contract or framework agreement and cannot change its terms
- Call offs can be simple (e.g., purchase order for desks) or complex (e.g., detailed contract for building works)
- Blanket orders reduce administration costs by consolidating orders for the same goods or services
- They can be for regular requirements (e.g., lunch for training sessions) or irregular requirements (e.g., varying training sessions)
- Blanket orders set out quality and price terms at the outset and can have a maximum spend limit
- They differ from term contracts as there is no facility to vary terms during the order's duration
- Blanket orders maintain control by having a maximum spend limit attached to individual orders or the total spend during the year
Writing a Well-Thought-Out Specification
- A well-thought-out specification is crucial for managing the contract and the procurement process.
- It serves as the basis for designing the invitation to tender and identifying evaluation criteria and methodology.
- The specification is key for getting the pricing right and ensuring that the buyer gets what they want.
- Drafting the specification should be done early to match the requirements with potential contractors/suppliers.
- During the contract period, the specification serves as a reference point for measuring performance and as a guide to the deliverables.
- There are two main types of specifications: performance-related and technical, with many specifications being a combination of the two.
- A purely performance-related specification focuses on the system's capabilities, while a technical specification details specific make, model, and additional technical details.
- Specifying brands in a technical specification can limit competition in the supply chain, although some purchasers use the expression "or equivalent" to get around this in regulated procurement.
- The choice between performance-related and technical specifications depends on the purchase's nature and integration needs, with each type having its advantages and risks.
- When designing a specification, it's essential to consider its purpose, type, perspective, relevance, scope, performance, improvements and innovation, clarity, regulatory compliance and quality standards, and service conditions/environmental factors.
- Different stakeholders may require different things from the specification, and it's crucial to consider potential changes in the organization, supply market, and technology.
- The technical specification is less flexible and competitive, while the performance specification is more flexible but could create compatibility issues with existing equipment or processes.
Managing Key Performance Indicators in Contracts
- KPIs should be sensible and limited in number when used to measure performance in a contract for services such as an elevator maintenance.
- KPIs need to be weighted according to their importance, with each KPI individually scored and then totaled into a weighted average score.
- KPI measurements are used to monitor performance against the contract, and if the supplier is not performing, there needs to be a discussion to identify the issues and agree on a plan of action.
- The purchasing organization's behavior also impacts the contract's success, and KPIs can be used to measure the client's performance as well.
- KPIs are measurements on a scale and are not the targets to be achieved, with the KPI score being the output of the measurement at a point in time.
- Understanding contract terms is crucial, with express terms being those written into the contract and implied terms existing even though they are not spelled out in the text.
- Implied terms can arise through legal means such as case law, government regulations, or common industry practices.
- The business efficacy test is a criterion used to determine whether a term should be included in a contract, established in a case known as The Moorcock in 1889.
Procurement Process Overview
- Direct approach to suppliers via an approved list or published advert
- Purpose of the process is to obtain fixed-price offers for supply
- Purchaser issues request, potential suppliers complete and return it
- Requests for quotation (RFQ)/tender enquiries (RFT or ITT) are made
- Quotations/tenders received and responses submitted
- Responses should be received in a way that enables them all to be opened at the same time
- Electronic systems should be used to hold quotations/tenders in a locked electronic vault
- Transparent opening of quotations/tenders with at least two impartial witnesses
- Evaluation of tenders/quotations involves comparing responses and determining best value
- Different documents may be needed to accept the tender or place the order
- Formal written contract comprising all elements is created for complex contracts
- Two original identical versions of the contract are needed, both parties should sign both copies
Contract Management in Purchasing and Supply
- Contracts in purchasing and supply often deal with services related to student areas in schools, requiring suppliers to adhere to specific rules and be sensitive to cultural differences.
- Method statements outline the precise manner in which services will be delivered and are an essential part of the contract, particularly for services that can be executed in different ways.
- Technical specifications dictate the method statement within the specification, while in performance specifications, the purchaser may choose to fix certain options at the contract acceptance stage or allow supplier flexibility throughout the contract period.
- Common schedules in contracts include non-disclosure/confidentiality agreements, which protect sensitive business information and trade secrets of both parties involved in the contract.
- Non-disclosure agreements are crucial for safeguarding confidential information exchanged during the tender process or contract negotiations, especially if a contract is never signed.
- Non-disclosure agreements can be either one-way or mutual, depending on whether one or both parties are sharing confidential information, and they cover seven key areas such as the description of the information, the purpose of sharing, the period of use, and remedies for breach.
- Non-disclosure agreements are generally short and simple, typically covering a description of the information, the purpose of sharing, the period of use, the requirement to return or destroy the information, the period of confidentiality, any exemptions, and remedies for breach.
- The UK government has published examples of non-disclosure agreements for use under English law, and samples from different jurisdictions can be found through an internet search using specific keywords.
- The stages involved in forming and executing contracts in purchasing and supply are crucial and include various documents or sections that make up a contract.
- The key stages involved in forming and executing contracts in purchasing and supply are essential to understand the process of contract creation and management.
- The process of contract formation and execution is crucial to the world of purchasing and supply, and understanding the stages involved is vital for effective contract management.
- The contract formation and execution process in purchasing and supply involves various key stages, which are fundamental to the creation and management of contracts in this field.
Managing Contracts and Payments: Key Considerations
- Late payments to suppliers can result in increased borrowing costs or loss of interest on bank deposits.
- Contracts often involve multiple deliveries, invoices, and payments, with some having stage payments.
- Invoicing and payment typically occur after the GRN has been issued or within the contract's specified time period.
- Contract completion can occur for fixed delivery contracts, such as construction projects or specialist installations, requiring final paperwork and payment.
- Expiry happens with term contracts at the end of a fixed term, with options to extend for continued relationships or re-tendering.
- Final expiry occurs if parties choose not to extend the contract beyond the initial or extended term, requiring final payments and future intentions to be communicated.
- Termination of contracts can occur due to liquidation, poor performance, non-compliance, or through break clauses, often requiring legal advice and potential replacement suppliers.
- Managing termination is challenging, and it should be a last resort, with the need for legal advice and potential urgent replacement supplier search.
- Contract registers are used to keep track of current contracts, with varying formats from simple spreadsheets to software applications with additional features like automatic alerts.
Business Operations Review and Payment Process Summary
- Various documents are used to acknowledge the receipt of orders, such as appointments for a business consultant and signatures for service delivery.
- Delivery notes may or may not be used for services, depending on the distance between the point of order and point of delivery in terms of business organization.
- Goods received notes (GRNs) confirm the receipt and conformity of goods to the order, increasingly issued electronically as part of a procure-to-pay system.
- An invoice is a formal request for payment, containing key information including company names, dates, payment terms, order numbers, descriptions, costs, and acceptable payment methods.
- Invoices may be issued as paper documents or electronically, and payment is usually made electronically from the purchaser's bank account to the supplier's account.
- Payment must be made within the time period set in the contract, and late payment may result in interest charges.
- The contract may require specific information to be included on the invoice, enabling charges to be set against different departments.
- Key information needed on all invoices includes the company issuing the invoice, the company to be paid, the date, due date/payment terms, order number/contract reference number, description of goods/services, cost, discounts, delivery charges, expenses, total cost, tax rate and amount, total amount due, acceptable payment method, and reference to the supplier's terms and conditions.
- The purpose of an acknowledgment is to let the purchaser know delivery will occur, while the purpose of a delivery note is for the purchaser to confirm physical receipt, and the purpose of a goods received note is to let the supplier know they can invoice.
- The contract may require specific information to be included on the invoice, so that the costs are broken down in the same way as the pricing schedule.
- Invoices may be issued as paper documents, but are increasingly electronic - either by e-mail or as part of procure-to-pay systems.
- Payment must be made in the time period set out in the contract (e.g., 30 days from the date of invoice), and late payment may result in interest charges, as per the contract or country laws.
Procurement Business Case Considerations
- When considering a procurement business case, it is crucial to evaluate the necessity of addressing the issue and the potential consequences of doing nothing.
- The risks associated with inaction range from catastrophic, such as factory shutdown and bankruptcy, to minimal impact, like a luxury purchase.
- The decision-making process involves assessing whether the goods or services can be produced in-house or if external procurement is necessary.
- Various procurement options, including one-off purchases, long-term contracts, and framework agreements, need to be considered along with quality options and process requirements.
- Costs associated with procurement can be direct (attributed to specific products) or indirect (general running costs), and should also account for the cost of the procurement process itself.
- Indirect costs, both of the procurement exercise and the impact of the contract, are often detailed in a separate section of the business case called 'resources'.
- The financial impacts of not carrying out the proposal, as well as the costs and benefits of doing so, should be thoroughly evaluated.
- Potential savings from renewing or replacing a contract should be identified, including those arising from market conditions, changes in specification, and contract terms.
- Benefits of procurement might include financial savings, both direct and indirect, as well as intangible benefits such as environmental impact and improved staff welfare.
- A business case must align with the organization's strategies and policies to be approved, demonstrating how the proposal links to these.
- Price indexes for various sectors and industries are available, showing average percentage changes over time.
- Different methods of acquisition involve varying time and resource inputs, and the costs and benefits of each approach need to be considered in the business case.
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Description
Test your knowledge of procurement processes with this quiz on framework agreements, call offs, and blanket orders. Learn about the different types of agreements and how they can be used to streamline purchasing, manage risks, and reduce administrative costs.
