Types of Procurement Contracts Ppt

9 HIT241 – PROCUREMENT AND CONTRACT MANAGEMENT Fixed price contractsFixed or fixed price contracts include a fixed total price for a well-defined product or service. Such contracts are particularly appropriate if the supplies or services can be clearly specified before the call for tenders. The buyer takes a low risk in this situation. Fixed-price contracts may also include incentives to meet or exceed project objectives. They may also contain safeguards in the form of penalty clauses, but these can be difficult to enforce before the consequences of the delay are felt. An important consideration is that any change in resource requirements due to a project revision (change) is likely to result in additional claims and payment to the contractor. Like other contracts, a supply contract is legally binding on two or more parties, usually a buyer and a seller. Contracts describe in detail the terms of a particular project. Signing a contract inaccurately can cost you money over time. If a contract is inadequate, you may have to spend money to get the other party to legally comply with it or pay extra because you opted for a time and material supply contract instead of a fixed-price contract. Procurement may include the purchase of materials, equipment or other goods necessary for a project, or it may require the hiring of a service or consulting provider. Before you begin the procurement process, consider whether the benefits of procurement outweigh the benefits of delivering internal projects. Ideally, procurement provides appropriate goods and services that meet the standards of time, location, quality and quantity at the best possible cost.

Buyers and sellers in an organization need to understand the formal procurement process. Supply contracts are used in almost every industry and business. While private companies are flexible in purchasing, government agencies must comply with certain rules and regulations when spending public funds. 13 HIT241 – DESCRIPTION OF THE PROCUREMENT AND CONTRACT MANAGEMENT SERVICE (SOW)Many contracts contain a service description (SOW). A service description is a description of the work required for procurement. The statement of work describes the work in such detail that potential sellers can determine whether they are able to provide the necessary goods and services and can determine a reasonable price. Good specifications allow bidders to better understand the buyer`s expectations and should therefore be as clear, concise and comprehensive as possible. It should describe all services required and include performance reporting requirements. The statement of work must specify the project product, use industry terms and refer to industry standards. 27 HIT241 – PROCUREMENT AND CONTRACT MANAGEMENT Conclusion – 1It is important that organizations enter into good contracts that minimize risk while ensuring optimal results through effective contract management.

Given the current competitive and demanding conditions for IT projects, it is very important to prepare contracts with great care and expert support. It is equally important to initiate and follow effective contract management procedures. 23 HIT241 – PROCUREMENT AND CONTRACT MANAGEMENT Contract Management, however, many project managers are unaware of contractual issues due to their complexity. This can lead to serious problems. Ideally, the project manager and project team should be actively involved with contract law experts in contract preparation and management. 28 HIT241 – PURCHASING AND CONTRACT MANAGEMENT Conclusion – 2The following guidelines can help in the preparation of proposals, contracts and administrative procedures: Use checklists and templates if necessary. If necessary, assess the risks according to the proposed contractual provisions. All important proposals and contracts, as well as contracts with questionable provisions, should be reviewed by a contract law expert.

Reasonable prices and/or risk insurance under the Contract. Regular review, improvement and updating of contract preparation and management procedures. 4 HIT241 – PROCUREMENT AND CONTRACT MANAGEMENT Procurement and key product management processThe following figure summarizes the most important procurement management processes and identifies the milestones associated with each phase. After supply planning, the most important step is, for example, the “decision to make or buy”. This determines whether other procurement management processes are needed. The purchasing manager is responsible for selecting the best contract for a particular project. Supply contracts are divided into the following types and subtypes: Although companies have already done everything they need on their own, this can be impractical and lead you to incur significant costs and develop a lower quality product, which is bad for your business. For this reason, your company must establish a purchasing management process to find the best suppliers and negotiate advantageous contracts that take into account the interests of both parties. 6 HIT241 – PROCUREMENT AND CONTRACT MANAGEMENT Procurement Planning Inputs required for procurement planning include: The Project Scope Statement. Product. Market conditions.

Limitations and assumptions. It is important to define the scope of the project, products, market conditions, as well as limitations and assumptions. However, it is also important to know exactly why you want to buy goods or services. Supply contracts are agreements about the use of certain products and services in a project. Reading time of 3 min The procurement manager is responsible for analyzing the scope of the project to determine if it can be completed with internal resources or if external suppliers need to be hired. Needs that need to be outsourced are subject to the formal procurement process. For example, a telecommunications company may outsource billing to a print service provider who can create these forms and send them to subscribers. Supply contracts are agreements about the use of certain products and services in a project. The types of supply contracts are generally either fixed-price, refundable or time and material. Some agreements may include more than one of these payment structures in a single supply contract.

The procurement management process allows you to find the right contractors and suppliers for the goods and services you need for your project. .