Contract Administration: After the Award...

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Contract Administration: After the Award

The Most Sought After Experts in Procurement & Contracts Learning & Competency Building Programs

Contracts Administration: After the Award

Strategies For Contract Administrators to

Minimise Changes, Delays & Ensure Scope of Contract is Delivered as Agreed

Webinar



Artin Vaqari Chief Executive Officer

Robi Bendorf CPSM, MCIPS, Lifetime CPM Senior Consultant

Purchasing & Procurement Center Inc.

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Robi Bendorf Over 30 Years Experience in Procurement &

Contracts. Lifetime CPM, CPSM – from Institute of Supply Management MCIPS – from Chartered Institute of Purchasing &

Supply Unique Experience As a Buyer & Contract

Administrator as well as Supplier/Contractor as Robi Served as Manager of Customer & Supplier Development for Westinghouse Trading Corp.



1. Questions

Write them down – We’ll answer what we can or reply later by email

2. Getting the Slides

Stay Until the end to get a Copy of this presentation

3. For those who want more on Contract Administration, we have something special at the end

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Do Contractor/Supplier Know What They Are Doing OR

Specifications Are a Total Mess OR

End Users Don’t Know What they are doing



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What Is The Real Objective of Contract Administration?

The Causes of Contract Changes

Evaluating Price Changes

Why SOW is a Major Cause of Contract Changes?

3 Types of SOW & When To Use Each?

Monitoring Techniques to Expedite Work

Liquidated Damages or Penalty Clauses?

Why Inspection & Acceptance Is The Most Important Factor?

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The objectives of contract administration are basically to assure:

• That the scope is being delivered as

agreed-- to the required level of

performance and quality.

• That all the conditions of the contract are

met by both parties.

• That all the objectives of the organization

for entering into an agreement with an

outside source are satisfied.

• The relationship between the two parties are open and constructive, so

as to avoid tensions and identify and resolve problems early.

The objectives can be summarized as : .

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Please identify the changes that have occurred in some of the contracts that you have been involved in.

What was the cause of the change?




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The contract administrator should request a cost breakdown to be included with the proposal for any change.

The breakdown should include all elements of cost so that the proposal for price change can be evaluated as to the fairness and reasonableness of the proposal.



Always ensure that the supplier deducts the price for scope of work not done as per original contract, when supplier

quotes new price for the change

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A Statement of Work (SOW) is a statement outlining specific services a supplier is expected to perform, generally indicating the type, level, and quality of service, as well as the time schedule required..

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Most conflicts and problems in contract execution result from a poorly written SOW, so it is essential that those involved in the contract administration be able to analyze and understand the SOW.

Generally a Specification and SOW are not the same. A specification is usually a reference in the SOW that covers requirements and test procedures for parts, materials, equipment and or the services to be used with either associated specifications or specification sheets. .




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Although there are other types and variations of each, the basic types of SOW fall into three categories.

1. Design/detail SOWs tell the supplier how

to do the work. It may include precise

measurements, tolerances, materials,

quality control requirements, and other

buyer requirements that control the

processes of the supplier.

The buyer, to a large degree, requires the

contractor to follow the buyer's way of performing

the task or making the equipment.

This causes the risk of performance to be borne by

the buyer unless the supplier is negligent. .



The basic types of SOW: 2. Level-of-effort or Time and Material or Unit Rate

SOWs can be written for almost any type of service.

The real deliverable under this type of contract is an

hour of work and the material required to perform the

service, research, repair, development, etc..

These SOWs are usually very broad and describe the

general nature, scope or complexity of the services or

products to be procured over

a given period of time.

Extreme care must be exercised in

supervision of the work and the

reimbursement of material cost under

this type of SOW. .

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The basic types of SOW:

3. Performance-based SOWs are generally the

preferred method of stating needs. A performance

based statement of work structures all aspects of an

acquisition around the purpose of the work to be

performed or equipment to be supplied and does not

dictate how the work is to be accomplished.

Performance based SOWs emphasize

performance that can be contractually

defined so that the results of the

contractor's effort can be measured

in terms of performance, technical

and quality achievement, schedule

progress, or cost performance. .




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Schedule Status Reporting

1. Supplier shall provide within 5 working days of the

signing of the Procurement Contract a detailed schedule

of all major tasks and events required to design,

purchase materials, manufacture, test and deliver the

scope by the required dates.

2. The supplier shall provide weekly a progress report of

the actual status adequate to allow Buyer to monitor

the progress against the original schedule and toward

the timely completion. Included in the report must be

the following:



Schedule Status Reporting - Continued

2.1 Did the project achieve the milestones/ performance

due since the last report?

2.2 What milestones are due before the next report?

2.3 Has anything happened that will impact the final delivery

date?

2.4 Are there any new significant risks, and if so what is

being done to treat the risk.

3. The progress report will be provided in the following format

(e.g. form, MS Projects, etc.) and transmitted by digital file

via (hand, internet, phone line, mail, etc.)

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Status Checking: Determining current progress, promised delivery, shipping status.

The most accurate information comes by sending your own

personnel to the supplier’s location. It is best to use those

trained in project monitoring. Include surprise visits. If it is

not possible to visit consider the following when obtaining

status:

• Use Open ended questions that cannot be

answered without actually checking:

Good: At what stage is my contract?

Not Good: Is my contract on schedule?

Good: What time did the material ship?

What is the vessel and ocean bill number?

Not Good: Did my shipment go?

• Document name, time, and status.

• Be a fanatic about requiring up-to-date accurate

status from your suppliers. .

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Is the following a penalty clause or a liquidated damages clause?

Delivery of the Equipment at the time described above is critical to Buyer. Should the supplier fail to meet the above delivery date and Buyer does not contribute to the delay, Supplier agrees to pay the amount of 1% per week of the original contract price for every week that delivery is not made up to a maximum of 10 weeks.

- Penalty Clause

- Liquidated Damages Clause

- Don’t Know/Got No Idea

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In many countries Penalty clauses are not enforceable.

◦ For a contract provision to be enforceable it must contain Legal subject matter.

If the court feels that the clause was intended to apply undue force to the other party to perform his part of the agreement then it will not be considered as legal subject matter.

◦ Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in light of the anticipated or actual harm caused by the breach,

the difficulties of proof of loss, and

the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.

◦ A term fixing unreasonably large liquidated damages may be void as a penalty.

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Inspection & Acceptance phase is one of the most important since the word “acceptance” is very significant under most of contract laws. ◦ Before acceptance occurs, the buyer has few obligations

and some very good remedies for any nonconforming items it receives, including the right not to pay for those items and even possibly canceling the contract.

◦ After the point of acceptance the buyer has abandoned his right to reject the goods and the buyer’s rights become more limited and its obligations increase.

◦ It is therefore very important to be as detailed and specific as possible regarding how the deliverables will be inspected and accepted.

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How to take your contract administration to the next level and achieve successful

completion with minimal changes

and delays and within time and

Budget. Be on Your Way to

Becoming a Pro in Contract Administration



An exclusive invitation to Best Selling Training Program with Robi Bendorf

CONTRACT ADMINISTRATION:

From Start To Finish

A Chance to See Robi Live & Meet Face to Face

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“At the beginning I thought that it is worth coming to this course, but now after attending I am damn sure that it is worth

every penny.” Head of Contracts,

Oman Airports Management

“After attending … I feel excited and can’t wait

to go to office and start work.” Contract Management Specialist

Petronas, Malaysia

Is This The Best Program?

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What if you used these best practices, how would that affect your day to day job - you, your end users & your suppliers and contractors?

What if all your suppliers and contractors did what they promised to do how would your day be like?

How these proven strategies on contract administrations would affect your career and possibly your pay?

How About You?



Comprehensive Manual:

What Do You Get?

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Post Conference Award Meeting with the Supplier:

Checklist & A Detailed Sample Record of such Conference



Contract Performance Evaluation

Sample Report

Performance Criteria Evaluation

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Managing Contract Risks – 22 Categories of Risk

Using 4 Response Types to Any Risk Category



Expediting: - Making Things Happen Minimizing Contract

Changes: Detailed Example of a 21 steps approach to use for contract changes

Detailed Cost Estimate

Summary Sheet Sample Request To

Suppliers For Submitting Cost Proposals When Cost Data Are Required

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Payment Terms:

The 3 types of Progressive Payments – Which One to Use

How Much of Total Cost Should You Pay the Supplier before contract is fully delivered?



This Program Is Not Going to Solve ALL Your Problems

BUT

We Promise that You Will Do Much Better in Your Contract Administration

- Less changes,

- Less Delays,

- Less Complications with Suppliers and End Users

- Professionally Deal with All Stakeholders, bosses, peers, end users, supplier.

Click Below to Register http://ppc-inc.com/contract-admin-webinar-special/

Is This For You?

http://ppc-inc.com/contract-admin-webinar-special/









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$ 400 Off The Regular Investment

Available for the next 72 hours

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One of the true tests of leadership is the ability to recognize a problem before it

becomes an emergency.

~ Arnold Glasow










Contract Administration: After the Award...

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