Effective Purchasing, Tendering and Supplier Selection
Course Code: LT07
Course Objective
- How to evaluate bids and proposals
- What key clauses to include in contract documents
- Structure and application of incentive arrangements
- Best Terms & Conditions to protect your company
- Negotiation Planning and Strategy
- Monitoring and measuring Consultants and Contractors performance
Target Audience
- Engineering Project Professionals
- Construction Professionals
- Contract Professionals
- Buyers, Purchasing Professionals
- Financial personnel in organizations whose leadership wants advanced skills sets for those involved in major contracting and subcontracting activities
Course Outline
DAY 1:Establishing Contractual Relationships with Consultants and Contractors
- Introductions
- Purpose of the course and objectives
Defining the Difference between Consultants and Contractors
- Role of Consultants & Responsibilities to Buyer
Defining the Relationship with Consultants and Contractors
- Length of contract with consultant or contractor
- Type of work to be accomplished
- Reason for contracting out the work
Consultants & Contractor Firms Pricing Strategies
- Top Down Strategy – Market based
- Bottom Up Strategy – Cost recovery based
Sourcing & Qualifying Potential Consultants and Contracting Firms
- Basic planning assumptions
- Proactive sourcing & project scheduling
- Use of the Internet
- References from other known past users
Defining the Scope
- Statements of Work (SOWs) – work packages
- Service Level Agreements (SLAs) – Key Performance Indicators (KPIs)
- Importance to overall success
- Clear and Concise to both Buyer and Consultant/Contractor
- Establishing Milestones for future progress reporting
DAY 2: The Bidding and Bid Evaluation Processes
Invitations to Tender (ITT)/Requests for Proposals (RFP)/Requests for Quotation (RFQ)
- What type of request is best for a situation
- Why use competition?
Proposal/Bid Evaluation
- Bid evaluation schedule
- Compliance matrix
- Terms & Conditions Analysis
- Factors that Affect Comparability
Contract Pricing & Price Adjustments
- Fixed price or firm price?
- Costs Plus (Time & Materials); Incentive based pricing
- Contract Price Adjustment Criteria & Clauses
- Price Adjustments using Price Indices
- Price vs. Quality Factors – Value for Money
Cost Analysis of Proposals/Bids
- Reasons for Cost Analysis
- Requesting Additional Cost Information from Bidders
- Cost Estimating Methods
DAY 3: Negotiations and Contract Development
Negotiations Strategies and Techniques
- Supplier/Buyer Positioning – pre-cursor for the negotiation strategy
- With Consultants
- With Firms supplying Contractors
- How to Negotiate with Sole Source
- Incentive Arrangements – Structure and Application
Model Contract Formats
- Formats for Consultants
- Formats for Contractor Firms
- Important Contract Articles
Financial Considerations
- Specifics of items included in base price
- Definition of expenses not included in base price
- Hourly/Daily/Weekly/Project rates
Progress Reporting and Payment
- Payment based on Milestones Achieved not Stage Payments (elapsed time)
- Payment terms – When, Where, How, Currency Net payment terms and currency
Termination of Contract
- Reasons for termination – Both Parties
- Processes of terminating
DAY 4: Confidentiality, IPR, Insurance and Warranties
Confidential Information & Non-Disclosure
- Need for Pre-contract arrangements
- Access to confidential or proprietary information
- Agreement not to use or divulge
- How long in force after contract is complete
Insurance Coverage
- What is insurable?
- How much insurance required?
- Nature of proof of insurance and possible impact
- What type of coverage
- Who bears the cost – Consultant/Contractor Firm or Buyer
Intellectual Property Rights
- Definition of IPR – Patents, Design Rights, Trade Marks & Copyright
- Background & Foreground Rights
- Ownership rights and assignment
Warranties and Representations
- No Conflict with Consultant/Contractor other work
- Consultant/Contractor agrees to perform in professional manner
Restrictive Covenants
- Consultant/Contractor will not provide like services to Buyer’s competitors
- Will not publish without prior written consent of Buyer
- Will not use in advertising, sales promotion or publicity without prior consent
DAY 5: Contract Award and Performance Evaluation
Awarding of Contract
- Contract formation & contract effectiveness conditions
- Notification of successful bidder
- Notification of unsuccessful bidders
- Official signatures and start dates
Monitoring and Measuring Consultant Performance
- Performance based on Statement of Work
- Milestones and progress against them
- Project Management Processes
Monitoring and Measuring Contractor Performance
- Performance based on Statement of Work
- Individual project performance
- Work expectations
Contract Administration
- Ensuring performance of Consultant/Contractor as Invoiced
- Resolving issues/problems from either party
- Preparation for Renewing Agreement
- Preparation for Terminating Agreement
Final Learning Review and Analysis
- Delegate feedback forms
- Analysis against objectives
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