Monday, March 3, 2014

Things to be taken care in Procurement for (Client/Contractor view)


Things to be taken care in Procurement for (Client/Contractor view)

In Generate from client's point of view things to be taken care in Contract:
* Make sure your work scope should more clear and in details

In Generate from Contractor point of view things to be taken care in Contract:
* Make sure you add proper buffer to avoid uncertain issues
* Do only that changes which are part of Contract, For any additional work charge to client

It is also depend on which type of contract buyer and Contractor in Mainly there are 3 types of Contract, Please find advantage and disadvantages to Client/Contractor

1)Fixed Price contract

Buyer:
-Make sure work scope (SOW) is clear and in detail, As for addition work contractor may charge high
-As it is Fixed price contract contractor put buffer which could be higher payment contract.
-Your work will get covered in same prices though contractor cost become more

Contractor:
--Contractor put buffer to for managing contingencies
--Make sure cost get monitor properly else contractor has to pay from pocket.

2)Cost Reimbursable contract

Buyer:
Whatever cost is incurred in project, buyer has to pay
It is less costly as compare to fixed price.
To Reduce/Control cost buyer can set incentive/Reward clause
Buyer has to verify seller's invoice which is related to cost.

Contractor:
There is no worry about cost as it get reimbursed from client.
Contractor has to moderate incentive to control cost

3)Time and Material

Buyer:
This contract often used for staff augmentation, acquisition of experts, and any outside support  when a precise statement of work cannot be quickly prescribed.
In this case contract cost may get extended, to prevent unlimited cost growth "not-to-exceed values  and time limits" clause can be placed in all T&M contracts

Contractor:
Contractor is in profit as every hour is getting billed.

Regards
Kshitij yelkar
www.yelkar.com

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