Procurement Contracts - Overview | PMQ D3.5a
- Another key part of procurement is the contract, because it's covered by law. Because of this you might need to ask for specialist advice to help you fully understand your contract. In this video, we'll go through the importance of contracts in general, as well as contract conditions, and contractual relationships. While the law around contract is different depending on where you are, there are a few general principles every contract should deal with in some way. While the law around contracts is different depending on where you are. There are a few general principles that every contract should deal with in some way. A contract should represent an offer being made by one party and accepted by another. With the intent of this being a legally binding relationship between both parties. It should also have very specific and definite terms. So then it's clear what both parties are agreeing to. Lastly, it should be a legal document between parties which should have the legal right to enter into that kind of agreement in the first place. Okay, let's move on now to talk about some of the kinds of conditions that might be present in any contract. These are important because they are the part of the contract that clearly set out the intentions for both parties. These could include any of the following, general information like who the parties are. Descriptions and locations of the product or service. And the legal system the contract uses. Who's responsible for what? What the schedule for the project is, and the quality that's expected for acceptance testing. How payment and disputes will be dealt with. Compensation for any alterations. Who owns the deliverables? And the assignment and management of any risks. Okay, so we've covered the purpose of contracts. As well as the types of agreements that contracts usually cover. For the last part of this video, let's talk about the different sorts of contractual relationships in some detail. There are quite a few different kinds of contractual relationship, and you need to make sure that you have the right one for your project. A comprehensive relationship also known as a term key contract, has a single party responsible for everything involved in the development and implementation of a specific solution. The supply will have access to all of the resources they need to do the project. And will deliver everything involved in that specific solution. A subcontractor relationship has suppliers who uses several subcontractors to fulfill different parts of delivery. The prime supplier is responsible for managing their subcontractors. But as a customer you're still responsible for making sure that their outputs deliver the outcomes that you expect. The parallel or hub-and-spoke relationship is different to the subcontractor relationship. In that you the customer will manage the relationship between different suppliers who are all working on different parts of the delivery. While this means that you'll have more responsibility and work to do, it also means that you have more control over the performance and the cost of suppliers. The sequential relationship has multiple contractors delivering sequentially. This is great if the project is too complex to be fully defined in a contract at the start. However it does have more risk involved. Last up, the partner alliance relationship, has you working with the supplier. Bringing the skills and resources both together to deliver the project. This also means that risks are shared, but so are benefits. And that's it for this video. Contracts tend to cover quite a few different areas. All of which are critical to the project's success. On top of this, there are also quite a few different relationships you can have with suppliers, which needs to be laid out in the contract.