Friday, October 7, 2011

The “Contracting Process”

The "Contracting Process" consists of a number of inter-related activities and tasks. As every company may have their own definition of what they call a contracting process and may define it by tasks performed by different parties, let me define what I consider to be the requirements of a normal contracting process.

1. It starts with a purchase request or form of advance notice of a need for support.:
2. You woork with the requestor to gain an understanding of exactly what is needed.
3. You work with the requestor or subject matter experts to establish requirements by drawings, specifications, scope or statements of work, or requirements documents etc.
4. You identify an initial list of potential qualified suppliers.
5, You perform pre-qualification of determine those suppliers that are best suited to perform the work to establish the the list of suppliers to receive the bid or RFP. .
6. You select of the appropriate contracting approach. (Lump sum, time & materials, individual packages, management contract, unit price, guaranteed maximum, not to exceed, etc.)
7. You determine the supplier selection process (Do you bid, solicit proposals or negotiate?)
8. You prepare the appropriate Contract Documents. This includes: legal terms and conditions; business terms and conditions, specifications; standards or requirements, schedules, performance standards, acceptance & test criteria and requirements for training, support, maintenance.
9. If you bid or solicit proposals you issue and receive of the appropriate bid or proposal documents
10. You perform bid or proposal review and prioritization of alternative suppliers according to your evaluation criteria.
11. You commence negotiation of the agreement and cost.
12. You finalize the agreed terms and perform contract review, approval and execution.
13. You manage the contract mobilization.
14. You manage delivery related activities.
15. You manage performance related activities.
16. You perform administration of contract related activities.
17. You manage the contract file.
18. You manage the conducting appropriate tests & acceptance of the deliverables.
19. You manage changes that occur throughout the process..
20. You negotiate and resolve disputes..
21. You manage the close out of the contract..
22. You manage any warranties.
23. You manage and negotiate any claims
24. If a claim cannot be resolved you work with the business and legal to prepare to pursue or defend against litigation..
There is a strong inter-relationship between the process steps. How well you manage the steps leading up to the negotiation will have a significant impact on how successful you will be in the negotiation. How well you manage the pre-qualification and selection process can have a significant impact on how successful you will be in the performance phase. How well you manage the steps after the negotiation will have a significant impact on how successful you will be in achieving the committed performance and maintaining the benefits achieved from the negotiation.How well you manage the creation of the agreement's terms and all the activities after the negotiation
may have a significant impact on how successful you will be in any litigation

Want to learn more? The companion book "Negotiating Procurement Contracts - The Knowledge to Negotiate" is now available on A hotlink to
Is at the top of the post.

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