Chapter 1.1 Flashcards
Analyse the documentation that can compromise a commercial agreement for the supply of goods or services
What does it mean when you are talking about ‘the contract’
The totality of the agreement between the parties as evidenced by the contract documents
Define schedule
A time-oriented attachment, structured and designed to be periodically updated. These may include annual price lists, a project delivery plan or a maintenance programme
Define annex
An attachment which is of direct relevance to the contract but which is not intended to be updated very often
Define appendix
An attachment to the contract which may be of use or interest but which is independent to the contract and really only for reference and background
How are modern commercial contracts designed?
To accomodate the fact that change is inevitable - therefore it is important to ensure there is a mechanism in place to ensure that the contract is easily accessible
Estimate
A suppliers best guess at what the price will be. It has no legal standing
Tender
A request from a buying organisation to invite suppliers to formally quote on a large value project
Quotation
A formal statement from a supplier detailing the cost to provide goods or services. May often include other consideration such as minimum order and lead times
Is there a difference between a quotation and a tender in regard to law?
No
Does an estimate have legal standing?
No
Should estimates be avoided in legal contracts?
Yes
Will a tender be more comprehensive and detailed in comparison to a quotation?
Yes
When is a quotation normally used?
When the only variable is price
What will the process for arriving at a quotation usually involve?
A buyer describing in precise terms what they wish to buy, and a supplier offering a price at which they are willing to supply it
Are terms and conditions usually specified in requests for quotation?
No
Name 4 situations where quotations should be used?
- For low-value, low-risk purchases
- Where the specification and delivery terms are fixed
- Where suppliers have been pre-qualified
- Where a framework or dynamic purchasing system has locked down the contract terms and price is the only variable
When is a tender normally used?
When there is potentially more than one variable
Is the process leading to a tender quite formal?
Yes
Name 4 situations where tenders should be used
- For complex projects
- For high-value or high-risk purchases
- For projects where quality and price need to be assessed
- Where access to unknown suppliers is required and there is a need to either pre-qualify them as part of a two-stage process, or to assess their suitability as part of a single-stage open tender process
Is an estimate a firm offer?
No
Are quotations and tenders firm offers?
Yes
Compare tenders to quotations
Tenders are more detailed and will include quality aspects as well as prices
Request for quotation (RFQ)
An invitation to suppliers to bid on specific products or services
Framework agreement
An arrangement that is put in place with one or more suppliers for the supply of a range of suppliers or services in which the prices (or a pricing formula) and terms and conditions are all agreed for the duration of the period of the arrangement
Are RFQs often mis-used?
Yes
Where do RFQs work well?
Under framework agreements where the contract terms are already fixed
Name 4 features of RFQs
- Degree of formality
- Delivery Speed
- Relationship to contract documents
- Implementation speed
Name 3 advantages of RFQs having a degree of formality?
- Reduces admin costs where specification is clear
- Frees up professional resource for more complex requirements
- Small and known supplier pool
Name 4 risks of RFQs having a degree of formality
- There is a risk that the RFQ may be done via a simple phone call
- Potential lack of an audit trail of the basis for the quote ‘you asked for/we quoted for’ disputes
- Possible lack of transparency potential for collusion or bribery if quotes are opened at different times
- Limited (if any) market engagement
Name 5 controls you could put in place relating to the degree of formality of an RFQ
- Set maximum value limits
- Set minimum acceptable formality. Use ‘quick quote’ e-tendering platforms
- Issue standard terms and conditions with all requests
- Monitor usage
- Train staff in possible risks
Name an advantage relating to speed of delivery in regards to RFQs
If price is the only variable, turnaround times can be short
Name two risks relating to speed of delivery in regards to RFQs
- Not always appropriate for price to be the only variable and may be used in the wrong circumstances
- Temptation to seek quick quotes when a more considered approach to aggregated spend is indicated
Name 2 controls you could put in place in regard to speed of delivery of an RFQ
- Use category management approaches to aggregate spend
- Set up framework agreements to ensure contract terms are fixed
Name an advantage of speed of implementation in relation to RFQs
Quick implementation is sometimes unavoidably necessary
Name 3 disadvantages of speed of implementation in relation to RFQs
- Notional compliance with internal rules without understanding the wider procurement landscape
- No thought given to contract terms
- No though given to supplier vetting
Name a control you could put in place in regards to speed of implementation when it comes to RFQs
Only permit quotations to be sought from pre-qualified suppliers
Name 2 risks of relationship to contract documents of RFQs
- Having no cross-reference to contract on the order risks a lack of clarity as to the contractual nature of the request
- Quotes often issued on supplier’s terms and conditions
Name 2 controls that could be put in place in regard to relationship to contract documents relating to RFQs
- Ensure terms and conditions are included in request and reiterate them at the point of order
- Cross-reference any information provided in the request with the order
Invitation to tender (ITT)
A formal invitation sent to suppliers inviting them to make an offer to supply goods or services
Public sector
Service organisations run by the government and usually funded by taxes
Utilities sector
Normally includes energy supplies, water and sewage, and telecoms networks
What code of practise does the UK construction industry have?
‘Practise Note’ (published by the Joint Contracts Tribunal - a body set up to include various stakeholder groups from both constructing and cluent sides of the industry)
What variables might tender returns/submissions include that mean they are more detailed than quotations? (4)
- Method statements
- Timescales
- Quality aspects of the delivery
- Price
What may open tenders request in tender returns/submissions?
Supplier vetting information because the suppliers have not been pre-qualified
Name 3 features of ITT
- Formality
- Lack of speed
- Relationship to contract documents
Name 3 advantages of the formality of an ITT
- Full audit trail, especially if electronic platform is used
- If process is robust, can provide transparency, reducing risks of bribery and corruption
- Potential for wider market engagement
Name 4 risks of the formality of an ITT
- Requires specific documentation
- Process-driven tender exercises risk a lack of project-specific thought
- Can create unnecessary admin burdens
- May be regulated by law - creates risk of challenge by suppliers if rules are not followed
Name 4 controls you can put in place in regards to the formality of the ITT
- Clear process, including options appraisals, reporting and accountability
- Ensure processes match legal requirements
- Audit random sample for compliance
- Train staff on formal processes
Name an advantage of the lack of speed of an ITT
Proper understanding of the time needed to deliver a tender process can drive improvements in forward planning
Name 3 risks of the lack of speed of an ITT
- Perceived or self-created urgency can drive poor practise
- Lack of understanding in the appropriate use of tenders
- Poor documentation leading to prolonged clarification processes and/or poor results
Name 4 controls you can put in place in relation to the lack of speed of an ITT
- Ensure the forward plan is robust
- Have a clear authorisation process for urgency
- Standardise documentation where ever possible
- Train staff in processes to ensure efficiency
Name an advantage of the relationship to contract documents relating to ITT
Clear and robust response schedules can easily be inserted into formal contract documents of the draft contract is properly designed to accomodate them
Name a risk of the relationship to contract documents relating to ITT
Inserting full tender response document into formal contract can create inconsistencies, especially where clarification exercises have been necessary
Name a control that can be put in place in regard to the relationship to contract documents relating to ITT
Design the tender return documents and the contract documents to ensure ease and clarity of use
Name 4 issues of ITT to consider in a real-world context
- Process admin costs
- Audit trails
- Transparency of process: controlled opening of offers
- Urgency and speed
Are costs to unsuccessful bidders recouped?
No
Bribery
The offer of a gift, financial gain or incentive to influence a decision
Corruption
Dishonest conduct, often by individuals who hold senior positions within organisations - can include bribery
Collusion
The cooperative but secretive or covert joining of allegiances of two parties
Extortion
Where one party exerts power over another in an attempt to force them into a particular action
What is an audit trail?
The written or electronic record of what was done, when and by whom
Name 5 reasons audit trails are important
- They reduce bribery, corruption, collusion and extortion by increasing the likelihood of being caught
- They provide solid evidence in the event of such activity occurring
- They improve accountability - even when there is no criminal or fraudulent intent, staff members tend to take more care when they know the actions can be traced back to them as individuals
- They help trace errors
- They provide solid evidence of the facts of a situation when disputes arise, particularly in relation to specification and/or offers of service
Transparency
Operating in such a way that everyone can see the actions performed
Nepotism
Using actual or perceived power to give an unfair advantage to friends or family members
Coercion
The act of forcing a person or organisation to do something through threatening behaviour
Waiver
A considered and deliberate decision not to apply normal rules
What should eliminate most of the need for immediate action scenarios?
Good category management and market awareness
What should an organisations internal rules include?
A section which sets out when normal supplier selection processes can be waived
What does a tender waiver process require?
High-level authority (normally a director) and must include a full business justification for not using the normal process
What should the tender waiver process include?
A requirement to state what has been learned from the situation and how (if) that can be built into operational improvements
What should happen if there is a reason for normal processes to be waived?
It should be fully documentation and approved at a high level
What is central to all commercial contracts?
The specification
Name 6 issues of an under-developed specification
- Poor bids being received - either overpriced or underpriced
- Claims for extensions of time or additional payments
- Delays in the approvals process
- Admin costs resulting from contract clarification orders
- The potential for goods and services being delivered that do not serve the desired purpose, or being delivered in the wrong place, at the wrong time or in the wrong quantities
- The potential for goods or services being delivered which do not meet the required standards, which may be written in law, putting the purchaser, end-users or the general public at risk
What is the specification?
The document which sets out the detailed requirements for the goods, services or works that you are procuring
How is the specification normally included in the contract?
As an annex or schedule
Name 3 risks of a specification
- Describing exactly what you want in miniscule and objective detail can make you miss out on opportunities for change and innovation
- Products should, where possible, not refer to a specific manufacturer or supplier, or a specific part number
- You may write a wish list that the supply market cannot meet or that is too vague for you to enforce contractually
Payments by results (PbR)
This scheme is a mechanism where all or part of the payment depends on the provider achieving outcomes specified by the commissioner. Providers are, to a greater or lesser extent, free to choose the interventions needed to secure the desired outcomes
Name the 2 main types of specifications
- Performance
- Conformance
Name a lesser known approach to specifications
Use an outcome based schedule of outcome requirements
What do outcome requirements encourage the use of?
Innovative approaches to meeting the procurement need
Name an example of an outcome based specification
The UK governments payment by results (PbR) scheme which is increasingly being used to deliver public services
Name 5 aspects of a performance specification
- Focus on outputs
- Sets out result to be achieved
- The ‘what’ not the ‘how’
- Gives supplier flexibility to present solutions that the buyer may not have considered
- Risk held by the supplier
Name 6 aspects of a conformance specification
- Focus on inputs
- Gives specific methods, processes and materials
- May identify specific manufactures or components
- The ‘how’ as well as the ‘what’
- Ties supplier to set details
- Risk held by the supplier
Should procurement professionals question specifications?
Yes
Name 12 key things to think about when designing a specification
- Purpose
- Perspective
- Scope
- Improvement and innovation
- Regulatory compliance and quality
- Type
- Relevance
- Performance
- Clarity
- Service conditions
- Budget
- Waste and emissions
Configuration control
A structured process used to ensure all documents and drawings versions are controlled effectively
Contractual measures
Originally intended to refer to the measures in a contract that were not so critical and referred to as ‘warranties’
Will a specification issued with an RFP or an ITT be fully incorporated into the contractual terms?
Not unless care is taken to ensure that it is
Whats the simplest method of configuration control?
To ensure that a final and agreed version of the specification is reproduced and appended to the core contract document as a schedule, clearly referenced from the contract terms
Name 3 problems that can arise if the specification is not fully incorporated into the contract
- Any total agreement clauses in the contract will invalidate anything not actually laid down in the contract documents, including anything included uin the tender information
- Any clarification or amendments taken during the tender process are likely to be omitted. This could potentially undermine the whole contract, as the parties may be agreeing to something different to what they believe they are agreeing to. At the very least, it creates scope for dispute and the costs of dealing with uncertainty and ambiguity
- Failure to use the most up-to-date specification when delivering the works
What is a performance management framework?
A series of standards and targets to be achieved by the supplier, definitions of how those standards will be measured, and actions to be taken on the basis of the measurement results.
What is the aim of a performance management framework?
To promote the best control possible of the things that can be influenced, and to ensure the best possible outcomes against agreed measures
Name the 3 key components of a performance management framework
- Key performance indicators (KPIs)
- Targets
- Consequences
Key performance indicators
These are measurable values that will enable a buyer to track how well a supplier is performing. KPIs are tracked over time and will enable the buyer to decide when remedial action may be needed to improve performance
Name 5 reasons why you should set up and measure KPIs in a contract
- ‘More or less’ is never good enough. The contract sets a standard that should be a minimum standard. You cannot know whether that standard is being consistently met unless you measure it
- You cannot rely on good luck
- Use commonly recognised and defined measures such as metres, seconds, litres etc.
- Even the good relationship that you know to exist at the beginning of the contract cannot be guaranteed to continue
- Measuring performance demonstrates whether it is stable, improving or deteriorating - each of which can and should provoke a response
Should organisations manage KPIs outside the contract?
No - this is poor practise
What is a KPI an indicator of?
A level of performance
What should KPIs be linked to in a contract?
A target
Can you revisit KPIs and targets during the negotiation for negotiated contracts?
Yes
Can you revisit KPIs and targets during the negotiation for tendered contracts?
No - they must be apart of the original tender invitation package
Name 4 things KPI targets can affect?
- A potential suppliers ability to actually perform the contract
- A potential suppliers interest in the contract
- The price at which the supplier is willing and able to perform the contract
- The performance expectations in subsequent contract negotiations
Incentive
Something which encourages a particular action or behaviour
Disincentive
Something which discourages a particular action or behaviour
Name 3 examples of consequences for not hitting KPIs
- Manually intervene
- Investigate and resolve the root cause of the problem
- Do both of the above
When are KPIs and performance management frameworks contract documents?
When they say they are
Name 4 tender submission aspects that could be included in a contract
- Purchase price factors, such as agreed price, or inflation rates
- Time scales for production and delivery or completion dates
- Logistical aspects, such as location, delivery method, packaging requirements, or transfer of ownership
- Location
Name 3 KPI aspects that could be included in a contract
- Delivery performance, such as on time in full or delivery performance to the requested delivery date
- Quality performance, such as the number of defects
- Response times
Name 2 specification factors that could be included in a contract
- Material requirements, such as a specific grade of metal
- Standards requirements, such as ISO 9001 or ISO 14001
What are contractual terms sometimes referred to as?
Terms and conditions
What do contractual terms make up?
The main body of the contract document
Service level agreements (SLAs)
Document outlining the expected minimum level of service between a service provider and a client. It clarifies the scope of service, responsibilities of each party and how to escalate among other factors. A service level agreement is legally enforceable if it is referred to in a contract
What is a formal contract?
Any contract or agreement which is ‘evidenced in writing’ and is intended to be legally binding
Name 3 circumstances where you would have a formal contract
- The terms are set out in detail
- The parties have agreed the terms and want ti be able to enforce the agreement, with the power of the law if necessary
- The evidence of this is that the parties have written down these terms, and signed, or signed and sealed, the document
Is it possible for a contract to exist without being recorded in writing?
Yes
Name 4 examples of alternative names for a contract
- Agreement
- Commission
- A letter of appointment
- A service level agreement
Describe a contract
The total agreement and may consist of a number of different documents. It may not actually be labelled ‘contract’ but might be called ‘agreement’, ‘commission’ or ‘appointment’
Draft (a contract)
The formal drawing up of a contract, formulating the words and clauses
Drafter (of a contract)
The person(s) who design(s) and develop(s) the contract wording
Bespoke
Made or provided especially for a specific end user
Name 6 advantages of using standard contract templates
- All of the key risk areas will be set out and therefore unlikely to be missed
- Standard clauses prompt drafters to think about relevance to current contracts
- The legal meaning of expressions and words will have been fully considered, possibly even tested in the courts, leaving less room
- Standard list of schedules to be attached prompts their inclusion
- Often cheaper to produce from a template rather than from scratch
- Templates drive consistency in layout and structure
Name 6 disadvantages of using standard contract templates
- Potential to use inappropriate template
- Can result in complacency on the part of drafters resulting in a tendency to only check the clauses which normally need amendment and not think about the specifics of the current procurement
- Failure to cross-check references between clauses or sections creating nonsensical requirements or conditions
- References to legislation and standards may become obsolete or not updated
- Schedules may be appended with no firm reference to them in the contract terms, so they are not properly incorporated into the contract
- Definitions used in schedules might differ from those in the standard contract, creating ambiguity and the potential for dispute
Name 2 advantages of using bespoke contract forms
- Focuses thought on the precise needs of the procurement
- Avoids the risks of using standard forms
Name 3 disadvantages of using bespoke contract forms
- Language may be inconsistent with established legal interpretation
- Potential to omit less obvious areas of risk
- Potential to identify risk and remedy but not consider wider consequences
Term contracts
Contracts written to last a period of time and include agreed terms
Name 5 common contract sections
- The articles - very basic agreement: a summary
- The recitals - they provide context
- Contractual particulars - sets out specific parameters
- Full terms and conditions can include a definitions and interpretations clause
- The schedules - set out project specific detail
Conditions
Conditions are the critical elements in a contract which can, if breached, allow for the termination of the contract or contractor
Critical success factors (CSF)
Identify the key objectives and essence of a contract and determine the conditions that will deliver these objectives
Warranties
Warranties are lesser terms in a contract which can result in damages but not contractual termination in the event of a breach
Innominate terms
Innominate terms are terms which could be either conditions or warranties depending on judgements made as part of a dispute resolution process
Name the 7 step process of establishing the contract terms in a formal contract
- The commercial team designs the contract and CSFs
- Draft contract discussed with potential suppliers as part of pre-market engagement
- Contract terms refined
- Draft contract issued with RFQ, ITT or invitation to negotiate
- Quotes or tenders received on the basis of stated terms or terms amended as part of negotiation process
- Quote/tender/final negotiated offer accepted, including confirmation of agreed terms
- Formal contract documents produced and signed (or signed and sealed)
Market leverage
Another term for buyer bargaining power, the ability of a purchaser to strongly influence the outcome of commercial negotiations
Name 2 things to be aware of when finalising contract terms
- The lower the purchasers market leverage, the easier it may be for the supplier to negotiate changes to the terms, either as part of the tender process or even after the contract has been signed
- In regulated procurement, once the opportunity has been advertised it is difficult to persuade purchasers that the terms can be changed
Name 3 things that every contract term is designed to do
- Protect the supplier
- Protect the purchaser
- Balance the protection between them
Name 7 things that key terms would cover if one party was to default
- Pricing
- Payment terms
- Risk allocation
- Insurance requirements
- Timescales
- Health and safety
- Actions and remedies
What should you remember about contracts
They should protect both parties, but the degree to which they do so will reflect the relative bargaining positions of the purchaser and the supplier and their ability to influence the contract terms
Name 3 ways of establishing what the terms of an agreement are in the absence of a contract?
- If the parties had been contracted previously, the terms of those agreements might be assumed to apply again
- If there are normal sector expectations about certain aspects of the delivery, they might be assumed to apply
- Either of the above could be discontinued if there were any evidence suggesting that either party had indicated that other circumstances should apply in this particular case
What’s a schedule to a contract?
An attachment to the body of a contract form
Why are contract schedules used? (2)
- To make it easier to incorporate project specific information in a contract without having to amend the wording of the main body of a document clause by clause
- It allows for the standardisation of terms and conditions, which then simply cross-refer to the detail in the schedules
Name 4 benefits of a schedule to a contract
- Drafting the contract is simplified, and therefore quicker and more cost effective
- Within the purchasing organisation, clauses for similar contracts have identical wording, avoiding the risk of different approaches across the organisation
- Contract managers become familiar with the forms that they use regularly and, in the event that they need to refer back to the contract, they can do so with ease, knowing where to find the relevant information
- The contract and the procurement documents can be drawn up in such a way as to allow direct incorporation of a supplier’s tendered offer, reducing the risks of misinterpretation
What type of contract will have a pricing schedule?
Any contract that does not involve a single fixed-fee payment on completion
What does a pricing schedule do?
Sets out how the price is to be calculated for each invoice
What might a pricing schedule include?
It may include various rates or simply confirm the total fee and the proportions payable at key stages
What does the degree of complexity of the pricing schedule vary depending on?
The nature of the contract
Is there a limit to the number of schedules that may be included in a contract?
No
Finish the sentence. A schedule attached to a contract has no force unless…
It is referred to within the terms and conditions
Name 14 of the most common types of schedules
- Specification
- Preliminaries or contractual/operational matters
- Performance management framework
- Delegated authority and contractual management
- Site lists, maps and plans
- Health and safety
- Method statements
- Sub-contractors
- Supply chain
- Alliancing agreements
- Core lists of exclusion lists
- Supplier’s staff
- Codes of conduct
- Data management
What is the most important schedule to a contract?
The specification
Where is the expression preliminaries often used in the UK?
Construction industry
What do preliminaries do?
Explain the context in which the contract has to be performed
Describe preliminaries
Can be an over-arching schedule which encompasses all those indicated as separate schedules
Why are preliminaries often included in tender documents
So that a single line on the pricing schedule can be used to cover all associated overheads and risks
What is a performance management framework?
The full framework including KPIs and targets, the assessment scheme and incentives, disincentives, bonuses and penalties
What should performance management frameworks include in term contracts?
A mechanism for enabling adjustment of the targets and/or changes to the actual indicators to be measured
Describe delegated authority and contractual management
Factors relating to the amendment, signatories, vested power, and management of the contractual performance
Describe site lists, maps and plans schedules
Factual information in list or map form to assist in the clarity of identified points of delivery. A plan such as GIS mapping can help assist in avoidance of doubt of a location
Define GIS (geographic information system) mapping
A means of storing, retrieving, managing, displaying and analysing data in relation to its geographic or spatial context. It can be used for any kind of data (qualitative or quantitative) mapped in layers which can range from global/international down to precise locations within buildings, depending on the parameters set and the needs of the data users
Where might site lists, maps and plan schedules be particularly relevant?
In facilities management where external areas are involved, or where only parts of buildings come under the purchasers jurisdiction
Describe method statement schedules
Describe how the desired result is to be achieved. Particularly important where performance specifications are used
When is comes to method statement schedules where is it vital that the contract is clear?
As to whether the method statement provided is ‘approved’ or merely accepted. Approving or embedding a supplier’s method statement in the specification shifts some of the liability for the method from the supplier to the purchaser and unnecessarily fixes on one potential method as a contractual requirement whereas flexibility during the contract might be quite useful
Describe sub-contractor schedules
Can include sub-contractors and/or approved manufacturers of components, but might equally simply set out the process for agreeing and/or approving the supply chain
Describe supply chain schedules
The contract needs to make provision for sanctions, remedies or other actions if these schedules lay down minimum requirements
Schedule of rates
A list of prices associated with the products or services to be provided. Note that the rate may be different for different order volumes
Describe alliancing agreement schedules
A contractual mechanism for requiring subcontractors or co-contractors to work with a main contractor or the purchaser in setting up joint supply chains
Are alliancing agreement schedules more common in framework agreements or term contracts?
Framework agreements
When are alliancing agreement schedules useful?
If the combined buying power is greater than the sum of the parts
Describe core list or exclusions list schedules
Where schedule of rates are based on national schedules of rates or catalogue prices, they are often quoted on the basis of a percentage discount against the schedule or catalogue price. The discount may not apply to all possible call off items
Describe suppliers staff schedules
Where the provision of services is specifically dependent on the skills and qualities of individuals, there may be a requirement to set out key personnel who are material to the contract, such that the contract may be terminated without their continued participation - or at least without their replacement by personnel of proportionally similar skills and experience. That skill and experience may need to be set out in detail if it is to have any force
Describe supplier staff schedules in relation to contact with children or vulnerable adults
There may be a need to set out specific staff-vetting processes and means of evidencing clearance to work on the project
Describe codes of conduct schedules
They can be used to set out norms of behaviour for suppliers staff working on the contract, particularly in respect of working on the clients premises
Name 6 examples of things included in the data management schedule
- Non-disclosure agreement requirements to protect intellectual property or commercially sensitive information
- Commercially confidential information in general
- Minimum cyber security standards
- Rules regarding processing, management and storage of any personal data which may need to be shared in the context of the contract (GDPR)
- Terms related to ownership and intellectual property rights (IPR)
- Terms related to the disposal of data post-contract termination
Non-disclosure agreement (NDA)
Sometimes known as a confidentiality agreement (CA), this signed document is a legal agreement that information received will not be shared and remains the property of the originator
General Data Protection Regulation (GDPR)
European regulation which sets out how personal data must be managed, applying to any data relating to any person in the EU - and the UK following Brexit - whether they are a European citizen or not, and to all organisations doing business in Europe, regardless of the nationality of the business ownership
Intellectual property rights (IPR)
Protection of assets created through human intellect, such as inventions, literary and artistic works, designs, symbols, music, computer software and images. These assets may be protected by trademarks, copyright, design rights and patents
What are the risks of a contract not having a change mechanism
At best it risks stagnation and at worst it risks ineffective delivery or early termination
Name 7 things the change process should include when set out in the contract
- Who can request change
- Who can authorise a change
- Who can accept a change
- The mechanism for agreeing price adjustments in respect of such a change
- The implications for the contract if a variation order is rejected
- Details of variance management and configuration control processes
- Responsibilities for notification of variation to affected parties
What must a variation order include?
A statement of any price impact on the contract value. It should also include timescales for delivery, date for completion or amendments
What should all change orders reference?
Both the clause allowing for the change, and any clauses or schedules which it changes
Where should copies of all change orders be held?
With the original contract documents - the orders themselves don’t need to be signed and sealed: authority for them to be valid is delegated under the terms of the contract, provided that they are issued in accordance with those terms
What must happen to a contract register when a change order is made?
The changes will need to be reflected in the register, especially with regard to price and/or timescales
