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CIPS L4M3 - Commercial Contracting > Chapter 2.1 > Flashcards

Chapter 2.1 Flashcards

Analyse the content of specifications for procurement activities

1
Q

Five rights

A

The original ‘five rights’ of procurement are traditionally: the right quantity, the right quality, at the right time, from the right place, at the right price

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2
Q

Name the 5 rights of procurement

A
  1. Quantity
  2. Quality
  3. Time
  4. Place
  5. Price
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3
Q

Name 2 approaches for developing specifications

A
  1. Use sample versions already in existence
  2. Communication with suppliers
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4
Q

Name 5 things you must be clear about when opening a conversation with a supplier

A
  1. What you wish to achieve through the conversation
  2. What you are willing to divulge about your own plans in order to get the information you want
  3. Any conflicts of interest that might exist and how to protect against them
  4. Any intellectual property issues and how you protect intellectual property
  5. Whether the conversation is procurement-led conversation or a technical/operations led conversation
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5
Q

Who should meetings with suppliers involve?

A

procurement and technical/operational personnel

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6
Q

Name 5 approaches to dialogue

A
  1. General networking
  2. One-to-one meetings
  3. Group visits
  4. Meet the buyer events
  5. Formal negotiations or competitive dialogues on a contract-specific basis
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7
Q

Name 2 advantages of general networking

A
  1. Establishes a personal connection, useful as a starting point
  2. Can provide the basis for more in-depth conversations
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8
Q

Name 3 advantages of one-to-one meetings

A
  1. Supplier-specific product development information
  2. An insiders view on risks to the supply chain
  3. Direct input into specification development
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9
Q

Name an advantage of group visits

A

Allows for people from different teams to meet their counterparts and understand the challenges from the other side of the fence

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10
Q

Name 2 advantages of meet the buyer events

A
  1. Useful for ensuring suppliers understand the purchaser’s requirements
  2. If held as general events, could help inform the supply market as to the product/service development being sought by purchasers
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11
Q

Name an advantage of formal negotiations or competitive dialogue on a contract specific basis

A

Useful for refining a draft specification or schedule of requirements into a fully agreed and jointly developed contract specification

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12
Q

Name 2 disadvantages of general networking

A
  1. Unlikely to deliver very specific information
  2. Risk of creating the perception of ‘too close’ a relationship which might raise suspicion of conflicts of interest
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13
Q

Name 4 disadvantages of one-to-one meetings

A
  1. The supplier may favour its own product or service
  2. The supplier may be silent on or understate features where it is behind its competitors
  3. There is a risk of only getting part of the story depending on which officers from each side are meeting
  4. There is a tendency in some organisations for the outcomes of such conversations not to be adequately shared across departments
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14
Q

Name a disadvantage of group visits

A

May involve personnel not accustomed to such engagement and therefore unskilled in managing the information flow

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15
Q

Name 2 disadvantages of meet the buyer events

A
  1. Often held too late to influence specification development. Traditionally focus more on process
  2. Holding such events outside of the planning of specific procurement exercises could be more useful
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16
Q

Name 2 disadvantages of formal negotiations or competitive dialogues on a contract specific bases

A
  1. Time-consuming and can be resource intensive
  2. Usually only permits a limited number of participants
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17
Q

What’s a good thing to keep sight of during dialogue

A

Being clear on what the objectives of the conversation are

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18
Q

How do you manage market dialogue?

A

Being clear on your objectives helps you to design the best approach to the dialogue

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19
Q

What may be used to maintain confidentiality in market dialogues

A

Memorandum of understanding/NDA, which formally binds the parties not to use the information in a way that undermines the commercial interests of the party providing the information

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20
Q

Name 3 restrictions of market dialogue in regulated procurement

A
  1. It must be equitable
  2. It must be transparent
  3. It must halt once a specific procurement process has commenced, unless that exercise is itself based on formal dialogue or a competitive negotiation procedure authorised by regulations
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21
Q

What is market dialogue?

A

An ongoing conversation between suppliers and purchasers

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22
Q

Project management

A

Initiation, planning, execution and control of inter-related pieces of work, normally carried out by a team of people, to achieve a specified aim by a specified time

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23
Q

Business as usual (BAU)

A

Normal business activities

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24
Q

What should any well-run procurement exercise be run alongside?

A

Project management lines but reflect the organisations operating processes and business as usual (BAU)

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25
Q

What is one key aspect of project management approach?

A

It includes a scoping stage

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26
Q

What does the scoping stage set out?

A

The objectives of the exercise; the limits and constraints; possible and/or preferred processes; and the roles and responsibilities of the project team

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27
Q

What can the project team be thought of as?

A

The people directly involved in the procurement exercise at any stage, whether or not they are formally identified as a team

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28
Q

Who is the scoping stage normally managed by?

A

The procurement professional

29
Q

What should the scoping stage cover?

A

A number of basic questions regarding the specifications

30
Q

Name 10 scoping stage questions about the specification

A
  1. Who is responsible for producing the first draft of the specification?
  2. Is there an existing specification
    3.If so, how well does it achieve what is needed
  3. What are its identified shortcomings
  4. If there is no existing specification, what are the broad objectives to be achieved?
  5. Is there an already defined minimum quality standard?
  6. Are there quality aspirations above that standard
  7. Are there any technical constraints
  8. Are there any environmental and/or social requirements or aspirations
  9. Who are the stakeholders that need to be consulted
31
Q

Name 5 factors that influence the decision on whois responsible for producing the first draft of the specification

A
  1. The structure of the organisation
  2. The level of skill and knowledge within the relevant departments
  3. Whether this is a re-procurement or something completely new
  4. Current workloads
  5. Timescales
32
Q

Where is a good place to start when writing the first draft of a specification?

A

By assembling a number of comparable specifications and the needs of different stakeholders from different sources

33
Q

Sector

A

A classification given to an area of industry, society or the economy to distinguish it from other areas

34
Q

Category

A

A group of goods or services that have shared characteristics

35
Q

Non-disclosure agreement (NDA)

A

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

36
Q

What are the 10 key aspects of specification design

A
  1. What are you trying to achieve
  2. Any preference for conformance or performance specification
  3. Varying perspectives of different stakeholders
  4. Relevance and avoiding the inclusion of anything not actually needed
  5. The limits and constraints if the scope of the procurement
  6. Performance standards to be achieved
  7. Improvements sought
  8. Ensuring that there is no ambiguity
  9. Compliance with regulations and standards
  10. The expected operating environment
37
Q

What should you do if using several variants of sample specifications as a starting point?

A

the pros and cons of each of them must be identified

38
Q

Why should you challenge a previously used specification?

A

To see how well it fits the proposed circumstances

39
Q

Name 7 advantages of starting from a pre-written specification

A
  1. It should be easier to critique than it is to create
  2. Most of the necessary elements should be covered, acting as a prompt to ensure they are considered and a consious decision made to include or omit
  3. Using more than one sample provides ideas and options regarding different potential solutions
  4. Using more than one sample specification is a good way of understanding the quality variations available
    5.Cross references to legislation, international standards or codes of practise act as prompts to check what you need to comply with
  5. The sample specifications may suggest ways in which innovation can be prompted or captured during the life of the contract
  6. The sample may be drafted to align with a standard form of contract, ensuring consistency of format and terminology
40
Q

Name 7 disadvantages of starting from a pre-written specification

A
  1. Time can be wasted discussing irrelevent aspects
  2. Some elements relevant to your organisation may not be included and could be missed if the sample is totally relied on
  3. Trying to combine aspects from different sample specifications can create inconsistency and ambiguity, especially if different terminology is used in different parts of the specification for the same thing
  4. The sample specifications may require a higher quality than your organisation either needs or can afford
  5. References to legislation, international standards or codes of practise may be outdated or obsolete
  6. The difference in the length and format of the contracts can either lead to the inclusion of things you do not need or may suggest that items which are potentially value-adding are not possible in your scenario
  7. Changing the specification to align to a different form of contract may create inconsistencies
41
Q

Code of practise (CoP)

A

A set of written rules explaining how people working in a particular procession should behave. Sometimes related to particular professions, they may equally relate to anyone working in a given environment or carrying out a particular function

42
Q

Standard

A

A document which sets out agreed minimum technical parameters for a product or serviceI

43
Q

ISO

A

International organisation for standardisation

44
Q

Should the specification be written in isolation of the contract documents?

A

No

45
Q

Name 3 short cuts to take when drafting a specification

A
  1. The use of brand names
  2. The use of recognised standards
  3. The use of samples
46
Q

ISO 9001

A

Quality management systems

47
Q

ISO 27001

A

Information security management

48
Q

ISO 5001

A

Energy management

49
Q

ISO 14001

A

Environmental management

50
Q

ISO 90-1

A

Light gauge metal containers

51
Q

ISO 3630-1

A

Dentistry - root canal instruments

52
Q

ISO 18890-2018

A

Clothing - standard method of garment measurement

53
Q

ISO 5790:1979

A

Furniture - Chairs and tables for educational institutions - Functional sizes

54
Q

Name 9 key sections that will appear in most specifications

A
  1. Title
  2. Version control/issue reference
  3. List of contents
  4. Foreword (or background)
  5. Scope
  6. Definitions
    7.Consultation requirements
  7. References to other documents, standards or CoPs
  8. Substantive requirements
55
Q

Version control table

A

List of dates of publication or agreement of each version of a specified document, together with the key changes since the previous edition forming part of an organisations configuration control process

56
Q

Name 4 examples of definitions in a specification

A
  1. Terminology
  2. Abbreviations
  3. Units of measurement
  4. Time
57
Q

Name 11 examples of substantive requirements

A
  1. Characteristics
  2. Timescales
  3. Response times
  4. Performance/reliability
  5. Lifespan/durability
  6. Packaging
  7. Recycling criteria
  8. Social criteria
  9. Information requirements
  10. Implementation
  11. Guarantees and warranties
58
Q

When is a specification legally binding?

A

When incorporated into a contract

59
Q

What must the contract explicitly refer to in order for a specification to be considered legally binding?

A

The specified schedule in the terms and conditions

60
Q

Name 5 benefits of using published standards

A
  1. Specifications are shorter
  2. Suppliers can understand specifications more quickly
  3. Where international standards are used, it removes a barrier to trade, in that cross-border suppliers do not have to understand local or national rules but can rely on international definitions and parameters with which they are already familiar
  4. Use of the standards allows for different approaches to be offered, all of which will meet the desired outcome, without procurers having to second guess what such approaches might be
  5. Use of the most up to date international standard should ensure that all recent influences have been considered
61
Q

Name 5 risks of using published standards

A
  1. In house staff may not be familiar with which standards do or could apply, so simplification opportunities are missed
  2. Staff may not fully understand the implication of the standards that they quote and inadvertently create conflicts within the specification by drafting precise requirements that do not agree with the standard
  3. Staff might not fully understand either the quoted standard or their own operating environment and as a result use standards in situations for which they are not designed, thereby possibly adding cost without value
  4. Insufficient thought can be given to what needs to happen when the standard is updated
  5. SMEs may not be as familiar with international standards as larger companies, while still being capable of doing what is actually required.
62
Q

SME

A

Small to medium enterprise, normally defined by turnover or number of staff. For example, the EU definition is a firm with fewer than 250 employees and an annual turnover of less than £50 million and/or a balance sheet of less than £43 million. A quick online search will reveal the parameters that apply in other parts of the world. Note, however, that this acronym is also sometimes used to refer to a subject matter expert

63
Q

Name another way organisations may seek to overcome the challenges associated with drafting a specification

A

Through the standardisation of requirements

64
Q

Name 11 advantages of standardisation

A
  1. Clarity of specification
  2. Compatibility
  3. Economies of scale
  4. Reliability
  5. Service enhancement
  6. Time-saving in the procurement process
  7. Accuracy of quotations
  8. wider supply market
  9. Narrower supply base
  10. Inventory savings
  11. Reduced risk
65
Q

Pricing for risk

A

Increasing the price quoted for goods or services to include an element of insurance against having to remedy errors

66
Q

Supply market

A

The marketplace in which suppliers conduct business

67
Q

Supply base

A

The group of suppliers that a purchaser actually contracts with

68
Q

Name 3 disadvantages of standardisation

A
  1. Lack of innovation
  2. Generic and bland solutions
  3. Reluctance to develop new ideas
69
Q

Name 6 advantages of increasing the range of products

A
  1. Breadth
  2. Innovation
  3. Product differentiation
  4. Cultural differences
  5. Economic factors
  6. Flexibility

CIPS L4M3 - Commercial Contracting (8 decks)

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