CIPS L4M2 Chapter 3 (3.2) Flashcards
What is the definition of Through-life contracts and its benefits of managing assets
It is a contract that gives a contractor sole accountability for the design, acquisition, operation, maintenace and disposal of an asset
Its major advantage is that it covers the physical product or asset and the subsequent services needed to operate and support it.
The benefits of through-life managment are: •Lower cost over the whole life of the asset •Lower risk as there is a single company accountable for costs and services over the life of the asset •A closer match between the asset delivered and the users’ needs •Development of capability over the life of the asset as the supplier continues to get experience tof users’ needs and can adapt services to meet them
What is Limitation of liability?
A limit placed on the financial obligations of a party within a contract
What are Warranties?
Written guarantee that requires a supplier to exchange or rectify a malfunction or a product or service within a specified time
Why is managing risk a key activity for procurement?
So that ways of mitigating risks can be found
Sources of future risk need to be identified at the specification stage
What are the six (6) main sections of a through-life specification?
Definition - To define the user requirements.
Produce a User Requirements Documents (URD) - a statement of the results or outputs, the technology and the boundaries that the users expect to receive in terms of performance, cost and timelines, Identify user requirements by asking open-ended questions e.g. who will be the users, what problem will this solve?
Make sure that the functions, attributes, constraints, preferences and expectations for the product or service are fully explored and trade-offs are agreed
Specification detail must give contractor sufficient information quickly and accurately to develop a price for the product or service
Sufficient information to minimise risk
Specification should provide on-site instructions as to what services should be delivered and how and the terms of outcomes e.g.a dirt free carpet (the outcome) by means of vacuming.
What are the main six (6) sections of a through-life specification?
Description of requirement - To write a clear description of the requirement using phrases: 1. ‘I expect the product/service to’ - describe what the product/service should do 2. ‘so that’ - why does the user want to do this? 3. ‘when’ - describe what triggers the use of the product/service 4. ‘because’ - detail any constraints the user might have
What are the main six (6) sections of a through-life specification ?
Testing and acceptance - Acceptance testing is a process for determining whether a product meets its specification before it is released to a customer - other terms for acceptance testing include •end-user testing, •field testing, •operational testing
Acceptance tests are validation tests and answer the questions: ‘did we build the right thing? and “is this what the customer really wanted?
Functional tests answer the question: ‘did we build a correctly working product? It is different from acceptance because the end user is not involved.
What are the five (5) main types of Acceptance testing?
- Alpha and beta testing - •Alpha testing takes place during the development phase and only involves contractor employees •Beta testing (also called field tests) takes place on customer’s site and involves the customer’s staff using the product in a real-life environment
- Contract acceptance testing - the product is tested against criteria and standards that were set out in the specification
- Regulation acceptance testing - the product is tested for compliance with any regulations required by law i.e. health and safety requirements
- Operational acceptance testing - final testing done after user acceptance testing (alpha and beta) and tests that all the operational functions of the product are working
- Black box testing - used in testing software. It focuses on inputs and outputs
What are the main six (6) sections of a through-life specification?
Change Management Process - Identifying and approving changes to a specification without derailing the project : It is a four-step process.
- Describe the change - identify the change needed and describe it in a change request document
- Review the change - project team and customer review and comment on the change and suggest amendments to improve the change and give reasons for rejecting the change
- Look at options - document any options for the change and also identify an deadline for a decision and the impact on the project if no decision is made by the deadline date
- Final approval - formal approval or rejection of the change. Approved changes are incorporated into the revised specification and updated project plans
What are the main six (6) sections of a through-life specification?
Social criteria - social capital: the network of relationships between people who work in a particular environment
Factors that influence social views are:
Media, Work ethic and working practices, Brand, company, technology image, Lifestyle trends, Cultural taboos, Consumer attitudes and opinions and their buing patterns, Buying access and trends, Publicity
What are the main six (6) sections of a through-life specification?
Environmental criteria - physical environment factors: Recovery from natural disasters - floods, hurricance, earthquakes: when assessing the risks ask the questions: •How long can you go without a product? •Where else could the product come from? •Is it possible to build up a surplus? •How might it affect the company’s brand
Management of waste emissions - Recycling and its costs. Sustainability of raw materials
Pollution - this affects the environment e.g. greenhouse gases contribute to climate change and ozone-depleting gases damage the ozone layer. Procurement should evaluate products or services that are sourced from suppliers in industriess that are likely to ceate air pollution, asses the risks and source from alternative suppliers or re-specify the product
Energy efficiency - can increase profitablity and competitiveness by reducing the cost of doing business •Priority list for improving energy efficiency: Energy efficiency programme, Energy audit, Energy Managment Plan, Low-cost measure to improve energy efficiency
What are the two (2) ways in which social and environmental factors can be used by Procurement when understanding markets and producing specifications?
- Ensure that manufacturing methods used by suppliers do not create pollution or hazardous waste or have a negative impact on the environment and can be done through specification and in the criteria used to evaluate supplier bids for a contract
- Identify supply chain risks especially when sourcing from overseas e.g. suppliers in areas with history of severe weather conditions which may affect their ablity to ship their product
