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1 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contracts racts Administratio istration: n: Afte ter r the Award

Strate ategies gies For Contract ract Adminis inistra rato tors rs to Minim nimis ise Changes ges, Delays ys & Ensure ure Scope

• f Co

Contrac ract t is Delivered ivered as Agreed ed

Webina ebinar

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract ct Administ istra ratio ion: n: After the Award

Arti tin n Vaqari ri

Chief Executive Officer

Robi i Bendorf rf

CPSM, MCIPS, Lifet etim ime e CPM Senior Consultant

Purchasing & Procuremen ment t Center ter Inc.

2

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award

Robi i Bendor

• rf
• Over 30 Years Experience in Procurement &

Contracts.

• Lifetime CPM,
• CPSM – from Institute of Supply Management
• MCIPS – from Chartered Institute of Purchasing &

Supply

• Unique Experience As a Buyer & Contract

Administrator as well as Supplier/Contractor as Robi Served as Manager of Customer & Supplier Development for Westinghouse Trading Corp.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

• 1. Questions

Write them down – We’ll answer what we can or reply later by email

• 2. Getting the Slides

Stay Until the end to get a Copy of this presentation

• 3. For those who want more on

Contract Administration, we have something special at the end

3 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

4 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Do Contract

ctor/ r/Suppl Supplie ier r Know What They Are Doing OR

Specifica

cificatio ions ns Are a Total Mess OR

 End Users Don’t Know What they are doing

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

5 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

 What t Is The Real Objecti ective e of Contr tract ct Admin minis istra rati tion

• n?

 The e Causes ses of Cont ntra ract ct Chang nges es  Evalu luati ting g Price e Changes nges  Why y SOW is a Major

• r Caus

use e of Cont ntra ract ct Changes? ges?  3 Types es of SOW & When n To Use Each? h?  Moni nitori

• ring

g Techn hniq iques ues to Expedi edite e Work  Liqui uidated ted Damages ges or Penalt lty y Clause uses? s?  Why y Insp specti ection

• n & Acceptance

ce Is The Most st Import

• rtant

nt Facto tor? r?

6

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

The objectives of contract administration are basically to assure:

• That the scope is being delivered as

agreed-- to the required level of performance and quality.

• That all the conditions of the contract are

met by both parties.

• That all the objectives of the organization

for entering into an agreement with an

• utside source are satisfied.
• The relationship between the two parties are open and constructive, so

as to avoid tensions and identify and resolve problems early. The objectives can be summarized as :

.

7 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract ct Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

8 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Please identify the changes that have occurred in some of the contracts that you have been involved in.

What was the cause of the change? e?

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract ct Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

9 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

The contract administrator should request a cost breakdown to be included with the proposal for any change. The breakdown should include all elements of cost so that the proposal for price change can be evaluated as to the fairness and reasonableness of the proposal.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Alway ays ensure re that the supplier r deduct cts the price for scope of work k not done as per original nal contract, act, when supplier r quotes new price for the change ge

10

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

A Statement of Work (SOW) is a statement

• utlining specific services a supplier is

expected to perform, generally indicating the type, level, and quality of service, as well as the time schedule required..

11 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Most conflicts and problems in contract execution result from a poorly written SOW, so it is essential that those involved in the contract administration be able to analyze and understand the SOW. Generally a Specification and SOW are not the

• same. A specification is usually a reference in the

SOW that covers requirements and test procedures for parts, materials, equipment and or the services to be used with either associated specifications or specification sheets.

.

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract ct Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

12 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Although there are other types and variations of each, the basic types of SOW fall into three categories.

• 1. Design/detail SOWs tell the supplier how

to do the work. It may include precise measurements, tolerances, materials, quality control requirements, and other buyer requirements that control the processes of the supplier.

 The buyer, to a large degree, requires the contractor to follow the buyer's way of performing the task or making the equipment.  This causes the risk of performance to be borne by the buyer unless the supplier is negligent.

.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

The basic types of SOW:

• 2. Level-of-effort or Time and Material or Unit Rate

SOWs can be written for almost any type of service. The real deliverable under this type of contract is an hour of work and the material required to perform the service, research, repair, development, etc..

 These SOWs are usually very broad and describe the general nature, scope or complexity of the services or products to be procured over a given period of time.  Extreme care must be exercised in supervision of the work and the reimbursement of material cost under this type of SOW.

.

13 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

The basic types of SOW:

• 3. Performance-based SOWs are generally the

preferred method of stating needs. A performance based statement of work structures all aspects of an acquisition around the purpose of the work to be performed or equipment to be supplied and does not dictate how the work is to be accomplished.

 Performance based SOWs emphasize performance that can be contractually defined so that the results of the contractor's effort can be measured in terms of performance, technical and quality achievement, schedule progress, or cost performance.

.

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract ct Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

14 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Schedule Status Reporting

• 1. Supplier shall provide within 5 working days of the

signing of the Procurement Contract a detailed schedule

• f all major tasks and events required to design,

purchase materials, manufacture, test and deliver the scope by the required dates.

• 2. The supplier shall provide weekly a progress report of

the actual status adequate to allow Buyer to monitor the progress against the original schedule and toward the timely completion. Included in the report must be the following: Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Schedule Status Reporting - Continued

2.1 Did the project achieve the milestones/ performance due since the last report? 2.2 What milestones are due before the next report? 2.3 Has anything happened that will impact the final delivery date? 2.4 Are there any new significant risks, and if so what is being done to treat the risk.

• 3. The progress report will be provided in the following format

(e.g. form, MS Projects, etc.) and transmitted by digital file via (hand, internet, phone line, mail, etc.)

15

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Status Checking: Determining current progress, promised delivery, shipping status.

The most accurate information comes by sending your own personnel to the supplier’s location. It is best to use those trained in project monitoring. Include surprise visits. If it is not possible to visit consider the following when obtaining status:

• Use Open ended questions that cannot be

answered without actually checking: Good: At what stage is my contract?

Not Good: Is my contract on schedule? Good: What time did the material ship? What is the vessel and ocean bill number? Not Good: Did my shipment go?

• Document name, time, and status.
• Be a fanatic about requiring up-to-date accurate

status from your suppliers.

.

16

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Is the following a penalty clause or a liquidated damages clause?

Delivery of the Equipment at the time described above is critical to Buyer. Should the supplier fail to meet the above delivery date and Buyer does not contribute to the delay, Supplier agrees to pay the amount of 1% per week of the

• riginal contract price for every week that delivery is not

made up to a maximum of 10 weeks.

• Penalty Clause
• Liquidated Damages Clause
• Don’t Know/Got No Idea

.

17

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award

Purchasing & Procuremen ment t Center ter Inc.

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

In many countries Penalty clauses are not enforceable.

• For a contract provision to be enforceable it must contain

Legal subject matter.

 If the court feels that the clause was intended to apply undue force to the other party to perform his part of the agreement then it will not be considered as legal subject matter.

• Damages for breach by either party may be liquidated in the

agreement but only at an amount which is reasonable

 in light of the anticipated or actual harm caused by the breach,  the difficulties of proof of loss, and  the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.

• A term fixing unreasonably large liquidated damages may be

void as a penalty.

.

.

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The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Inspection & Acceptance phase is one of the most important since the word “acceptance” is very significant under most of contract laws.

• Before acceptance occurs, the buyer has few obligations

and some very good remedies for any nonconforming items it receives, including the right not to pay for those items and even possibly canceling the contract.

• After the point of acceptance the buyer has abandoned his

right to reject the goods and the buyer’s rights become more limited and its obligations increase.

• It is therefore very important to be as detailed and specific

as possible regarding how the deliverables will be inspected and accepted.

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19 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

How to take your contract administration to the next level and achieve successful completion with minimal changes and delays and within time and

• Budget. Be on Your Way to

Becoming a Pro in Contract Administration

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

An exclusi sive ve invitation tion to Best Selling Training g Program with Robi Bendorf

• rf

CONTRACT ACT ADMINISTRA STRATI TION: ON: From Start To Finish

A Chanc nce e to See Robi i Live & Meet t Face e to Face

20

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contra ract Administ istra ratio ion: n: After the Award Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

“At the beginning I thought that it is worth coming to this cour urse, se, but now after er attendi nding I am damn mn sure that it is worth h every penny.”

Head of Contracts, Oman Airports Management

“After attending … I feel excited and can’t wait

to go to office and start work.”

Contract Management Specialist Petronas, Malaysia

Is This The Best Program?

21 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

 What if you used these best practices, how

would that affect your day to day job - you, your end users & your suppliers and contractors?

 What if all your suppliers and contractors did

what they promised to do how would your day be like?

 How these proven strategies on contract

administrations would affect your career and possibly your pay?

How About You?

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Compreh mprehens ensiv ive Manua nual: l:

What Do You Get?

22 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Post Conference Award Meeting with the Supplier: Checklist & A Detailed Sample Record of such Conference

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Contr tract ct Perform rmanc nce e Evalua uation tion

Sample Report Performance Criteria Evaluation

23 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Managing Contract Risks – 22 Categories of Risk Using 4 Response Types to Any Risk Category

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Expediting:

• Making Things Happen

Minimizing Contract Changes: Detailed Example of a 21 steps approach to use for contract changes Detailed Cost Estimate Summary Sheet Sample Request To Suppliers For Submitting Cost Proposals When Cost Data Are Required

24 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

Payment Terms: The 3 types of Progressive Payments – Which One to Use How Much of Total Cost Should You Pay the Supplier before contract is fully delivered?

Contra ract ct Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

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25 Contra ract Administ istra ratio ion: n: After the Award

The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

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The Most Soug ught ht After Experts in Procur urement nt & Contracts Learning ng & Competenc ncy Building Programs

One of the true tests of leadership p is the ability ty to recognize e a problem m before it becom

• mes

es an emergency.

~ Arnold Glasow