(Solution) CIPS Organisation Terms and Conditions PDC
Task
Using a set of your organisations (or one with which you are familiar) terms and conditions, explain
how the terms and conditions help the organisation ensure that:
• The risks of poor quality, extension of time, increased costs and unethical practice are
managed effectively
• The relevant performance measures are monitored and managed.
You should use a full set of terms which includes appropriate schedule content and relevant
appendices.
Outline the concept of the “battle of the forms” and explain how you could ensure that any
agreement is carried out under the organisation’s own terms and conditions.
Solution
Executive Summary
In this module of developing contracts in procurement and supply, an evaluation of XXX which is an engineering/Infrastructure organisation in UAE terms and conditions have been pursued. The relevance of terms and conditions are to ensure success in management of areas of quality, extension of time, increasing in costs and unethical issues hindering successful implementation of the contracts. Also, performance measures and monitoring in the contract implementation have also been evaluated. In terms and conditions of the contract, it entail chemical materials category of spend. The relevance of the different terms and conditions is ensuring appropriate risks management and appropriate power in their implementation.
In regard to the findings in this report, it evident that XXX organisation chemicals materials is impacted by different issues integrated in their terms and conditions. A summary of the contract components include and not limited to performance management, quality factors, costs overruns management, risks management and organisation market environment.
After the different findings obtained in this report, there has been battle of the forms which have been identified as critical in influencing success in use of different terms and conditions in the contract. Based on the case report provided, appropriate recommendations on its management has been provided. This is while integrating appropriate terms and conditions relevant for the buyer (XXX).
In findings and conclusions of the current report, a set of limitations/gaps have been deduced. These could be managed through pursuing the following recommendations;
- Broadening the contract terms and conditions in their application in different contract implementation process
- Pursuing benchmarking process of terms and conditions in other organisations to manage battle of the forms successfully
- Implementation of terms and conditions for different suppliers apart from only the chemicals suppliers to enhance their operations
- In the used terms and conditions of the contract, it is important integrating innovation being a critical factor in implementing contracts and managing them appropriately
- Improving awareness scope and using knowledge of the PS&M teams in the application of their terms and conditions
Table of Contents
1.1 Organisation Background. 4
1.2 Terms and Conditions in the Contract 5
2.0 Evaluation of Terms and Conditions in XXX Organisation. 6
2.2 Risk of Extension of Time. 9
2.4 Managing Risks of Unethical Practice. 11
3.0 Performance measures monitoring and management in managing contracts. 12
5.0 Conclusions and Recommendations. 15
Appendix 1: Summary of terms and conditions 18
Figure 1:Stages of Strategic PS&M.. 5
Figure 2:Mendelow Matrix Analysis Summary. 5
Figure 3:Vulnerability and Risk; Relative Value/Impact analysis. 7
Figure 4:Performance Management and Management practices. 12
Table 1:Condition and warranty differences summary. 8
Table 2:Summary of risk register for chemicals materials sourcing. 8
1.0 Introduction
1.1 Organisation Background
XXX is a leading UAE-based engineering/infrastructure organisation with its operations scoping in entire GCC and further afield. The organisation has been actively engaged in contribution to the growth and prosperity of the entire UAE region. As a best practice, XXX has been engaged in different infrastructure and engineering projects which include Palm Jumeiraj, Business Bay, Yas Island and more. The most recent huge project is being involved in the engineering and infrastructure projects which formed the Expo2020 in Dubai UAE. For success in their operations, XXX spends an upward of AED200 Million in their different spend categories. This is with their focus being to improve on their spend portfolios and integrated with intelligent diversification for achieving a strong and sustainable growth levels. Apart from the chemical materials which is one of the organisation major spend category, others include equipment, installations, vehicles, machines, IT and logistics. In their different spend categories, they engages different suppliers including ACC Gulf LCC, Al Taher chemicals, UNA general trading, Kanoo energy LLC and water master water Eqpts LLC. In XXX Procurement and Supply Management (PS&M) operations, they adopts what is identified in CIPS (2023) as the 7 main stages of strategic sourcing where they capitalise on strategic thinking on the value of suppliers in an organisation. A summary of these stages are as follows;
Figure 1:Stages of Strategic PS&M
Source: CIPS (2023a)
1.2 Terms and Conditions in the Contract
For the selected terms and conditions (see appendix 1), they are broadly standard or blanket despite of their spend value and risks which characterise them. To ensure XXX is successful in the engineering business environment, contract terms and conditions are relevant in various spend areas. They ensure risks and power are appropriately distributed with suppliers similarly captured in the process.
To identify the relevance of the terms and conditions to guide success in implementing the contracts. Use of Mendelow Matrix Analysis is appropriate (Kuzmin & Khilukha, 2016) as illustrated in the following;
Figure 2:Mendelow Matrix Analysis Summary
Source: (Kuzmin & Khilukha, 2016)
High Interest and High Power– This include the high-level admin in XXX organisation, leaders and investing organisation in the engineering sector. In implementing terms and conditions, their input is critical. They however need to improve their knowledge and understanding of the diversity of terms and conditions applicable in XXX.
High Interest and Low Power– For this category of stakeholders, they are identified as having high interest for different terms and conditions. The PS&M teams are engaged in making sure they possess sufficient information in ensuring their input are appreciated. For example, they are involved in making suggestions to implement innovation to manage the terms and conditions successfully.
Low Interest and High Power– This include the KSA admin regulating the operations of XXX, they make sure they initiate different laws and policies in the procurement process. The different terms and conditions need to note their expectations and align them appropriately with their goals.
Low Interest and Low Power– This represent competing organisations, partner with different entities in the engineering sector with less interest and power in existing terms and conditions. This mean they develop contract terms and conditions successfully. This mean they develop terms and conditions of the contract.
Further, in category management for XXX, contract management cycle is well used mitigate risks management. In line with the following illustration, this is important to develop and manage contracts, risk management and policies implementation (Hawrysz & Maj, 2017). Hence, in the entire contract management cycle, terms and conditions must be appropriately aligned. Hence, an effective management of internal and external risks in business environment is possible.
2.0 Evaluation of Terms and Conditions in XXX Organisation
To identify terms and conditions in XXX organisation, analysis of the level of stakeholders relations, managing risks and contracts implementation is important (Lysons & Farrington, 2020). CIPS Module Notes identify the need for using relative value impact and vulnerability and risk analysis to evidence on the importance of the terms and conditions.
Figure 3:Vulnerability and Risk; Relative Value/Impact analysis
Source: CIPS New Module Notes
Considering Chemicals materials sourced by XXX organisation, it is a performance box category. The importance of this is that it is characterised with immense vulnerability and risks and value. According to Zobel and Hagedoorn (2020), for the spend category which is performance classification, prioritisation isaccrued on profitability, managing costs and quality scope. Therefore, PS&M function and managing costs is prioritised and requirements an assurance. There is also a possibility of classifying the spend category as functional category (figure 3). This means not necessarily to pre-test prior executing the contract.
2.1 Risk of Poor Quality
Quality in contract development is identified in Hoekman and Taş (2022) as technical and non-technical based factors which characterise the products sourced. The factor of quality is core in implementing the contract. In XXX case, appendix 1 terms and conditions clearly detailed how quality should be achieved in regard to validity, accepted, capability and contract policy management. The quality factor in terms and conditions entail;
Therefore, in line with the terms and conditions, in XXX operations in the engineering sector, this clause is a condition rather than a warrant. The rational of this is that there is no support of management of damages and all terms and conditions in the contract stipulated in entire organisation.
To differentiate the warranty and condition, table below is appropriate;
Table 1:Condition and warranty differences summary
Source: Summarised from CIPS Module Notes
Taking into account of the aspect of quality in managing the identified project, set terms and conditions note on need to monitor risks and evaluation. This can be done by applying risk register which list all risks and mitigation strategies based on likelihood and impact level. A summary of the risk register in category of spend is illustrated in table 2;…
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