Procurement Tendering And Contract Administration Pdf
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The purpose of contract management is to ensure that all parties to the contract fully meet their respective obligations as efficiently and effectively as possible, delivering the business and operational outputs required from the contract and providing value for money. It also protects the rights of the parties and ensures required performance when circumstances change. Contract management is similar to project management. Each contract is a mini-project.
It has a unique goal, consumes resources, has a beginning and end date, and requires coordination and planning of relevant activities, as well as documentation in a contract file throughout the process. Contract management includes monitoring and documenting performance.
In all situations, the procurement officer is responsible for following up and ensuring that the actions of the supplier and the UN organization are in line with the contractual responsibilities, that the contract is amended to reflect agreed changes in circumstances, and that any claim or dispute is resolved amicably according to the terms of the contract.
Payment for the goods or services should be handled independently from the procurement function, while contract close out again is the responsibility of the procurement officer. The stages of contract management are intended to ensure that the parties work together to achieve the objectives of the contract.
Contract management is based on the idea that the contract is an agreement, a partnership with rights and obligations that must be met by both sides to achieve the goal. Contract management is aimed not at finding fault, but rather at identifying problems and finding solutions together with all contracting parties involved.
In this phase the procurement officer ensures that there is a shared understanding, distribution of responsibilities and systems and procedures in place to monitor and control contract performance and effectively deal with potential changes and disputes.
The supplier should be considered a member of the project team, with all members striving for success. Upon signature of the contract, several steps should be taken to ensure that roles, responsibilities and obligations are clearly allocated among the parties and proper systems and procedures are put in place to monitor performance and keep efforts well focused:.
The contract file should be opened by the procurement officer, and the contract should be carefully analysed, taking note of the rights and obligations of each party. Any issues requiring clarification or change of the contract should be fully documented in this file. The requisitioner will normally have a separate file, with copy of the contract, as part of the project management files. Although practice may vary among organizations, the following documents normally are part of the contract file:.
Other related documents preceding the contract finalization, such as Requisition, solicitation document, offers received, evaluation report, etc. As soon as possible, the responsible UN staff member programme manager, requisitioner, or procurement officer should analyse the terms and conditions of the prospective contract and develop a contract work breakdown structure that reflects both the technical and administrative aspects of contract performance.
The requisitioner and the procurement officer should reach agreement on intermediate performance goals based on contract performance obligations. Intermediate goals will enable the UN organization to measure progress, detect significant performance variances, take corrective action, and follow up.
Review the performance assessment plan with the supplier, so that both parties know the basis upon which performance will be established.
These should be understood as milestones for joint monitoring and not as contractual obligations. Discuss how and when to measure and report actual performance. The techniques, timing, and frequency of measurement and reporting should reflect the nature and criticality of the work. Clarify any remaining ambiguities and discuss procedures for managing change and resolving differences.
For simple goods or equipment purchase orders, a telephone or email contact is often sufficient to launch activities, supported by regular expediting and monitoring. Successful contract management is based on an open flow of communication and willingness to take actions necessary for correction and improvement, and is facilitated by:.
Attitude of teamwork, seeking to get the best results from joint efforts, willingness to discuss problems without immediate recourse to recriminations and to make the immediate adjustments that may be necessary to correct problems detected through routine inspection. Well organized oral and written reporting system, which highlights progress and problems and measures them against expected performance and results.
Contract performance and progress review meetings at appropriate intervals. For complex works and services contracts, such meetings could be as frequent as every two weeks or as infrequent as every two months.
For goods procurement, it may be sufficient to have an email or telephone follow-up every few weeks. For procurement of goods, contract monitoring and control is largely covered by expediting, pre-shipment inspection and final receipt and acceptance. The policy of compliance with contract terms and conditions requires that organizations maintain effective communication about, and control over, contract performance.
Each party to the contract should establish communication procedures to ensure that people within their organization know what they must do, and each party should establish controls to ensure that they do it.
It is equally important that the parties to the contract communicate with each other, as often as may be necessary. As performance proceeds and events unfold, the parties will find that they may have to modify their original expectations and plans to adjust to real events.
As they do so, they will have to modify the terms and conditions of their contract so that it reflects the current status of their agreement.
This is an inevitable part of contracting, because no one can predict the future with perfect accuracy. However, it is important that the parties do this consciously and openly, and with an attitude of teamwork, so that they remain in agreement about what they are doing.
If they do not communicate, they could end up mitigating a dispute over what their obligations really are. Once the contract has been awarded, the responsible procurement officer, or the requisitioner, monitors performance, collects information, and measures actual contract achievement. This is essential for effective control.
The resources devoted to these tasks, and the techniques used to perform them, will depend on the nature of the contract work, the size and complexity of the contract, and the resources available.
For small, simple, non-critical contracts, an occasional telephone call may be all that is needed to satisfy the responsible UN staff member that everything is proceeding according to plan. However, for large, complex contracts, the responsible UN staff member may require extensive reports, regular progress meetings, formal testing, and technical reviews and audits.
In performance based contracts, performance indicators developed in the contract are used. Observations are made in order to collect information related to those aspects of performance that, when measured, will describe the progress of the work. The reason for observing, collecting information, and measuring progress is to have a basis for comparing actual achievement with planned achievement in order to exert control.
Each party must direct its attention internally to ensure that it is fulfilling its own obligations, and externally to ensure that the other party is fulfilling its obligations.
Observing and collecting information should be directed at four general control points. These include:. Direct observation means personal, physical observation. The responsible UN staff member, or a field representative, is physically present at the work site during its performance to see how it is progressing. This approach is most practical when the work is physical in nature and performed at a limited number of sites.
Construction projects are examples of work readily subject to direct observation. The inspector goes to the site and visually inspects the work, comparing observations to the construction specifications and drawings to the schedule to determine the progress of the job.
Direct observation by the responsible UN staff member or field representative is of limited use, however, when the work is largely intellectual in nature, or when it is too complex for physical inspection alone to provide enough information to measure progress. In these cases, direct observation should be supplemented or replaced by indirect observation.
Indirect observation refers to testing, progress reports from many observers, technical reviews, performance indicators and audits. Indirect observation is appropriate whenever direct observation would provide insufficient or ambiguous information.
For example, projects involving an intellectual effort like infrastructure analysis where personal observations at the offices where the work is performed are unlikely to reveal whether the work is ahead of schedule, on schedule, or behind schedule. Inspection involves examining or testing a product or service to ensure that it conforms to contract requirements. Where quantities of goods are involved, inspection also means verifying that the correct number of items has been delivered.
Some organizations may have LTAs or one-off contracts with inspection agents, while others may have in-house experts who undertake plant visits and inspections.
Generally, there are the following types of inspection methods:. Sensory and dimensional checks are examinations by an inspector using his or her eyes, ears, and other senses. The inspector exercises a good amount of personal judgment. For a commercially available automatic pencil sharpener, for example, this method reveals surface defects, missing pieces, noisy operation, and parts out of alignment. For custodial services, for example, visual inspection detects surfaces that are not clean.
The UN organizations typically use sensory and dimensional checks to perform inspections. When using this method, UN staff at the receiving point that is, the UN office or field mission using the item should check the following:. Make a visual examination to verify that the proper type and kind of product has been delivered, that is, that the product or service conforms to the specifications outlined in the order or contract.
Conduct a physical count to ensure that the correct quantity of product has been delivered by comparing the quantity received with the quantity ordered. Variations in quantities authorized by the order or contract may be accepted. Quantities accepted must be documented; payment is based on quantities accepted. Perform an operability check to ensure that the product performs or operates properly, if applicable. Check the preservation of the product to ensure that it has not spoiled, rusted, or deteriorated, if applicable.
Any items that do not conform to appropriate standards should not be accepted. A receipt and inspection report should be submitted, noting any non-conforming item. Physical or performance tests provide actual performance data that are compared with required performance or physical characteristics or a range of what is considered acceptable according to the contract. Requiring that a motor runs or an operating system performs at a certain level for a specific period of time is an example of a performance test.
Testing materials for their chemical composition or density against parameters in the specification are examples of physical tests. On a bus service contract, waiting at a particular bus stop to see whether the bus arrives on time is a performance test to check compliance with the required schedule. Performance tests for labour-intensive services are often done as a random sample.
Destructive tests require that end products meet certain reliability standards or withstand a specific level of stress. For example, heating a product until it burns tests the fireproof characteristics of an end product. Scratching through newly applied coats of paint shows the number of coats applied by a painting supplier.
Acceptance or rejection of products or services must be based on the standards identified in the contract or purchase order. Generally, the UN organizations rely on two types of standards:. Subjective standards: Requirements based on a broader, more judgmental, criterion as applied by the inspector. It is not unusual to have both types of standards apply to different aspects of one purchase. In such cases, both strict compliance standards and subjective standards must be enforced.
But if both standards apply to a single aspect of the purchase, they typically are inconsistent with each other and, therefore, unenforceable. Both types of standards can be applied to different aspects of service requirements as well. For example, a contract for grass-cutting services may state that the grass will be cut once a week — which is a strict compliance standard — or that the grass must always be neat and trimmed — which is a subjective standard.
Contract terms with may require delivery of end items, which may include finished services, or may require a stated level of effort over a specified period of time.
The purpose of contract management is to ensure that all parties to the contract fully meet their respective obligations as efficiently and effectively as possible, delivering the business and operational outputs required from the contract and providing value for money. It also protects the rights of the parties and ensures required performance when circumstances change. Contract management is similar to project management. Each contract is a mini-project. It has a unique goal, consumes resources, has a beginning and end date, and requires coordination and planning of relevant activities, as well as documentation in a contract file throughout the process. Contract management includes monitoring and documenting performance. In all situations, the procurement officer is responsible for following up and ensuring that the actions of the supplier and the UN organization are in line with the contractual responsibilities, that the contract is amended to reflect agreed changes in circumstances, and that any claim or dispute is resolved amicably according to the terms of the contract.
A Contract A contract is a written agreement, enforceable by law, between a procuring entity and a supplier, contractor or service provider for the provision of goods, works or services. Any physical item or a combination of an item with a service where the item is the principle product being procured. Contract Administration The surveillance, monitoring and reporting of the performance of suppliers, contractors and service providers for compliance with the terms and conditions of a contract from the point at which the contract is signed up until it is either terminated or completed on the date specified in the original contract or by way of a variation amendment to the contract. Preparation for Contract Administration The surveillance, monitoring and reporting of the performance of suppliers, contractors and service providers for compliance with the terms and conditions of a contract from the point at which the contract is signed up until it is either terminated or completed on the date specified in the original contract or by way of a variation amendment to the contract. This planning includes the nomination of Contract A contract is a written agreement, enforceable by law, between a procuring entity and a supplier, contractor or service provider for the provision of goods, works or services. Although the actual planning begins during the selection process, Contract Administration The surveillance, monitoring and reporting of the performance of suppliers, contractors and service providers for compliance with the terms and conditions of a contract from the point at which the contract is signed up until it is either terminated or completed on the date specified in the original contract or by way of a variation amendment to the contract.
Procurement is the process of finding and agreeing to terms, and acquiring goods , services , or works from an external source, often via a tendering or competitive bidding process. Procurement generally involves making buying decisions under conditions of scarcity. If sound data is available, it is good practice to make use of economic analysis methods such as cost-benefit analysis or cost-utility analysis.
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Public-sector entities responsible for procurement of essential medicines and health commodities in developing countries often lack the technical capacity to efficiently ensure supply security. Under strict public scrutiny and pressures to be transparent, many agencies continue to use archaic procurement methods and to depend on inflexible forecasts and cumbersome tendering processes. On the basis of semi-structured literature reviews and interviews, we identified framework agreements as a strategic procurement practice used by the U.
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