Procurement introduction:
Contract is a mutually binding legal agreement that
obligates the seller to provide the specified products, services, or results;
obligates the buyer to compensate the seller;
and represents a legal relationship that is subject to remedy in the courts.
The major components in an agreement or Contract document will vary, and may include but are not limited to:
- Procurement statement of work or major deliverables;
- Schedule, milestones, or date by which a schedule is required;
- Performance reporting;
- Pricing and payment terms;
- Inspection, quality, and acceptance criteria;
- Warranty and future product support;
- Incentives and penalties;
- Insurance and performance bonds;
- Subordinate subcontractor approvals;
- General terms and conditions;
- Change request handling; and
- Termination clause and alternative dispute resolution mechanisms.
Contract is also known by following names in different industries or countries:
Agreement, Subcontract, Purchase Order, Understanding, Memorandum of Understanding
Buyer is also known as
Client, Customer, Prime Contractor, Contractor, Purchaser, Acquiring organization
Seller is also known as
Vendor, Service Provider, Supplier
Contract life Cycle & Project life Cycle:
Various activities involved in Project Procurement Management processes form the life cycle of a Contract.
A complex project like real estate building may involve managing multiple contracts simultaneously or in sequence.
In such cases each Contract life cycle may end during any phase of the project life cycle.
Bid documents are used to solicit proposals from prospective sellers. Terms such as bid, tender, or quotation are generally used when the seller selection decision is based on price (as when buying commercial or standard items),
While term such as proposal is generally used when considerations such as technical capability or technical approach are the most important. The conditions involving their use are presented below:
Contract is a mutually binding legal agreement that
obligates the seller to provide the specified products, services, or results;
obligates the buyer to compensate the seller;
and represents a legal relationship that is subject to remedy in the courts.
The major components in an agreement or Contract document will vary, and may include but are not limited to:
- Procurement statement of work or major deliverables;
- Schedule, milestones, or date by which a schedule is required;
- Performance reporting;
- Pricing and payment terms;
- Inspection, quality, and acceptance criteria;
- Warranty and future product support;
- Incentives and penalties;
- Insurance and performance bonds;
- Subordinate subcontractor approvals;
- General terms and conditions;
- Change request handling; and
- Termination clause and alternative dispute resolution mechanisms.
Contract is also known by following names in different industries or countries:
Agreement, Subcontract, Purchase Order, Understanding, Memorandum of Understanding
Client, Customer, Prime Contractor, Contractor, Purchaser, Acquiring organization
Seller is also known as
Vendor, Service Provider, Supplier
Contract life Cycle & Project life Cycle:
Various activities involved in Project Procurement Management processes form the life cycle of a Contract.
A complex project like real estate building may involve managing multiple contracts simultaneously or in sequence.
In such cases each Contract life cycle may end during any phase of the project life cycle.
Bid documents are used to solicit proposals from prospective sellers. Terms such as bid, tender, or quotation are generally used when the seller selection decision is based on price (as when buying commercial or standard items),
While term such as proposal is generally used when considerations such as technical capability or technical approach are the most important. The conditions involving their use are presented below:
- Request for information (RFI). An RFI is used when more information on the goods and services to be acquired is needed from the sellers. It will typically be followed by an RFQ or RFP.
- Request for quotation (RFQ). An RFQ is commonly used when more information is needed on how vendors would satisfy the requirements and/or how much it will cost.
- Request for proposal (RFP). An RFP is used when there is a problem in the project and the solution is not easy to determine. This is the most formal of the “request for” documents and has strict procurement rules for content, timeline, and seller responses
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