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10 questions to ask non-procurement colleagues about contracts

9 May 2013 |
Posted in: Purchasing

Stephen Ashcroft - January 2013We’re going back to basics with this post. I meet non-procurement specialists with procurement responsibilities that just need a ‘nudge’. SM readers should find this list helpful when advising their non-procurement’ colleagues. To set up and manage supplier (vendor or contractor) engagements is tough for some people who are outside procurement (which is why they need us) – especially because some suppliers are much better at bidding than they are at delivering the contract.

How do they get the core information they need to ensure a successful supplier engagement? Here’s a simple but incredibly effective checklist I recommend to our clients. These 10 simple questions will improve your colleagues’ approach to supplier engagements. Misaligned expectations are the number one cause of commercial disputes.

1. Do you know what you are buying? Admit you are not (always) a technical expert, so get the supplier to explain their value in business terms.

2. Are the responsibilities clear (who, what, why and when)? Be clear on obligations and liabilities (you might have some too).

3. Has the supplier explained how the deliverables are going to be achieved? Did you ask for a method statement or plan?

4. What does the supplier need from you? Dependency on the buyer can be a useful excuse for failure for some suppliers. Clarity is key.

5. Are deliverables linked to acceptance prior to payment? You need to define and jointly agree what is acceptance (agreed before the contract award).

6. What happens if things go wrong? We always ask (big-spend, strategic) suppliers for their risk register (they have got one, right?).

7. Are responsibilities to report progress clearly stated (so there are no surprises)? Ask the supplier to define management information in their proposal.

8. How is the supplier’s performance monitored? Is everything on track to ensure delivery? How do you know? The Olympic security contract is a good example.

9. What will success look like? Are the criteria, such as timing, quality and cost, clear in the contract or statement of work (SOW)?

10. If it is not clear to you, how can it be clear to the supplier? This is more a question for the stakeholder, than the supplier. The ‘it’ refers to the complete procurement – SOW, pricing, contracts

obligations and liabilities, the whole relationship in fact.

If you have any to add, please provide your suggestions in the comments below.

☛ Stephen Ashcroft is a procurement coach at Brian Farrington. He welcomes comments and LinkedIn connections, and you can follow him on Twitter

6 Responses to “10 questions to ask non-procurement colleagues about contracts”

  1. Nice timing – just putting together a contracts management template and these simple steps cover all the fundamentals in a way that can be easily explained to internal stakeholders.

  2. I’d suggest that it would also be useful for each of these to provide a what happens if you don’t do these. That is provide the horror stories ( staff being given vouchers to buy bra’s would be today’s example even if not an outcome of poor contract management I just couldn’t resist ;-) ). Many stakeholders believe what we’re talking about is simple and take the list at face value. The horror stories provide the incentive to look more closely at why the question is being asked.

  3. You have selected a new supplier? Are you aware of the approval process and quality audit obligations/timing for the Company to approve a new supplier – best to engage with Purchasing before making any selection.Often a major cause for problems

  4. Even after a few years in the business I think this is a useful checklist for anyone embarking on a new supplier or service contract. I will certainly be using it so thank you!

  5. Thanks Stephen,

    I would add for the supplier to highlight 1. any third party dependencies/bottlenecks in their risk register and how to mitigate a delay. 2. Also, where an Letter of Credit /Banking Code is involved, to be clear the terms coincide with your own contract terms and what takes priority- not always self evident! 3. Terms of Customs Clearance/ INCOTERMS is also an important aspect to pay attention to. 4. Laws of Adjudication for trans- shipments.

    However, I presume all covered in the broad questions raised and more importantly explicit in the contract! Ta.

  6. Many of the big failures in procurement begin with an unrealistic request that is questioned or ignored by decent suppliers, thus leaving an open goal for chancers.

    The most important thing is to have trusted, expert contacts in a range of fields who can give you ballpark figures BEFORE you try to procure anything. This is so much more important than all the box-ticking outlined above. Otherwise you’re faced with two scenarios:

    You expect too little from your budget – suppliers rub their hands together and rip you off.

    You expect too much from your budget – decent suppliers bail, leaving cynical suppliers to find ways of cutting enough corners to deliver against your checklist (but not against your needs).

    As someone managing subcontractors in a private sector company, I make so much use of speculative quote requests, cost databases, and just good old word-of-mouth, to ensure that when I’m putting in a serious RFQ I know what I should be asking for.

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