Procurement and contract management
Procurement and contract management
This domain tests procurement strategy, contract selection and administration.
Core rules
- Procurement route depends on risk, scope certainty and capability: fixed price suits well-defined scope; cost-reimbursable suits evolving scope; time and materials suits urgent, uncertain work.
- Evaluate tenders on weighted criteria such as price, quality and risk, not price alone; publish the evaluation model.
- Contract administration covers obligations, deliverables, payment terms, change procedure, performance monitoring and dispute resolution.
- Use KPIs and service credits carefully; they do not replace relationship management.
- Keep records of instructions, variations and acceptance.
Worked example
A council needs a new website but requirements are unclear. A fixed-price contract would invite large contingency or disputes. A cost-plus contract with a cap and shared savings lets the supplier work iteratively while limiting cost. Evaluation weights: quality 60%, price 30%, social value 10%. Reasoning: contract type follows scope certainty and risk allocation, not habit.
Traps
- Awarding on lowest price and ignoring whole-life cost.
- Using fixed price with incomplete scope.
- Ignoring the change procedure and accepting verbal variations.
- Failing to manage supplier performance until problems escalate.
- Confusing contract management with procurement.