Finally, fixed-price contracts are used when the scope is clear to both parties. In addition, fixed-price contracts contractually oblige the seller to perform the contractual tasks. Depending on the complexity of the project, each of these steps can take hours or sometimes weeks of work. Each of these steps is also included in the project mast plan. Procurement cycle time can influence the planning of critical activities, including the decision to do the work itself or to outsource the work to others. The delivery dates of equipment and materials as well as the dates of completion of the contractual work are recorded in the project plan. Any procurement activity that is delayed or has slipped down the critical path of the project may require special attention. The public procurement management plan describes how the procurement process is managed. It contains the following information: An FP-EPA is like an FFP, with the exception of a specific provision that allows predefined final adjustments to the contract price due to the modification of the conditions. This is useful if the project is largely dependent on inputs with a price determined by supply and demand, a seller could increase/decrease the overall contract price accordingly. Buyers and sellers in an organization should understand the formal purchasing process. Purchase contracts are used in almost all sectors and companies.
While private companies have flexibility in purchasing, government authorities must comply with certain rules and regulations, as they spend public funds. As a project manager, you should therefore understand different types of purchase contracts that can be useful for outsourcing each sub-project or task to another supplier. Gone are the days when organizations carried out all the processes they needed in the home. Today, organizations perform their core functions and use procurement for other tasks. I wrote this article to explain these three types of contracts. After reading this article, you will be able to understand the basic types of contracts with the help of a few examples. The procurement team uses the answers to the first three questions listed above to determine the approach to the acquisition of goods or services and the remaining questions to determine what type of contract is most appropriate. The acquisition may include the purchase of materials, equipment or other goods necessary for a project, or may require the engagement of a consultant or service provider. Before you begin the purchasing process, you will see if the benefits of the acquisition outweigh the benefits of internal project completion….
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