Contracting Procurement And Contract Management Case Study

Contracting Procurement And Contract Management Case Study Contracting Procurement And Contract Management â€" Case Study Example > CONTRACTING AND PROCUREMENTCONTRACT TYPES RECOMMENDEDThis project requires various items to be delivered for its successful completion. However, there are several types of contracts that can be recommended for use. Project managers must understand that there is a substantial need to have the required knowledge on contract management before choosing the best type of contract. One of the most crucial terms that are worth noting is the contract management life cycle (CMLC). According to the Chartered Institute of Purchasing and Supply. Contract management life cycle “is the process of systematically and efficiently managing contract creation, execution, and analysis for maximizing operational and financial performance and minimizing risk” (Bartle Korosec, 2013). Contract management systems range from simple database systems that allow companies to find their contracts and track basic information (such as contract expiration dates and deadlines) to contract lifecycle management ( CLM) systems that attempt to automate the entire contract lifecycle, from the initial contract request through contract creation, signing, filing, and post-contract reporting. Some systems are primarily intended to support the procurement function, and others the sales contracting function, but increasingly these systems are being designed to handle all types of contracts. While a simple database and tickler system may be adequate for companies with only a small number of contracts to deal with, more fully featured CLM systems add significant features and functions to help manage what, for many companies, is an increasingly complex and critical area. This means that there are issues that must be considered when choosing the best contract in a given project. For the case of IOC One, one of the key issues that will be vital is selecting and recommending a contract type the maximization of financial and operational performance. In such a case, the selected contract type should be abl e to produce the best results despite the current and the changing situations in the market (Berrios, 2006). Secondly, the issue of risks should be minimized. For this project, there are several risks that can be anticipated, but the contract type should be in a better position to minimize all these risks at all costs. Finally, the recommended contract type will be efficient and effective in the delivery of the required materials for the success of the project (Wang HU, 2007). One of the most recommended contract type for this project is fixed price contracts. This is one of the most applied and modern type of contract across the globe. This type of contracts is also referred to as lump sum contract. In such a type of contract, the buyer of any given products and the seller will agree on a certain fixed price. The fixed price type of contract is free from the negative issues such as inflation. This advantage is mainly effective for projects that run for more than one year. In thi s case, the project manager will not be worried about the changes in economy that can adversely affect the prices of the commodities and materials used in the project. The provider or supply of the drilling materials and equipment in this project will have to agree with the buyer and in this case, this can be the project managers or the representatives of IOC One (Nemec, Mericková Grega, 2014).