LO9 Procurement

Question 1

2 differences between fixed-price and cost-plus fee supplier reimbursement

Answer 1

1. Fixed price requires detailed scope of products and work, whereas cost-plus involves more uncertainty around what is to be delivered.
2. The fixed price approach provides more cost certainty whereas cost-plus fee makes client budgeting more difficult.

Question 2

Supplier Selection Process

Answer 2

Pre Qualification
Bidding
Tender Review
Contract Review

Question 3

Pre-qualification Process

Answer 3

Reduce long list to short list
Focus on suppliers who are able to meet key scope
E.g. cashflow, profitability
Yes / No questions

Question 4

Bidding

Answer 4

Invitation to tender to potential suppliers.
Suppliers fully understand what is required, level of risk and how to price tender.
Includes pricing model - all bids’ prices structured in the same way.
Clarifying questions / alternative tenders.

Question 5

Evaluating Tenders

Answer 5

Different teams may review different sections.
Ensures evaluations are unbiased.
Under public sector procurement rules, unsuccessful bidder can raise an appeal if specified process hasn’t been followed.

Question 6

3 reasons for robust supplier selection process

Answer 6

1. Ensures best value contract achieved for customer.
2. Ensures transparency and fairness in awarding contracts.
3. Allows large number of potential bidders to be reduced through PQ.

Question 7

2 differences between 2 types of contractual relationships

Answer 7

1. Single supplier relationship is simpler to manage than a multiple supplier relationship for the client.
2. A single supplier relationship exposes the client to less risk than a multiple supplier relationship.

Question 8

Procurement Strategy contents

Answer 8

1. Type of contract to be used
2. Type of supplier (single, multiple, integrated)
3. Make or buy decision