L6M5 Tutor Notes 1.0 AUG19

CIPS Level 6 Professional Diploma in Procurement and Supply
Tutor Notes
Module title: Strategic Programme Leadership [L6M5]
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Learning Outcome 1: Understand and analyse contracting for programmes
These notes are designed to support teaching staff using the CIPS Teaching Resources PPT slides. Teaching
staff are advised to cross reference against the relevant module content and learner resources (e.g., study
guide). Supplementary resources are available on cips.org in the Student Zone, CIPS Knowledge and Supply
Management online journal (www.cips.org).
SLIDE TUTOR NOTES
1 Not applicable
2 EPC contract – Engineering, procurement and construction (refer to the diagram on the
slide)
An EPC contract is used in the following cases.
• The client wishes to expand their facilities but do not have the expertise required
to perform the works needed.
• The client deems the programme to have a level of risk associated with it, which
would be better handled by a party with more experience.
• Constructing facilities, which will then be used to conduct processes for
infrastructure purposes, e.g., building a power plant, prisons or a manufacturing
facility.
The EPC contractor’s job includes the following.

• They are responsible for the delivery of a project from commencement to final
completion.
• May engage other consultants, suppliers and subcontractors to complete the
programme but retains the responsibility to the client for delivery of the
programme.
• Will use traditional project management techniques to break the contract down
into key phases or milestones.
• Mechanical completion
• Performance testing
• Provisional acceptance
• Commercial operation
Class discussion
As a class create a list of the advantages to contractor and client when using EPC
contracts. Once complete, compare the learners’ lists with the below.
Advantages to the EPC client:

• Allocation of design and construction risk is given to the EPC Contractor
• Easier to manage as there is only one contractor to liaise with
• Certainty in the price makes it easier to budget
• EPC contractor is incentivised to complete quicker
• Projects delivered will typically be fit for purpose through the use of the
performance specification
2
SLIDE TUTOR NOTES
Advantages to the EPC Contractor:

• More control over the design and selection process of subcontractors
• Contract price may be more lucrative if early completion targets are met and
subject to bonuses
• Clearly defined scope allows for more detailed planning and fewer changes during
the programme
• Only having one point of contact with the client prevents confusion caused by
other subcontractors/suppliers/etc.
3 DBO contract – Design-Build-Operate contract
• Contractor is responsible for the design and build activities, as well as the
operation and maintenance of the completed work or facility.
• Reduces the number of external parties that the client must deal with.
• Typically used for programmes with durations of fifteen to twenty years – supports
long-term relationships.
• Encourages the contractor to design and build a facility which is durable, reliable
and efficient to operate, and encourages higher levels of innovation, cost efficiency
and performance delivery.
• The contractor can take an integrated approach to the programme, and plan for
activities to overlap, which can reduce the completion time of the programme and
leads to greater cost efficiency.
• Includes provisions to replace any assets or components that will fail due to wear
and tear or reach the end of their useful life if it falls within the time frames of the
programme contract.
Refer to the diagram on the slide for the advantages and disadvantages of DBO contracts.
Learner activity
Research projects that have used DBO contracts. Were they successful?
4 In many professions, there exists at least one professional body or institution, which is
recognised in a given field of work.
Institutions aim to develop the interests and practices of individuals associated with the
relevant profession and ultimately look to safeguard the public interests.
Accreditation by institutions (by firms or individuals undertaking examinations, audits,

checks, etc.) demonstrate they operate to a defined standard and provide trust or piece of
mind for the client.
3
SLIDE TUTOR NOTES
Functions of professional bodies or institutions include the following.

• Set standards for best practice in their industry
• Address technical and ethical aspects of an industry in order to build both social
and economic capital
• (Refer to the diagram on the slide)
In the UK there are approximately 400 professional bodies, which represent

approximately 13 million working professionals.
These are divided into professional associations, regulatory bodies and learned societies.
Some professional bodies combine these functions.
Learner activity/Class discussion [delete as applicable]

Research and prepare a short statement to present back to the class for five different
institutions or professional bodies that represent best practice within their industries.
 Chartered Institute of Supply

 The New Engineering Contract (NEC) core and optional clauses
 International Federation of Consulting Engineers (FIDIC) contract forms
 Institution of Mechanical Engineers (IMechE) contract forms
 Joint Contracts Tribunal (JCT) contract forms
5 The complexity of contracts differs depending on the industry sector that the organisation
is operating in.
Some key considerations when choosing which contract form to use include the following.
(Refer to the points on the slide.)
• The composition of the team – helps the parties to understand their roles and
responsibilities and where the risks of the programme are allocated.
• The level of client involvement, and whether a third party, such as a Project
Manager, Contract Administrator or Consultant Engineer will be used.
• The compatibility of agreements – ensuring there is consistency in the documents
which are called up in the contract forms.
• The amount of information available at the tender stage.
• The desired relationship between the parties, e.g. NEC contracts focus on
collaborative working relationship; JCT contracts facilitate a more transactional
relationship between the parties.
• Cultural sensitivities
• The interests and involvement of stakeholders, e.g., NEC contracts have proven
very effective when the key measure is timeliness of completion; FIDIC suites are
more appropriate if the key measure is cost control.
The success of a programme begins with the choice of contract form that is used.
4
SLIDE TUTOR NOTES
Class discussion
Discuss a project which would best suit:
1. An NEC contract
2. A JCT contract
3. A DBO contract
6 Risk and reward pricing mechanisms are aimed at reshaping the contractor and client
relationship to ensure that the partnership is based on a win-win framework, meaning
that the pricing mechanism support a constructive contracting relationship.
A simple structure of a risk and reward pricing mechanism is as follows.

• 4% margin is fixed
• Target cost is set based on benchmarks, e.g., 12%
• Under achievement of the target means a penalty cost against the 4%
• Over achievement means a % of the additional saving awarded to the Contractor.
Target cost – the agreed total cost between a client and contractor that a programme
should aim to not exceed.
• Offering a financial reward if they work to a target cost can encourage contractors
to work efficiently.
• Any savings made are shared between the client and contractor.
• If the actual cost is higher than the target cost, any additional expenses may also
be shared, in proportions agreed in the contract.
• Forces the contractor to focus on what the client actually wants, usually with
reference to a specification or statement of work, which in turn leads to the client
having higher levels of satisfaction.
• Shared risk-reward arrangement encourages a high level of collaboration between
the contracting parties.
• Bonus payments and penalties are usually capped in order to prevent any
adversarial behaviour.
• The client must have a sufficient level of experience and knowledge of the work to
be performed on the programme in order to accurately estimate and negotiate
with the contractor.
• Common in industries where there are high levels of competition and the end
product is homogenous or indistinguishable to the end consumer between
suppliers, for example in the following industries.
• Construction
• Energy
• Healthcare
5
SLIDE TUTOR NOTES
Learner activity
Does your organisation use risk and reward or target costing? If so, explain to the class a
situation when it has been used and how successful it was.
If your organisation does not use these methods, research projects that have used them to
further your understanding.
7 Investment appraisal – helps decision-makers decide which programmes to pursue.
The following are reasons why investment appraisal is important.

• The resources required for programmes can be extensive and can have a
significant impact on the business.
• The commitment required by a business to complete a programme may span a
long period of time.
• Generally the longer the time period, the more chances there are for something to
go wrong.
• Programmes must compensate the business effectively by adequate returns.
• Once a programme is accepted, there are usually high costs associated with
terminating the programme early stemming from liquidated damages or finding
alternative suppliers to complete the work which is outstanding.
The profit calculation is traditionally shown in a profit and loss account, or as part of an
organisation’s income statement, where net income equals net profits.
The term earnings is also used to describe profits.
Points to note when conducting an investment appraisal of different options include the
following. (Refer to the points on the slide.)
• Consider only the relevant costs – some decision makers may be tempted to
amortise fixed costs and overheads, but it is important that only the costs, which
change with the investment option being considered, are taken into account.
• Consider opportunity costs of choosing one investment decision over another.
• Consider any taxes that may be applicable to resulting profits.
• Remember that cash flow, rather than profit flow, is key when assessing different
options.
• When using discounted cash flow techniques, remember that interest payments
from loans or financing should not be taken into account – this is because the
method of using discounted cash flows already takes into account the costs
associated with any interest payments.
• Results from the investment appraisal methods should only be used as part of a
wider set of considerations and not the sole measure used to guide decision
makers.
6
SLIDE TUTOR NOTES
Other factors should be considered alongside the investment appraisal, such as the
following.
• The strategic fit of a programme to a company.
• The volatility of a given market.
Learner activity
Research profit and loss accounts and income statements to further your understanding of
the results of investment appraisals.
8 There are benefits and limitations of each method of investment appraisals.
Payback analysis (refer to the first equation on the slide)

• Forces decision makers to focus on the viability of a potential programme, and its
contribution to the financial sustainability of the company.
• Focuses on the speed with which programmes will recover their costs; this makes
programmes with faster paybacks more financially attractive than those with
longer paybacks.
• Helps to reduce the exposure to risk if the end customer decides to terminate the
programme early.
• Ignores the profitability and cash flow of the programme once the costs have been
recovered.
The use of average rate of return (refer to the second equation on the slide)
• Allows decision makers to compare the Return on Capital Employed once a
programme is completed.
• Percentage indicates the efficiency of a programme and its ability to grow the
investment of a business.
• Limits the possibility of examining the scale of the initial investment and return as
an absolute figure.
• Does not consider cash flow, which is a vital measure of the financial health of a
business.
Both methods do the following.

• Fail to take into account the time value of money, that is, that money is worth
more at the present time than in the future due to factors such as inflation.
• Are not concerned with profit maximisation
• Set minimum requirements for potential programmes on a judgment basis, which
can be easily altered to suit the needs or interests of key stakeholders.
Class discussion
Which of the two methods of investment appraisal is favourable?
Would you choose to conduct just one or both? Discuss the reasons for your answers.
7
SLIDE TUTOR NOTES
9 Answers to missing cells below from top right.

£0
£-50
£100
£250
£600
£1350
8
Learning Outcome 2: Understand and analyse programme leadership approaches
SLIDE TUTOR NOTES
10 Not applicable
11 Categories of costs associated with a programme include the following. (Refer to the table
on the slide)
• Direct costs – those associated directly with creating and delivering the product or
work needed by the programme.
• Indirect costs – those that may be shared with other departments or programmes,
for example, administration, staffing or IT, not directly associated with the
programme.
• Fixed costs – those that remain the same regardless of output, for example, the
cost of machinery.
• Variable costs – those that vary depending on how much of the resource is used,
for example, the cost of staff.
Variance analysis – commonly applied to variables of scope, cost and schedule.

• In the area of budgetary control, spending variance is the primary measure.
• For example, spending of a particular material may have gone over the budgeted
spend either because of changes in pricing or in quantities. The analysis will
identify what type of variance has taken place.
A variance analysis can reveal the following.

• Favourable variance – the actual results are better than the expected results.
• Unfavourable or adverse variance – the actual results are worse than the
expected results.
Learner activity
In pairs create a cost variance analysis model for a project with which you are familiar
with.
Were there any variances? Were they favourable or adverse?
12 Open book costing – requires the supplier to be open with their costs and margins in order
to work with the buyer to keep costs down.
• Cost transparency means that programmes have access to all suppliers’ charges,
costs and planned returns.
• The aim is not to drive down suppliers’ margins – that would put them out of
business.
• Information should be used by both parties to identify costs savings and manage
the programme more efficiently.
9
SLIDE TUTOR NOTES
• Incentive – both sides have the opportunity to share any savings.

• Equally, both the supplier and contractor share the risks.
• Open book costing often takes place during supplier negotiations, when it can be
useful to have input from the supplier’s legal, finance and commercial
departments.
• The buyer should always be aware of what changes the supplier is implementing
whenever costs are lowered to ensure that quality is not compromised.
• For this method to work, both sides must be committed to collaboration and
honesty, working together to achieve goals; it cannot work if there is an adversarial
relationship between the two parties.
There are several aspects that should be checked in suppliers’ cost models. (Refer to list on
slide.)
• Whether contingency is included
• Whether it includes fixed and variable costs
• Whether labour and materials costs are clear
Benefits of open book costing and cost transparency include the following.
• Provides a basis for the buyer to review supplier performance.
• The buyer benefits from the expertise and experience of the supplier in the areas
of quality control and cost efficiency.
• When effectively implemented, it builds understanding and trust between the two
parties.
• It can lead to cost savings.
• It is particularly suitable for managing high-value, complex projects.
Potential drawbacks/risks of open book costing include the following.

• When well-managed, this technique can be resource intensive due to regular
reviews or audits.
• Specialist skills (e.g., financial and commercial expertise) are needed to ensure
effective management.
• If not managed well, it can damage relations between buyers and suppliers.
Class discussion
What are your views on open book costing?
Would you/do you use this approach?
What are the reasons for your choice?
10
SLIDE TUTOR NOTES
13 Three commonly used methods for estimating costs include the following.
Parametric
• An estimate generated by calculation or algorithm using actual results from past
projects and defined parameters, such as scope, duration or complexity.
• Actual results of similar past projects and well-defined parameters.
Comparative (or analogous)
• Uses data from similar projects or programmes, of similar scopes, to estimate
costs.
• Actual results of similar past projects.
Bottom-up (refer to the table on the slide)
• The cost estimates for each component of the project are amalgamated to produce
an overall estimate.
• Cost estimates from each component of the project or programme.
The bottom-up estimate is regarded as producing the most accurate results but is the
most time-consuming and resource-intensive.
Two other methods of cost estimating include the following.

• An expert judgment
• A three-point estimate – requires the following three estimates of the project cost.
• The best-case cost (Bc)
• The most likely cost (Mc)
• The worst case (Wc) total cost
Use the formula, taken from PERT to give a better estimate of total cost: Ec = (Bc + 4Mc +
Wc)/6
Learner activity
Split into three groups.
Group 1: research parametric costing and consider when it would be appropriate to be
used.
Group 2: research comparative costing and consider when it would be appropriate to be
used.
Group 3: research bottom up costings and consider when it would be appropriate to be
used.
14 Measurement, monitoring control and improvement
• Measurement and tracking of resources helps to identify and address areas where
issues have arisen.
• Excessive costs or poor-quality outcomes can have a significant impact on the
following.
• Project/programme performance
• Bottom-line performance of the organisation
11
SLIDE TUTOR NOTES
• Project performance can be measured by breaking down the project outcomes

and activities into smaller measures, which can help the project team to organise
their task activities and prioritise their efforts.
Project monitoring and control system (refer to the points on the slide).
• Used to minimise deviations from the project plan, even when faced with
unexpected events.
• Status of project is identified, reported and compared against the plan.
• Reasons for deviations are investigated, and appropriate corrective measures are
taken.
• The project manager collates and monitors reports from the teams and reports
back to the project board.
Reports will include the following.

• Financial information
• Progress against the initial project plan
• Accountability and ownerships
• Risks
Earned value analysis (EVA) is used to monitor the progress of a project.

• Compares where a project should be, known as ‘planned value’, to where it
actually is, known as ‘earned value’.
• Helps programme managers evaluate whether the programme is on track to meet
its targets.
Class discussion
What type of resource measurements and controls are you aware of?
What do you use within your organisation?
Should any further methods be implemented to enhance efficiencies?
15 (Refer to the slide for definitions of key terms)

• Whenever a party defaults on its contractual obligations, the other party is likely to
suffer losses.
• Losses can be significant, so clauses are included to protect against large costs.
• Liability limitation is particularly common in construction projects.
In cases of major default, the other party may suffer the following two types of losses.
• Direct losses – arise directly and naturally from a breach of contract, for example,
damage to property.
• Consequential losses – occur indirectly from the breach of contract, for example,
loss of profit or loss of opportunity. Generally, the most unpredictable are often
the most significant. Liability limitation often focuses on this type of loss.
12
SLIDE TUTOR NOTES
Procurement professionals need to do the following.

• Limit the damages that are due to suppliers if their organisation defaults on its
contractual obligations.
• Protect the project from the effects of breach of contract by major suppliers.
• It is in the interests of the project that recoverable losses are unlimited.
• Suppliers would wish to restrict these losses by excluding consequential losses.
• Contracts generally allow for recovery of direct costs but include a limitation of
these indirect losses.
• Without these warranties, the project may be considered too high-risk for
suppliers to enter into.
• Contracts that limit the suppliers’ liability are often more cost effective for the
project.
Learner activity
Research how consequential losses can be avoided?
What clauses/terms could be inserted into contracts to protect the buyer?
16 Audit
• Carried out in the project closure phase to identify which parts of the project were
managed effectively, and which presented challenges.
• Compares project performance against the initial project plans, such as the project
initiation document, business case and project plan.
• Examines the following against plans.
• Cost
• Schedule
• Tolerances
• Prepares an analysis of lessons learned – can be used to benefit future projects.
Incurred cost audit

• Used in the public sector and/or of high financial value.
• Verifies that all project costs invoiced were specifically for the benefit of the
project.
An audit can be carried out by the following people. (Refer to the table on the slide.)
• The project manager (internal audit)
• Auditor or external party if the project is large or of high value, or if the audit is
financial (external audit)
Class discussion
Nominate a scribe from the class.
Ask the scribe to divide a flip chart sheet into three columns – type of audit, advantages
and disadvantages.
Complete the grid with the pros and cons of both internal and external audits.
13
SLIDE TUTOR NOTES
17 The procurement department has an important role to play in knowledge management.

• Their procedural knowledge is crucial to the success of projects.
• Well placed to gain knowledge from their supply chain.
• Can facilitate and enhance the exchange of information and knowledge through
the relationships with both internal customers and suppliers.
Ensuring effective knowledge management at the close of a project is much easier if it has
been part of the project throughout its duration.
Ginger Levin (2010) – recommendations for ensuring knowledge management is built into
the project plan.
• Make knowledge management a Work Package in the Work Breakdown Structure.
• Establish a point of contact for knowledge management in each project. This
person could report to someone responsible for knowledge management at
programme level.
• Define roles, responsibilities and accountabilities for knowledge management. This
could be done using a responsibility matrix.
• Communicate the importance of knowledge management.
Polyaninova (2011) suggests the following knowledge management activities in the

project closure phase.
• Post-project reviews
• Post-project appraisal
• After action review
• Debriefing
• Reuse planning
• Co-operative project evaluation
• Reflection
• Corporate feedback cycle
• Post-installation or implementation evaluation
Learner activity
Individually research each of the management activities suggested by Polyaninova (2011).
18 Hold a class discussion to debate the questions.

Expect answers that relate to a lack of consequences damages clause in the contract.
14
Learning Outcome 3: Understand and analyse the role of culture on achieving
programme success
SLIDE TUTOR NOTES
19 Not applicable
20 Ed Shein’s Levels of Culture Model (refer to the diagram on the slide)
The first level focuses on the aspects (‘artefacts’) of an organisation that can be seen, felt
and heard by an observer to an organisation.
• The physical components of an organisation which relay cultural meaning.
• Cultural meaning can also be reflected in the overt and everyday behaviour of the
members of the group, including the language that they use.
• Understanding the language and behaviour common to the different departments
can be useful for smoother inter-departmental functioning, and for understanding
the culture of external organisations, such as suppliers, agencies and competitors.
Second level looks at the values and beliefs of an organisation.

• Guides decision-making and the approach to resolving problems; used to justify
the actions and behaviour of individuals.
• Understanding suppliers’ values can help when understanding their actions and
the logic which has been used to guide their decisions and can be used to influence
them.
• For example, if a supplier’s values are based on customer service and
dependability, the supplier could be encouraged to expedite a delivery to better
satisfy the end customer and promote potential follow-on business.
Third level looks at the basic assumptions that are unseen and not consciously present in
everyday interactions.
• Unconsciously learned responses to challenges that an organisation may face
which eventually become implicit assumptions that guide behaviour and influence
how individuals perceive, think about and respond to events.
• This can be likened to the tacit knowledge within an organisation and not just at a
programme level.
• Harder to assess when looking at suppliers and external organisations; may be
recognised at the later stages of a programme’s life cycle once the working
practices and relationships have become established.
15
SLIDE TUTOR NOTES
Tips for assessing and understanding an organisation’s own culture.

• Be impartial when observing the culture of an organisation – look through the eyes
of an outsider to get as objective a view as possible.
• Ask questions to reveal the power structure and the flow of information.
• How do people interact with each other?
• How do senior managers interact with shop floor workers (if at all)?
• Look for displays of emotion – indicates/displays of the values which are inherent
in an organisation – what individuals get excited or upset about, why conflicts
occur and the engagement of members.
• Watch out for things which are not there – this can show what the organisation
views as important. The following for example.
• Lots of reports and charts and facilities dedicated to a programme may
indicate that the success of the programme is measured by key metrics.
• A lack of these may indicate that the programme is more reliant on
intangible factors, such as the progress of research or development of
relationships, for example.
Learner activity
Create an Ed Shein Culture Model for your organisation.
Discuss the model with the class and compare the difference in types of cultures.
21 The six elements that make up the paradigm include the following.
Stories
• Past events that have occurred and which colleagues are familiar with.
• Typically shared by management to highlight what the company sees as successes.
• Identify key values and attributes that management wishes to promote in the
workforce, for example, a story about the founder starting the company with a
$1000 loan will promote an enterprising culture.
Symbols
• Visual representations of the company, ranging from the company logo to the
layout and dress code of the office.
• Reflect, to some degree, the attitude taken to work and how situations are
handled.
• A formally structured office with uniform corporate colours and formal
business wear may indicate a process-driven company.
• An open-plan office with a varied colour scheme and no requirement for
formal business wear may indicate a relaxed company which encourages
creativity.
Power structure
• Refers to the individuals or teams that have the greatest influence on the
decisions, operations and strategic direction of the business.
16
SLIDE TUTOR NOTES
Organisational structure
• Includes both the hierarchy of an organisation and any informal structures which
may arise from social interaction in the office.
Control systems
• The way in which an organisation is controlled, such as financial measures, quality
systems and rewards packages, will influence the culture of the organisation.
• An organisation with an emphasis on control systems is likely to focus on processes
and output.
Rituals and routines
• The daily behaviour and actions of employees that signal acceptable organisational
behaviour.
• Can be influenced by the operational processes in place – show what is valued by
management and determine what is expected of staff in every-day situations.
• A lot of reporting in processes may indicate a management preference for
frequent communication.
• A comparatively high level of freedom may indicate management place a
higher value on trust and creativity.
Class discussion
Consider APPLE as an organisation and hold a discussion using the cultural web as the
basis for it.
Discuss the stories, symbols, rules etc., that have created the organisational culture to
become what it is today.
22 • Every organisation will display a mix of culture types within its own unique culture.
• Different individuals will have a preference for a particular type of culture.
• People are more likely to be motivated if they work at an organisation that has a
culture that reflects their personality and attributes.
The following are Charles Handy’s four types of culture. (Refer to the table on the slide)
Power culture
• Characterised by a central figure of power who uses influencers throughout the
organisation to circulate any message or decision.
• Likened to a spider’s web.
• Common in small, entrepreneurial companies or teams and allows teams to
respond quickly to events due to the lack of bureaucracy.
A task culture
• Focused on a specific job or project. It looks to bring together the right people and
the right resources needed to complete a task and uses the full capabilities of a
team or organisation.
• Likened to a net – organisations often have a matrix or project-based structure.
• Common where flexibility and sensitivity to the market or environment is
important.
17
SLIDE TUTOR NOTES
Role culture
• Often associated with high levels of bureaucracy, logic and rationality.
• Roles likened to pillars that support a building.
• Individuals are selected to fill roles based on their experience and capabilities.
• All work is formalised and standardised, and there are clear lines of authority.
• Decision-making can be a slow process and the organisation is less likely to take
risks.
Person culture
• Focuses on the individuals within a team or organisation.
• It occurs when a group of people with similar interests’ band together to share
office space, equipment, facilities, etc., to further their collective interests, such as
a doctors’ surgery.
• Likened to a constellation of stars.
Learner activity
Which of the four types of culture best describes your organisation?
Discuss your type of culture with a partner and understand the differences between the
two.
23 Richard Lewis devised a model which focuses on the importance of cross-cultural training
and offers a generic method for categorising cultures.
The Lewis Model categorises culture under the following three main headings.
Linear-active – the extent to which individuals are task orientated.

• Individuals in a linear-active culture are highly organised, complete chains of
actions focusing on one activity at a time, and typically prefer straightforward and
direct discussions using logic to guide decisions rather than emotions.
• Individuals are more likely to honour written contracts and are process orientated.
Multi-active – individuals are emotional and impulsive in their responses and place a high
importance on the role of family.
• Individuals in a multi-active culture have a preference for multi-tasking and
consider the formation of relationships as more important than products or
material items.
• Individuals may have a limited respect for authority and often procrastinate, yet
they are flexible in their approach to tasks.
• This can obviously have an impact on the way information is communicated during
a programme.
• Lines of authority do not play an important role when influencing the direction of a
programme within a multi-active culture.
18
SLIDE TUTOR NOTES
Reactive – individuals absorb a lot of information through listening and rarely initiate
action or discussion.
• Individuals in a reactive culture typically concentrate on what is being
communicated and have a clear respect for authority.
• Silence also has a meaningful part in discussions.
The three dimensions outlined in Lewis’ model have obvious impacts on the way in which
an individual or organisation will interact with counterparts from different nations.
For example, an individual from a linear-active nation may place high regard on formal
processes and contractual agreements whereas an individual from a multi-active nation
may see contracts as closer to a gentlemen’s agreement than a point of reference to a
fixed agreement.
Learner activity/Class discussion

Research the Lewis Model using the Internet and see if you can find any organisations or
institutions that use the model to enhance the way their employees interact.
24 Hofstede’s work on cultural dimensions examines differences between different

nationalities and how they may work together and where challenges may lie.
The work identifies the following four cultural dimensions. (Refer to the table on the slide.)
• The social distance among individuals.
• The extent to which individuals can tolerate ambiguity and risk.
• The extent to which individuals express a preference for individualism or
collectivism.
• The extent to which traditionally masculine traits are demonstrated.
Hofstede later added a fifth dimension, labelled ‘Confucian work dynamism’, which looked
to map the extent to which Chinese cultural values impacted the workplace.
Mapping the cultural dimensions of a nation makes it possible to explain or predict the
culture of an organisation located there.
It is particularly useful to identify shortcomings in multi-nationals that are experiencing
challenges in operating effectively.
Other key research in this field includes the following.

Tompenaars and Hampden-Turner identified seven areas in which cultural differences may
affect the organisational behaviour of individuals.
• Relationships and rules
• Responsibility
• Emotional expression
• Work-life separation
• Status
• Time
• Environment
19
SLIDE TUTOR NOTES
Ed Hall – framework for understanding cultural differences.

It conceptualises culture as being made of a series of ‘languages’: the language of:
• Time
• Space
• Things
• Friendships
• Agreements
Learner activity
Split into three groups.
Group 1: Using Hofstede’s work, describe how AFRICA relates to each cultural dimension.
Group 2: Using Hofstede’s work, describe how CHINA relates to each cultural dimension.
Group 3: Using Hofstede’s work, describe how AMERICA relates to each cultural dimension.
25 Robert Quinn and Kim Cameron produced a model known as the Competing Values
Framework which looks to map two dimensions to assess whether an organisation
performs effectively.
One dimension: flexibility vs. control.

• The extent to which a leader is viewed as being effective will depend on the values
of the organisation, which in turn can be influenced by the values of a particular
nation or the industry in which it operates.
• Flexibility – organisations and managers are viewed as being effective leaders if
they change and adapt to the needs of the organisation.
• Control – managers viewed as effective if they are more consistent and
dependable.
• Technology-based companies – value flexibility, as employees need to be able to
adapt to technological changes and take advantage of emerging opportunities,
collaborations, etc.
• Education industry – values consistency in processes.
Other dimension: orientation of a company.

• This dimension will indicate whether the organisational values are based more
towards precision and consistency or if are results orientated.
• Internal orientation characterised by integration and unity; external orientation
characterised by competition and differentiation.
• Some organisations management team will be seen as being effective if it
maintains harmony and keeps the different functions working together with well-
maintained processes.
• Other organisations, management teams will be seen as being effective if it can
effectively compete against others and make the organisation stand out within its
market or field of interest.
20
SLIDE TUTOR NOTES
This creates four quadrants that represent distinct groups or sets of organisations. (Refer
to the diagram on the slide.)
• Shows a clear link between the values of an organisation and how these are
manifested within the working practices and culture of an organisation.
• Identifies what the organisation views as good measures to assess the
effectiveness of a company.
• Each quadrant identifies the general approach of an organisation.
• Top left quadrant – focus on doing things together vs bottom right – focus
on doing things fast.
• Bottom left quadrant – do things right vs top right quadrant – do things
first approach.
• Can be used to map and identify which management style would be best suited in
an organisation depending on the common values held by the employees.
Learner activity
Create a competing value framework for your organisation.
What did this framework teach you about your organisation?
26 Management needs to find strategic ways of changing the behaviours of the individuals of
an organisation in order to have a lasting impact.
There are various strategies that managers can employ to change behaviours. (Refer to
the key points on the slide.)
Leadership by example – the leadership team should demonstrate the desired changes in
order for the rest of the organisation to understand what is expected of them.
The leadership team needs to be the following.
• Supportive and receptive to suggestions.
• Visible where possible so employees can buy in to the changes and change their
behaviours willingly rather than under pressure.
Create a movement among individuals using communication and training to ensure

individuals feel equipped to deal with any changes that are being introduced.
• Equip individuals to deal with any changes that are being introduced.
• Individuals may forget what has been taught or may resent any training.
21
SLIDE TUTOR NOTES
Run a single project as a demonstration of how to implement the new change to

illustrate how the new way of working will be beneficial.
Ideally should involve a member of senior management demonstrating the purpose and
the use of any changes, with a similar effect to that of leadership by example.
The pilot project:
• Needs to be one of real value and one that contributes to the objectives of the
organisation, otherwise its credibility may be questioned.
• Should be performed openly and progress should be communicated along the way
as a learning experience for the rest of the organisation.
Create spaces and adopt tools that support the changes – can take the form of a
dedicated meeting room or coffee table in the kitchen where ideas, discussions, data,
research and progress reports can be shared.
• Encourages individuals to participate in the adoption of the process change and
consequently change their own behaviours.
• Provides evidence that an introduced change is working and is a much more
tangible and engaging method of communicating progress than giving periodic
progress reports in the company newsletter or meetings.
Learner activity/Class discussion

Do any of these strategies apply to your organisation? Are there any other strategies that
you would now recognise as being a strategy to change behaviour?
27 Expect the learners to have a discussion about which statement suits which area of the web.
Answers:
1. Rituals and routines
2. Power structures
3. Stories
4. Organisational structure
5. Control systems
6. Symbols
22

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CIPS Level 6 Professional Diploma in Procurement and Supply

Leading global excellence in procurement and supply

SLIDE TUTOR NOTES

The EPC contractor’s job includes the following.

Advantages to the EPC client:

Advantages to the EPC Contractor:

Accreditation by institutions (by firms or individuals undertaking examinations, audits,

Functions of professional bodies or institutions include the following.

In the UK there are approximately 400 professional bodies, which represent

Learner activity/Class discussion [delete as applicable]

 Chartered Institute of Supply

A simple structure of a risk and reward pricing mechanism is as follows.

The following are reasons why investment appraisal is important.

The term earnings is also used to describe profits.

Payback analysis (refer to the first equation on the slide)

Both methods do the following.

9 Answers to missing cells below from top right.

SLIDE TUTOR NOTES

Variance analysis – commonly applied to variables of scope, cost and schedule.

A variance analysis can reveal the following.

• Incentive – both sides have the opportunity to share any savings.

Potential drawbacks/risks of open book costing include the following.

Two other methods of cost estimating include the following.

14 Measurement, monitoring control and improvement

• Project performance can be measured by breaking down the project outcomes

Reports will include the following.

Earned value analysis (EVA) is used to monitor the progress of a project.

15 (Refer to the slide for definitions of key terms)

Procurement professionals need to do the following.

Incurred cost audit

17 The procurement department has an important role to play in knowledge management.

Polyaninova (2011) suggests the following knowledge management activities in the

18 Hold a class discussion to debate the questions.

SLIDE TUTOR NOTES

20 Ed Shein’s Levels of Culture Model (refer to the diagram on the slide)

Second level looks at the values and beliefs of an organisation.

Tips for assessing and understanding an organisation’s own culture.

Linear-active – the extent to which individuals are task orientated.

Learner activity/Class discussion

24 Hofstede’s work on cultural dimensions examines differences between different

Other key research in this field includes the following.

Ed Hall – framework for understanding cultural differences.

One dimension: flexibility vs. control.

Other dimension: orientation of a company.

Create a movement among individuals using communication and training to ensure

Run a single project as a demonstration of how to implement the new change to

Learner activity/Class discussion

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