CONTRACT MANAGEMENT

NIRDOSH BISTA
• Contracts, are a means to build better business partnerships and to ensure
successful business outcomes.
• Contract management is the process that ensures both parties to a contract
fully understand their respective obligations and that these are fulfilled as
efficiently and effectively as possible to provide the best value for money
WHY USE CONTRACT?

• Describe scope of work

• Establish time frame
• Establish cost and payment provision
• Set fourth obligations and relationship
• Minimize dispute
• Improve economic return of investment
YOU NEED A SOFTWARE, WHAT TO DO?

• A bespoke system.
• Off-the-shelf system
• Customized off-the-shelf system
TYPES OF CONTRACT

• Lump sum or fixed price contract

• Time and material contract
• Unit pricing contract
TYPES OF CONTRACT-LUMP SUM OR FIXED
PRICE CONTRACT

• Involves a total fixed price for all development related activities.

• Can include incentive for early termination or penalties for late termination.
• Preferred when a clear scope and a defined schedule has been reviewed and
agreed upon.
TYPES OF CONTRACT-LUMP SUM OR FIXED
PRICE CONTRACT-ADVANTAGES

• Low risk on the owner, higher risk to the contractor

• Cost known at beginning
• Contractor will assign best personnel
• Contractor motivated to be cost effective.
TYPES OF CONTRACT-LUMP SUM OR FIXED
PRICE CONTRACT- DISADVANTAGES

• Supplier will include price to meet contingencies

• Difficult to modify requirements
• Threat to system quality
• Competent contractors may not bid to avoid high risk contract.
TYPES OF CONTRACT-TIME AND MATERIAL
CONTRACT

• You pay for the number of hours the software developer works on your
project.
• This agreement ensures that the developer will be paid, even if the timeline
for the project is longer than expected.
TYPES OF CONTRACT-TIME AND MATERIAL
CONTRACT-ADVANTAGES

• Easier and less complicated way to get started with a custom software developer
• More flexibility to make changes to features, while remaining within the same budget
• Stronger trust and communication because both parties know what to expect
• Better chance of achieving your desired result due to constant communication
• Ability to keep track of progress on the software development project
• Reasonable timeline, allowing the developer to focus on quality instead of rushing to
complete the job
TYPES OF CONTRACT-TIME AND MATERIAL
CONTRACT-DISADVANTAGES

• Less control over the budget

• Shifting deadlines, making it harder to know exactly when the product will
be complete
• Constant involvement with the software development company, requiring
more effort and time
• Nearly impossible to predict the final cost, especially as things change within
the software
THE TENDERING PROCESS

• A tender is a formal offer, or a bid, to ultimately secure a contract.

• Tendering is a competition.
THE TENDERING PROCESS
• Tender process is determined
• Request for tender is prepared
• Tenders are invited
• Suppliers respond
• Evaluation and selection
• Notification and debriefing
• Contracts established and managed
THE TENDERING PROCESS-TENDER PROCESS IS
DETERMINED

• Open Tendering
• Select Tendering
• Multi-stage Tendering
• Invited Tendering
THE TENDERING PROCESS-TENDER PROCESS IS
DETERMINED
• Tenders can be issued through:

Expressions of interest (EOI) - used to shortlist potential suppliers before seeking detailed
offers.
• Request for information (RFI) - used in the planning stage to assist in defining the project,
however, not used to select suppliers.
• Request for proposal (RFP) - used where the project requirements have been defined, but an
innovative or flexible solution is needed.
• Request for quotation (RFQ) - invites businesses to provide a quote for the provision of
specific goods or services.
• Request for tender (RFT) - an invitation to tender by public advertisement open to all suppliers.
THE TENDERING PROCESS- REQUEST FOR TENDER IS
PREPARED

• Description of the goods and services to be procured

• Conditions of tender
• Evaluation criteria
• Submission content and format
• Process rules and information
• Conditions of Contract
THE TENDERING PROCESS- SUPPLIERS RESPOND
You should first obtain all relevant documentation. Then:
a. Attend any pre tender briefing sessions being conducted
b. Clarify any uncertainties
c. Plan your response
d. Prepare your response
e. Submit your response in the right format, on time and at the right location
THE TENDERING PROCESS- EVALUATION AND SELECTION
The tender document is accessed:
• Complies with any conditions of participation.
• Tender has been lodged on time.
• Documents are signed as required.
• Tender meets all mandatory requirements
Once this stage is passed then the selection will be on the basis of
• The technical merit of your proposal,
• The capability of your business to fulfil the requirement including: technical and
management competence, financial viability and relevant experience,
• The relevant skills, experience and availability of key personnel,
• Quality assurance requirements, and
• The risks or constraints associated with your offer.