(Solution) CIPS Developing Contracts in Procurement and Supply (PDC)

Executive Summary

In this assessment, an evaluation of ROSHN company contract terms and conditions have been evaluated. By selecting Facilities Management Contract, its effectiveness in ensuring quality issues, time extension risk, costs overruns and unethical practices has been evaluated. Further, the importance of performance measures and management in ROSHN company practices has been prioritised for evaluation. The contract terms and conditions have been quoted for evidencing the success of the contract implementation.

In this assessment, the findings evidence that ROSHN facilities management spend category is characterised by various issues which are stipulated by the terms and conditions. The relevance of this is ensuring success in managing the overall faced challenges. By reviewing the different terms and conditions, the issues related to performance management, force majeure, costs, indemnity, risk management and insurance have been put into account. Additionally, the findings sourced in this assessment evidence that terms and conditions for ROSHN company is that they lead to terms and conditions in procurement and supply departments assuring the organisation for their successful operations. ROSHN has as a result dominated their property and real estate sector fully.

In this assessment, the Battle of Forms have also been evaluated with their importance being noted as harnessing attainment of similar approach in implementing contracts. This is through their terms and conditions as opposed to assuming a hardened position.

From this assessment analysis, different recommendations have been developed and are;

  • Ensuring that the facilities management contract is differentiated from other spend categories by having distinct contracts
  • Attain a common agreement and understanding of terms and conditions for solving challenges linked with battle of form
  • Ensure part of their contract implementation is aligned with various Kek Performance Indicators (KPIs) and contract implementation process
  • Integrate use of modernised technology as part of implementing their contracts to avoid some of the identified Force Majeure challenges
  • Create an increased awareness amongst the staff of PS&M for the purpose of harnessing an improvement of the capacity of appreciating the importance of terms and conditions

Table of Contents

1.0 Introduction. 3

1.1 ROSHN Organisation Background. 3

1.2 Contract 4

1.3 Purpose of the Contract 5

2.0 Risks. 8

2.1 Risk of Poor Quality. 9

2.2 Risk of Extension of Time. 11

2.3 Risk of Increased Costs. 13

2.4 Risk of Unethical Practice. 13

3.0 Performance Measures, Monitoring and Management 14

4.0 Battle of Forms. 16

5.0 Conclusion and Recommendations. 18

5.1 Conclusion. 18

5.2 Recommendations. 18

References. 20

Appendices. 22

Appendix 1: Summary of the Contract Terms and Conditions. 22

Figure 1:Summary of ROSHN Company areas of operations 4

Figure 2:Kraljic Matrix Analysis for the Selected Contract 5

Figure 3:Contract Management Approach. 6

Figure 4:Difference of conditions and warranties. 7

Figure 5:Stakeholders Analysis. 8

Figure 6:4T’s Model of Risks Management 9

Figure 7:Considerations by Procurement in performance measures, monitoring and management 15

Figure 8:Battle of forms summary. 17

Table 1:Risk management matrix. 11

1.0 Introduction

1.1 ROSHN Organisation Background

ROSHN company based in Saudi Arabia operate as a national real estate developer which is powered by the Public Investment Fund (PIF) with their commitment being to deliver a high-level quality communities to the Saudi Citizens. As explained in ROSHN (2022) the organisation intention include to achieve the Vision 2030 of achieving 70% home ownership in entire Saudi Arabia. This is by contributing positively to developing the Kingdom’s real estate sector by ambitious agenda of localisation and job creation. Further, ROSHN company is engaged in offering aspirational living, presenting a holistic city-based experience in a community boasting of unique designs and array of facilities. The areas of organisation operations is as summarised in figure 1;

Figure 1:Summary of ROSHN Company areas of operations

As evidenced in ROSHN (2022a) the organisation operates in active collaboration with multiple stakeholders in different levels. This is through solid partnerships which are customised on generating value for the homeowners, partners, investors and the Public Investment Fund. Hence, as part of their contract implementation, partnership is pursued holistically. This is with a success in identifying, selecting, and working with partners from public and private sectors in equal measures and globally. Hence, for all these operations, the organisation has established appropriate terms and conditions which are intended to ensure that their contracts are successfully implemented. This is to achieve value for money in their operations.

1.2 Contract

As illustrated in appendix 1 section, the selected contract is used for facilities management. The rationale of evaluating on the facilities management category of spend is informed by what ROSHN (2022a) identify as a strategy of raising Saudi Arabia (KSA) home ownership level to 70% in a period of 10 years as supported by the Vision 2030 in the country. In order to identify the importance of the identified category of spend and the contract Kraljic Matrix Analysis can be used. This is defined by CIPS (2022) as a strategic tool applied by procurement and supply chain professionals for identifying and minimising supply risks. Hence, the contract terms and conditions for this contract are informed on how risks are distributed (see figure 2);

Figure 2:Kraljic Matrix Analysis for the Selected Contract

As illustrated in figure 2, facilities management contract which has been selected is grouped in the leverage items. In Saudi Arabia, considering the increased transition from a fully oil and gas industry to venturing in Information Technology and other industries, many facilities management suppliers are coming up leading to high-level competition amongst the suppliers. Hence, low supply risks are evident and as such ROSHN ensure that they clearly stipulate their roles in the contract management. It is their contract terms and conditions which are used to harness the likelihood of negotiating appropriate cost-saving results (CIPS, 2022a). Therefore, in ROSHN operations, they work on developing strategic partnerships as earlier aforementioned not only with KSA Government but also with their different suppliers.

Additionally, considering Facilities Management is a core business area for ROSHN, the expenditure is high with multiple alternatives available and immense suppliers ready to engage them. It is in this light that the contract terms and conditions is used to eliminate the suppliers who do not meet the expected threshold for the purchase requirements. Similar to the UK laws on ‘flexible competitive procedure’ offering a buyer with a freedom of negotiating and innovativeness for gaining in optimum from their private, charity and social enterprise sectors CIPS (2021), in Saudi Arabia (KSA), there equally exists the legislation. ROSHN has integrated limited tendering procedure which is relevant in varying circumstances including extreme urgencies.

1.3 Purpose of the Contract

The purpose of the terms and conditions operated by ROSHN is to achieve what CIPS (2022b) continuous process of contract management cycle. These are used for definition of terms and conditions. These guide both the suppliers and ROSHN in ensuring that the risks are appropriately distributed with contract demands appreciated. Also, the negotiations are core and important for prioritising on various changes in the organisation  (see figure 3);

This is how digital contract lifecycle management works

Figure 3:Contract Management Approach

In order to evaluate the importance of the contract and in the different phases illustrated in figure 3, the areas of consideration would include;

Warranties- As evidenced in CIPS (2022c), a guarantee is normally written. Warranties are identified as an implied term in a contract which are not viewed as a condition or a warranty (see figure 4).

Figure 4:Difference of conditions and warranties

For the selected contract terms and conditions, it note;

Termination of contracts- A contract can be terminated by either reaching the contract expiration as illustrated I figure 3, or any other reason at any phase. The terms and conditions of the contract note that;

Hence, apart from lack of the capability of the vendor to supply the demanded goods and services in their right quantity or a dispute which transitions to the justice system.

Clauses types- This can include the express and implied clauses which are varying in different jurisdictions.

Contract type–  in the terms and conditions, this is represented by call off and PO based SoW. This is evident model from the contract benefits and drawbacks and the terms contract being prioritised effectively.

2.0 Risks

Adopting the definition of CIPS (2022d), a risk identify the probability of unwanted outcome happening. Considering the…….

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