Procurement and Contract Management

Posted: October 17th, 2013

Procurement and Contract Management

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Contract management methodology features

One of the key roles of project management is that it should provide benefits to the organization through the ability to manage the business and utilize resources controllably. This makes management of project risks efficient. The ability of a management methodology to achieve this depends on different factors. One of these factors is that it should offer a product based approach in planning. Any key to success in management depends on the organization. A good management methodology should ensure that there is a defined organizational structure in the implementation of the project. A project manager ensures smooth running of operations with delegation of different duties to different workers (Evans, Lindsay, 1950).

Another feature of a successful contract management methodology is the presence of good communication channels between the different organizational departments beginning from the administration, to the managers and the field workers. This ensures decisions making is fast and efficient implementation of said decisions. There should also be flexibility in the methodology to enable it to be adjusted hence making it applicable in any level. This flexibility also ensures that in case of deviation from the original plan the project can still proceed. Another feature of a good methodology is reviewing project progress at regular intervals and comparing the results with the original plan to determine whether the project is on schedule or lagging behind.

Benefits of contract management to a company in today’s economy

Contract management aids in cost lowering where the cost of making a product or providing a service would be higher. Creating contracts with companies that provide raw materials create a hedge against future inflation of the materials as the cost stated in the contract becomes inflexible. Through contract bidding, companies manage to lower costs by choosing the lowest bidder as their supplier. Contracts enable the companies involved to build a lasting relationship with there being a possibility of discounts on consecutive years, which ensures that the goods obtained are of high quality. Through these good networks, they may recommend each other to various potential clients hence expanding their market base. Through contracts, companies may be able to have a competitive advantage over the rest by hindering supply of a certain commodity vital in the production process to other companies by the contracted supplier.

References

Evans, J. R., Lindsay, W. M. (2002). The management and control of quality. Australia; Cincinnati, Ohio: Southwestern.

Hill, G. M. (2010). The complete project management methodology and toolkit. Boca Raton: CRC Press 2010

The Advantages of Contract Management. (2012). eHow.com. http://www.ehow.com/list_6824840_advantages-contract management.html#ixzz1wRIWoLY3