SC0008 - Purchasing And Contracting For Projects

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Summer 2013

MBA (Supply Chain Management) Semester 4

SC0008 - Purchasing And Contracting For Projects - 4 Credits

(Book ID B1663)

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q1. Explain the various phases involved in negotiation.

(Explanation of negotiation – 1.25 marks, phases of negotiation – 8.75marks)10 marks

Answer : Negotiation :

The negotiating a union contract is a stressful time, and it will drain us mentally and physically. Following these stages will help you to overcome the obstacle on your way and reduce the time dedicated to the process. Negotiation is a process where each party involved in negotiating tries to gain an advantage for themselves by the end of the process. Negotiation is intended to aim at compromise

Q2. Discuss the various incentive mechanisms.

(Organisational incentives; Incentive techniques; Contract incentives; Target cost incentives – 10 marks , i.e. 2.5 marks each)10 marks

Answer : Incentive mechanisms :

The principles of incentive contracting are long standing. In recent years, however, there has been a greater emphasis on the need to use incentives whenever possible. Consequently, there is a growing requirement for a more thorough understanding of the principles and techniques involved.

Q3. Discuss each of the payment security risks.

(Payment in advance ;Letter of credit ;Documentary collection against payment; Open account; Minimum Guarantee; Consignment- 10 marks) 10 marks

Answer :  Payment can be made by means of various methods. Here we will discuss the payment security risks associated with these methods.

1. Payment in advance:

Under this method, the exporter receives payment from the importer in advance through demand draft or cheque. The payment is given in advance so various risks associated with it like huge payment require involvement of bank.

Q4. Write short notes on Pre-Qualification Questionnaire (PQQ)?

(Explanation of Pre-Qualification Questionnaire – 2 marks; Significance-2 marks; Information asked in a PQQ- 6 marks)10 marks

Answer :  Pre-Qualification Questionnaire:

A Pre-Qualification Questionnaire, normally abbreviated to 'PQQ', is a questionnaire that suppliers or contractors must fill out when bidding for work, applying for an approved supplier list or when applying for an accreditation scheme. They are very common in the public sector, but also sometimes used for private sector tenders too. Typically, PQQs are scored according to the answers given.

Q5. Many issues can arise in a contract after the contract is created and before a party performs under the contract. Discuss such contracting issues.

(issues – 8.75 marks; conclusion 1.25 marks) 10 marks

Answer : Contracting issues :

Performance is the fulfillment of a promise in the contract. Many issues can arise in a sales contract after the contract is made and before a party's performance is required.

1. Sometimes performance may be made impracticable. If the goods are completely destroyed before the risk of loss has passed to the buyer, and the goods have not been destroyed through the fault of either party, the seller may be excused from performing

Q6. Explain the different types of shared risk contracts.

(Types – 9 marks, conclusion – 1 marks) 10 marks

Answer :   Shared Risk Contracts :

Risk sharing occurs when two parties identify a risk and agree to share the loss upon the occurrence of the loss due to the risk. This is typically done in joint ventures (where equity owners share risks of the loss in proportion to their stakes in the venture), new ventures and relationships where each party shares actual operational control.