Open-book contract - WikipediaAlready a member? Home News. Careers and skills. Supply chain. Supplier relations.
What’s the use of open book accounting in supplier negotiation?
The negotiations run in parallel with the works which the contractor is carrying out under the PCSA. You should not ignore them. A common cause of concern is when a tender asks for breakdown of your price s. CIPS Knowledge.
Pitch competitively and in line with the tender requirements! Pricing undertaken during the second stage is more likely to reflect the actual construction costs, and lower probability of claims, otherwise tenedrs may require re-negotiation at second stage. Choose the right tenders and ignore anything else. There must be enough of a design to allow for firm preliminaries and a programme from the contractor!
Open book procurement has its supporters and detractors, with the latter often claiming that contractors are up to no good, or manipulating the process. But if all parties play the game fairly, the experience should only be positive. The scheme started in with a four-year programme.
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The concept of suppliers and customers having such a trusting relationship that they can work together collaboratively and seek ways to reduce the cost of items and that they share information and data on a very open and transparent level was almost unheard of 10 or 15 years ago, but is now becoming much more common place. Some who have been involved in either procurement or supply for some time and remember just how confrontational the process used to be, are still slightly nervous about it. Well in fact, there is no reason to be nervous about this process; it is actually a mutually beneficial and constructive relationship when it is carried out well, so it really is nothing to fear! The Open Book Policy An open book policy is nothing more than an agreement to view data and financial information relating to costs incurred in any one part of the supply chain. So the supplier and customer can work together to ensure that costs are minimised where possible. Sometimes the customer can even help the supplier by suggesting ways that they may be able to source some raw materials from companies that offer better value for money, thereby reducing the costs of the end product further.
Notify me of new posts by email. As I said at the start, I cannot tell you what will be the winning price! Supplier relations. Tip : See our Tender Terminology Glossary.
Take a commercial view when pricing tenders. The contractor may also tender early and long-lead works packages, and together with the employer select certain specialist sub-contractors. Customers recognised the problem and allowed a price renegotiation. If costs increase beyond reasonable prediction, meet with the customer and explain the situation.Six books to make you smarter in The employer pays teders additional fee for the contractor to carry out the pre-construction services. Others have pre-filled prices. The initial stage 1 tender may also include competitive tendering of some already defined work packages, plus a lump sum or cost reimbursable price for pre-construction services and design fees!
It is rare to be given a chance to change to your tendered price. Cost-plus pricing is a very common pricing methodology? Back Forward. There may be difficulties in using a lump sum PCSA where the design is particularly complex as the parties may be unable to agree on design allowances, although this will not be an issue if the contractor is retained under the PCSA on a cost-reimbursable basis.