It is good practise to to make sure that some type of contract is put in place between your subcontractor and/or supplier when procuring their services.
I have seen on many occasions, companies placing orders stating;
“Please proceed on the basis of your email” or “Please proceed as per your quotation”
This is a complete no-no as you are legally signing up to your subcontractor’s/supplier’s terms and conditions, without possibly having the full knowledge of what they are.
Time can often be of the essence, but it is imperative that a order process is adhered to.
You maybe under pressure to issue an order due to a supply chain member either carrying out a long design period and/or have a lengthy procurement timescale.
In these cases you could use a small order, which can take a matter of 20 to 30 minutes to prepare. This small order can then be superseded by a larger order in the weeks to come.
I am aware of companies issuing LOI’s (Letter of Intents) to get the works moving, but this can also be dangerous as not all supply chain members will accept these as they will have a maximum expenditure on them.
Below is a quick summary of the best practise for two types of orders:
Small Order:
These orders can be used a the only order if it is seem that it is of small value, no design portion, no material lead-in issues and anything other items that would amuse programme issues.
This type of order would consist of:
- A couple of pages of contract
- Your standard conditions
- A pricing document
- Contract docs (statement not enclosures)
- A construction/procurement programme
- Pre-start meeting minute
Larger Order:
A must for supply chain orders where: larger values, design portion, long lead-in time.
It should consist as per the small order:
- All contract documents
In my own opinion and yes this may be being slightly over the top, but there is no reason why the larger order cannot be used for all supply chain procurement. In practise, it my take a good couple of hours to have a standard template of an order on a project specific basis, but once up and running, it should only take a matter of a maximum of an hour to issue the full document.
The tighter the order can be the more chance that where undertaking your cost reporting there will be less chance for your reporting upline to your manager of inconsistent reporting which is down to non-recoverables. The only thing from this point that could cause inconsistent reporting is that of human error.
Should you wish to discuss the above in more detail or need assistance with any commercial aspects of your construction projects, please don’t hesitate to contact me, either through my website; www.qsadvisor.com or via e-mail grant@qsadvisor.com.
