Opinion for contracts and subcontracts:
An opinion about future major and minor contracts and/or Subcontracts, especially for newly approaching contracts for the companies already commenced the construction steps. The idea comes up from the practice works of construction contracts. The main aim is to assure the performance of the suppliers and fulfillment of the contracts by insert some special monitoring clauses in the contract; as it is called incentives and motivation clauses.
Of course Incentives can take many forms and these should be discussed later on..
Firstly, monitoring of suppliers defines as the term “performance monitoring” means measuring, analyzing and managing a supplier's ability to comply with, and preferably exceed, their contractual obligations.
In generally it is good technic to include supplier measurement and monitoring in all contracts so that quality, price, delivery and service levels can be monitored to ensure contract performance and compliance
In practices there are many examples such as - companies that named successful, embrace their suppliers (or vendor), viewing them as partners in helping to grow the business. Supporting in business (so called Partnership) as in a default, gain more collaboration. Making sure that this is a mutually beneficial partnership will impact the price we/are are negotiating today and the quality of service we/you will get in future (As your Projects will continue, think ahead).
As it is in practice, the purpose of investing in a relationship with a supplier is to improve the supplier's performance in fulfilling the needs of your company.
Here, suppliers need to be made aware from the outset that their performance will be assessed and recorded by us/you (or by 3rd party) (Apart from Taking Over, Acceptance procedures as it is held in contracts generally.) Of course Performance monitoring can be a time-consuming task and so the effort and methods should be proportionate to the value and importance of the contract. So from that point you may insert some/any independent 3rd party who will carry out monitoring on our behalf as in specification. It’s upon management of course.
But if is on the contractual step then the critical stage is that you have to find the criteria for tracking and evaluating your supplier in the contracts. “Track the supplier” is one of the important milestones of monitoring. You own processes and needs so here will have a power to dictate what criteria they should apply.
Ensuring that performance criteria are and should be (in your contracts) an explicit part of the contract so that both parties will be fully aware of what is required from them.
“Tracking” from another point of view, approached as “meeting of the parties”! It is important to hold regular review meetings where both parties seek to understand how they can make the contract perform better. Meetings between Clients and suppliers should be two-way, with both parties learning from each other; For example regular meetings are particularly important for long-term contracts. Ideally, such meetings would complement other forms of performance monitoring.
It is expected and it is vital that the Client (here it is you) keeps managing the supplier and deals with problems as and when they arise. For example, if a supplier begins to suffer financial strain (commercial nature) in discharging its obligations then the supplier will begin making “behind-the-scenes” cutbacks irrespective of what may or may not be specified in the contract. The key is to address problems when they are still minor and therefore easier to resolve. Furthermore, by monitoring process, early warning of a supplier in financial difficulty gives the Client (buyer /you) time to develop alternative supply solutions. “The time” that is most important aspect of your/most Project/s. Of course when it comes to edge the contracts have”” Penalty” procedures and termination clauses but it should be measure of last resort. You still have project to compete.
Key suppliers of high value and high risk goods and services require close performance and relationship monitoring and this is where most resources should be employed. The level and frequency of performance monitoring is dependent on the value and criticality of the contract to you.
All Clients/you aware of that, the Key supplier failure can bring significant losses to a business, and therefore it is important to ensure that these contracts contain suitably robust exit clauses and contingency plans. We/You can well involve monthly meetings with major key suppliers where performance is discussed, issues resolved and new targets set as appropriate. The further stages are amicable negotiations of course.
There is another point in practice that describes as; to hold feedback meetings with suppliers at the suppliers’ premises (according supplier type where appropriate), as this enables to assess efficiency levels on the suppliers’ “home ground”.
Since performance monitoring should lead to continual improvement from suppliers, most suppliers would expect a long-term business relationship with you. This may involve contracts of several years duration, with options to extend for further periods and further projects, if the supplier's performance is satisfactory.
Also one of most important tools in monitoring is Contract Reports. In some of such contracts it is appropriate to require the Contractor/Supplier to provide written reports on performance as one of the contract deliverables. The reports provide a further mechanism for monitoring and managing the supplier’s performance.
There is also some remarkable points that were merged in some of and such contracts and we think need to be stated in subsequent contracts; one is suppliers being prepared for “weather conditions”.
- The order receipt and deemed acceptance by the supplier and short time stated for its rejection because of physical impossibility.
- The fixed penalty amount for not compliance with the obligations (fixed amount is always remarkable)
- Lead parties to holding contract alive, if there is invalid or unenforceable clause; parties shall mutually try to revise that part/article to make it with accordance to the law.
