Discussions & Youdecide Contracts & Procurement Management

DQ 1: The Award Phase

Class: In Chapter 9 of our World Class Contracting text, the section, Best Practices: 45 Actions to Improve Results, lists 45 actions to improve results in the contract award phase. Pick a few of these best practices that you have seen successful in action and share your experiences with the class. Comment on the choices of your classmates to discover other best practices that might be useful to you in contract negotiations. Discuss and explain which best practice you have found to be the most important or the most useful to you in the past.

DQ 2: The Award Phase

Negotiating Case Study

Read and review the "BBC vs. Info R Us" Case located in Doc Sharing, let's discuss the following questions:

How should Dan, as the contract manager, prepare for his negotiating session with BBC? How does this relate to the negotiating assignment?

What if Bennie ignores Dan's recommendations during the negotiation with BBC? How does this relate to what you learned in the negotiating assignment?

What impact will company politics have on this negotiation?

What risks exist for Dan at this point? How does this relate to what you learned in our negotiating assignment?

Also, consider if you have been in a similar situation and how you handled the situation. Did you use any of the best practices discussed this week in that negotiation?

The Award Phase - You Decide

Scenario

Scenario Summary

You are Chris and Pat Smith, entrepreneurs with five years of experience investing in small businesses. Eighteen months ago you decided to invest in a catering venture with two chefs, J. P. Martin and L. L. Miller, who have culinary science degrees and five years of work experience, which includes winning a prestigious prize in a gourmet food competition. Following some extended discussions, the four of you decided to set up a business catering to parties and weddings under the name of At Your Service.

The arrangement between you was quite informal. Essentially you put up $25,000 and the chefs put up $10,000 in capital to get the operation started. You were to manage the advertising, and the bookkeeping. The chefs' contribution was to set up the kitchen and menus, cook, hire staff, and be on site to supervise all catering jobs. The agreement between you was that the profits would be split 50-50 after clearing fixed expenses.

Although the first few months were difficult and At Your Service had to use some of the investment reserves to cover monthly expenses, a good newspaper review produced a spurt of business in the third month when the company not only covered fixed costs, but distributed a profit of $250 to each owner. Throughout the first year, you continued to make a little money, or lose a little every month, but the company has been steadily losing money in the second year and has had to use reserves in order to keep in business.

You think the problem is that the chefs do not know how to manage a business. As soon as the business seemed to be breaking even last year, you noticed that they changed menus, offering more elaborate dishes with more expensive ingredients without increasing prices. These dishes cost too much and take too much time to prepare, limiting their availability to take on more jobs.