Understanding procurement and contract management in facilities management

Assignment Brief

Unit FM4.21: Understanding procurement and contract management in facilities management

Learning outcomes

1. Understand procurement

   • 1.1 Describe the basic principles of procurement (including the rights and responsibilities of the buyers and of the sellers)

   • 1.2 Explain the processes and stages of the procurement of goods and services to support the facilities management function (including agreeing requirements defining specifications, agreeing adjudication criteria, sourcing suppliers, issuing tenders, receiving and adjudicating tenders, short listing , negotiating, awarding contracts and declining other bids, initiating contracts, monitoring provision)

   • 1.3 Explain the tendering and bid processes (including the use of spend analysis, supplier/market analysis, expressions of interest, pre-qualification, approved tenderer lists, schedules, adjudication criteria, invitations to tender, responses to tenderers’ questions, supplier open days, e-auctions, formal opening of tenders, adjudication processes, short listing, presentations, negotiations)

   • 1.4 Explain how to select appropriate contracts and service specifications (including the influence of factors such as the types of goods or services to be purchased, commodities or bespoke, input or output specification, value and duration of contract, lease or buy, purchase order, call off contract, JCT forms 2005 (replacing JCT 1998) for building contracts)

   • 1.5 Explain how the management of the procurement process should be organised (including the definition of roles, (specifier, user, buyer, budget holder), separation of powers, levels of authority, keeping of records)

   • 1.6 Explain the principles of relevant legislation (including the EU procurement process, OJEU, open competition, Office of Government Commerce (OGC), environmental standards, employment (Working Time Directive, Right to Work, Discrimination), Sale of Goods Act 1979, Supply of Goods and Services Act 1982, Unfair Contract Terms Act 1979)

2. Understand different types of contract

   • 2.1 Explain the different types of contracts (including verbal contracts, purchase orders, call off contracts (enabling or framework contracts), industry standard forms, e.g.; JCT forms 2005, PPI/PPP)

   • 2.2 Explain the advantages and disadvantages of different types of contracts for a range of goods and services (relating the different types of contract explained for the previous assessment criterion to different types of goods and services)

   • 2.3 Explain how to select the most appropriate procurement option that suits the contract type (supporting the explanation with example/s from the learner’s own experience or case studies)

   • 2.4 Explain how to select the most appropriate contract type that suits the procurement of a particular good or service (supporting the explanation with example/s from the learner’s own experience or case studies)

3. Understand the use of specifications and terms and conditions in the procurement of goods and services

   • 3.1 Explain how specifications are drafted and used for procurement of goods and services (no additional guidance)

   • 3.2 Explain the benefits of writing well defined specifications. (no additional guidance)

   • 3.3 Explain how standard terms and conditions are used in the procurement of goods and services (no additional guidance)

   • 3.4 Explain the advantages and disadvantages of the standard terms and conditions (including factors such as ease of management, dispute resolution, availability, time, familiarity, flexibility, clarity, precedent, equitable)

4. Understand procurement costs

• 4.1 Explain the elements which may make up the cost of goods or services (including raw material, labour, manufacture, packaging, transport, consumables, cost of sales, excise duty, insurance, overheads, profit)

• 4.2 Explain the factors to consider when evaluating a procurement decision (including cost, reliability, capacity, reputation, cost, time, quality, compliance)

Sample Answer

Understanding Procurement and Contract Management in Facilities Management

Introduction

Procurement and contract management are central to effective facilities management, ensuring that goods and services are acquired in a manner that supports organisational objectives while adhering to legal, ethical, and financial requirements. This report critically analyses the principles, processes, and practices associated with procurement, exploring contract types, specifications, terms and conditions, and the factors that influence procurement decisions. The discussion integrates theoretical models with practical examples to demonstrate a comprehensive understanding of procurement within a facilities management context.

Principles of Procurement

Procurement involves acquiring goods, services, or works from external suppliers to meet organisational needs. The process is governed by principles of fairness, transparency, value for money, and accountability. Buyers are responsible for defining requirements, assessing suppliers, and managing contracts effectively. Sellers are obliged to provide goods or services that meet the agreed specifications, ensure compliance with relevant legislation, and deliver on time and within budget. In facilities management, procurement ensures operational continuity and supports strategic objectives such as sustainability, efficiency, and safety (Lysons & Farrington, 2020).

Procurement Processes and Stages

The procurement process in facilities management follows a structured sequence:

• Agreeing Requirements and Defining Specifications: Clearly identifying organisational needs is critical. For example, specifying maintenance services for HVAC systems requires detailed operational and performance standards.

• Agreeing Adjudication Criteria: Establishing the basis for evaluating bids, including cost, quality, compliance, and sustainability.

• Sourcing Suppliers: Conducting market research to identify potential vendors with the capacity and capability to deliver.

• Issuing Tenders: Inviting formal bids from suppliers using appropriate channels, such as e-tendering platforms.

• Receiving and Adjudicating Tenders: Assessing proposals against pre-defined criteria, including cost-effectiveness, reliability, and technical competence.

• Shortlisting, Negotiating, and Awarding Contracts: Selecting the most suitable suppliers and formalising agreements while ensuring competitive fairness.

• Monitoring Provision: Ongoing contract management ensures service quality, compliance, and the identification of areas for improvement (CIPS, 2021).

Tendering and Bid Processes

Effective tendering and bidding are essential for securing optimal supplier arrangements. Tools such as spend analysis and supplier/market analysis help identify sourcing opportunities. Pre-qualification questionnaires and expressions of interest screen potential suppliers. Adjudication criteria, formal tender invitations, supplier open days, e-auctions, and shortlisting enhance transparency and fairness. These processes mitigate risk, encourage competition, and ensure that facilities management operations receive value for money (Thai, 2009).

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