Eskom Procurement Book 2015

GLOSSARY

Development costs:

Supplier’s expenses in development of a design or a prototype to help the buyer decide whether the product conforming to this would meet his intended use. As part of a two-stage tendering procedure these costs will not be reimbursed by the buyer. Selection of a supplier without obtaining tenders/offers from tenderers. Used for small purchase values or in case of extreme urgency. Price deduction granted by the supplier to the buyer, usually when certain stipulated conditions are met by the buyer such as prompt payment, bulk order quantity, etc. Discounts are also granted by a supplier on nominal list prices which may vary from one buyer to another because of either order size, payment terms, relationship or as an element of marketing strategy of the supplier. See also Cash discount, Quantity discount, Concealed discount, List price, Price discrimination and Trade discount. Report indicating that the delivered goods were unsatisfactory for any reason or that the goods (their number, packages, etc.) did not correspond with those indicated in various shipping documents. e.g., the invoice. A contract specimen filled in and signed by the tenderer and submitted to the buyer as part of his tender. See also Bid, Offer and Tender. A sum of money given by one contracting party to another on entering into the contract, to be forfeited by the giver if he fails to carry out his obligations under the contract. See also Bond. Economic evaluation of offers, particularly in case of capital equipment of high value, where different tenderers may offer different payment and/or financing terms with an impact on the total cost of acquisition. Also refers to evaluation of when and how much to buy, taking into account the level of inventories, the likely demand, ordering and holding costs, as well as the present and the likely international market situation.

Direct contracting:

Discount:

Discrepancy report:

Draft contract:

Earnest money:

Economic analysis:

Economic order quantity: That order quantity which gives lowest total variable costs, including costs of both procurement and stock holding. See also Inventory control. Economies of scale: A concept that, when procuring goods or services, examines

the effect of combining like requirements to increase the scale of procurement, thereby providing greater leverage in achieving maximum value for money when getting tenders/offers from tenderers. See also Aggregation and Bulk buying.

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