Eskom Procurement Book 2015

THE PLANNING, ORGANISING, LEADING AND CONTROL OF PROCUREMENT

The consultancy service should meet the highest standards of quality and efficiency and provide advice that is unbiased and does not conflict with the interests of the principle. It should ensure that the advice proposed or assignment executed meets the ethical principles of the consultancy profession. The method of selection of consultants should be based on the scope of the assignment, the quality of service, the complexity of the assignment and whether the assignments are of a standard or routine nature. Consultants consider six critical goals while negotiating for their service: avoidance of misunderstanding; maintenance of working independence and freedom; assurance of work; assurance of payment; and avoidance of liability/litigation [22]. It is imperative that procurement considers the potential risks in the supply chain management process. There are many risks in the public, private and service sectors, considering the length of the supply chain and the many processes involved with moving goods and information from suppliers through to manufacturing, through distribution of the finished product, and finally to customers. To pre-empt the risk issues, procurement should identify risk on an individual case basis, assign risk management to the party best equipped to manage a risk, and exercise risk management in a proactive manner by adequately addressing residual risks. Contract documentation should indicate clearly relative risks to the contracting parties [21]. Advance provision should be made for procurement-related risk by taking out the appropriate insurance coverage. This allows the organisation to mitigate risk and to avoid financial loss. This is particularly important in cases where large volumes of goods are handled and supplied and delivery routes are long. It may be worth remembering that insurance does not usually cover risk arising from war, piracy and in-transit delay [23]. Suitable arrangements should also be made to ensure that the payment of insurance-related excess does not negatively affect small and micro enterprises, especially in public sector procurement [24].

3.6.5 RISK MANAGEMENT

3.6.6 PERFORMANCE GUARANTEES

Performance guarantees are essential for all procurement contracts, but especially for large and complex contracts. All engineering and construction contracts should include non-performance clauses.

3.6.7 ETHICS AND FAIR DEALINGS

In supply chain management all parties are required to comply with the highest ethical standards to promote mutual trust and an environment that is conducive to conducting business with integrity and in a fair and reasonable manner. This is a crucial discipline that procurement should adhere to without compromise.

57 CHAPTER 3