IACCM Contract Management Forum

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2015-04-28 23:17:04

Should we consider Cancelation / Postponement of Tenders/ Contracts as a saving ??

We have an internal debate about the cancelation/postponement of Contracts and if it falls under the criterion of saving.

For cancelation:
In our view, challenging the requirement/need of a tender by the Supply Chain, especially after approving the Budget for this relevant tender by Shareholders, and convince the User to cancel it after eliminating the risk/need factor is considered to be a saving. It became a money that Shareholders do not need to pay anymore. (Regardless the fact that such challenges should take place by Users before proposing/approving the budget).

For Postponement:
In our view, challenging the need at this time and balancing the risk to postponed the requirement, considering the market conditions and the opportunity cost concept is considered to be a saving in a way or another for the 'respective year', with the fact that It might be difficult to quantify it.

Your kind feedback on the above will be highly appreciated and it will help us shaping our cost saving criteria.
 •  Telefonica  •   2015-05-05 04:38:54
What has happened to the requirement(s):

If you no longer have the need for the service/product you were intending to purchase then in my view it isn't a saving: you have simply avoided wasted expenditure.

If you require an alternative product/service, or are extending existing contracts then you could consider the delta between the new contracts/purchases and the extended/current contracts as a saving: this would apply to either cancellations or postponements.
 •  Centrica plc  •   2015-07-24 07:24:05
Your first example strikes me as a saving, and if budget has been set for activities that are then postponed then assuming it isn't diverted elsewhere or money spent to bredge any delta - i could also see that being classed as a saving.
Key for me is tracking the money back to the budget and getting validation from the FD CFO etc.
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