(Solution) CIPS PDC Royal Commission for Alula Managing Risk of Increased Costs
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Description
Solution
2.3 Risk of Increased Costs
As evidenced in Heravi and Mohammadian (2021) the cost overruns risk is as a consequence of prevalent of badly written conditions of contracts. Nevertheless, there are broadly prevalent circumstances which are integrated for prioritising on aspects which impact or potentially impacting a specific contract. In terms of costs, RCU terms and conditions note that;
Further, for RCU, they integrate Key Performance Indicators (KPIs) which are meant for ensuring that a clearly agreed pricing is used for the contracts. Often, this has contributed to challenges with the PS&M since they have remained hellbent on when these contracts could be altered. This inform the need for harnessing the awareness level of the contracts and how different occurrences could inform on the contract changes on costs. As evidence in Alebrahim vs BM Design London Ltd [2020] EWHC 3393 (TCC) case which involved a contract for refurbishment of a residential property, the contractor had increased the estimated costs initially (Creedy et al., 2010). The court of law noted that the employer can only pay for the trade price items and not any price which is not agreed upon. Further, in this case, the RCU terms and conditions note that,
Hence, there is no instances where the buyer/RCU can incur any further costs which were not initially stipulated in their contract….
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- In conclusion, the findings in this report indicate that Woolworths is currently using Ariba and SAP systems. This study covers the annual spend of Woolworths, the portfolio of Woolworths, their Category and Risk Management.
- Based on the study, Woolworths have to reduce their annual costs, and this may be supported by automation of as many processes as possible and this will also improve their efficiency and effectiveness levels.
- Woolworths also has made significant efforts in categorising its products and managing supply and other risks by having a wide pool of suppliers.
- Further, the introduction of online shopping has greatly boosted their market reach and their competitiveness.
- Woolworths also has to consider grouping all its purchases into categories. This will greatly ease the amounts spent on buying individual items since bulk purchases allow for great discounts due to the economies of scale.
- Further, category management will ensure that the entire supply chain is managed effectively and efficiently with minimal instances of supply chain disruptions.
- Woolworths also must prioritise its stakeholders and acknowledge the role that each stakeholder plays and how this contributes significantly to the overall growth of the firm.
- Stakeholders have to be informed and involved when major decisions are to be made as this will enrich the strategies, contributions and suggestions brought forward.
- Stakeholder analysis is also key to maintain the stakeholder relations which improves not only the reputation of Woolworths but also the market share of Woolworths. This gives them a niche in their market.