Challenges in Supply Contracting in Prevailing Conditions: Navigating Landmines Dr. Victor Gekara A Presentation for the Chartered Institute of Purchasing.

Challenges in Supply Contracting in Prevailing Conditions: Navigating

Landmines

Dr. Victor Gekara

A Presentation for the Chartered Institute of Purchasing and Supply

25th September 2014

The Prevailing Conditions and the Landmines

• Increasing complexity

• Growing competitive pressure

• Mounting social/political pressure on business

• Shifting government policies

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International Case Study One - who is party to the contract?

• Contract activity: Exploration and extraction of coal

• Contract ID: Chinese mining company

• Location: Country in Africa

• Challenges:

– Technical skills availability/pressure to recruit locally

– Socio-political pressure on environment

– Social-political pressure on community engagement

– Social-political pressure on community benefits

• Outcome: stalled projects and on-going legal battles

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International Case Study Two – who is party to the contract?• Contract activity: Exploration and extraction of crude oil

• Contract ID: Australian company

• Location: Country in Africa

• Challenges:

– Technical skills availability/pressure to recruit locally

– Socio-political pressure on environment

– Social-political pressure on community engagement

– Social-political pressure on community benefits

• Outcome: stalled project, company action for compensation

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International Case Study Three: who to trust?

• Contract activity: Procurement of cultural artefacts

• Principal party: The National Gallery of Australia

• Location: India

• Problems:

– Due diligence failure

– Procurement of stolen property

• Outcome:

– Financial loss

– Public embarrassment

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International Case Study Four – consumer awareness and civil pressure

• Activity: Live export

• Developments:

– Inhumane cattle slaughter

• Outcome:

– Mounting social/political pressure

– Cancelled export contracts

– Financial implications for business

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Local Case Study One: Retail Price Competition and Supply Pressure

• Unconscionable activity?• Undue influence?• Abuse of duopoly power?• Imbalanced contractual

benefits?

Common Pitfalls in the Contracting Process

• Failure of due diligence

• Failure to collect sufficient intelligence

• Failure to recognise extra-contractual parties

• Failure to recognise and ensure balance of benefit

• Failure to recognise the importance of delicate relationship management

• Failure to set up an effective contract management system

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The Ideal Contract – Perspectives on the Contract

The contact as a technical instrument which allocates risk and determines legal rights and liabilities

The contract as an instrument which negotiates, establishes and maintains the balance of power between the parties

The contract as a living instrument meant to maintain flexible, long-term and viable business relations.

Thank [email protected]

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