Running head: CONTRACTURAL ADJUSTMENTS 1

Contractual Adjustments
William Taylor Pittman
PJM400-1 Project Procurement and Contract Management
Colorado State University Global Campus
Professor Clara Spenny









CONTRACTURAL ADJUSTMENTS 2

Contractual Adjustments
Contract Compliance
Contract compliance is essential between supplier and sellers of mats because of their
importance on pipeline constructions jobs. Mats are a commodity and on the buyer side of
things, mats can only be ordered from current stock and not produced to order. This makes
contract compliance simple and leaves only two variables, risk in shipping delivery date, and
quality of the mats. Quality of mats purchased is sometimes difficult to assess based on the way
they are shipped. Risk in quality also lies in how soft the mats are, or in other term how
saturated they are with water. The biggest risk in contract compliance is relate to delivery. This
dispute, although critical, is often resolved at the procurement level due to the problem most
likely resulting in shipping delays.
Contract compliance is most essential to the procurement of mans because Contract
compliance helps to provide guidance and insight into procurement processes and helps to
achieve savings through better negotiations with suppliers. Contract compliance can tell you
how specific vendors will perform and can help you adjust your schedule accordingly. Also
contract compliance provides you with a better business relationship with your suppliers
ultimately leading to better prices, and more timely delivery.
Deviation
Deviation in the mat procurement process is caused by four factors: liability issues, loss,
shipping errors, and pricing and payment issues.
Liability issues. There exists certain liabilities when procuring and using mats.
Transportation is at the liability of the consumer and damages caused are theyre responsibility
CONTRACTURAL ADJUSTMENTS 3

Also, when mats are used on jobs, they are often moved into different locations. This causes
more hazard and risk in the process as well as increase insurance costs
Loss. Loss can occur when using mats in the case of either renting or buying the mats. In
the case of renting, any mats too damaged for further use will not be bought back by the supplier.
Mats Bought by contractor intended to be used on future projects experience loss in the same
fashion as rented equipment. The Loss is greater when mats are bought and damaged.
Shipping errors. Shipping errors can affect pipeline construction projects in two ways.
First, suppliers not meeting the delivery date can greatly hinder a projects progress. In some
cases, mat supplies arriving to early can cause a burden on a project based on space issues. There
may not be enough space on project grounds to store the mats.
Pricing and payment issues. Pricing and payment issues generally occur when a change
order is implemented and there must be negation between the seller and the supplier. There is
often a change in the mat market after the initiation of a first order. When the price has dropped,
buyers desire the new rate. When the price has risen, seller wish to charge the new rate.
Change

Contract change in regards to mats most often occurs in the form of a change order. The
change order most often originate from the buyer, and usually concern the requisition of more
mats. Generally, estimators try to underbid mats and shortages often occur at projects as a result.
Supplier related deviation are generally not a concern as supplier are acutely aware of their
supply of mats. Contract change can also occur when a series of mats are to be procured.
Changes in mat prices can affect the rates charged for remaining shipments.
CONTRACTURAL ADJUSTMENTS 4



Tracking
Tracking of orders inquired, placed, submitted, and approved all needs to take place by
both the supplier and the buyer. Suppliers need to track the size, frequency, payment, and typical
destinations in their analysis of their clients. This is necessary to best anticipate demand and
stock locations accordingly buyers need to track a suppliers timeliness in shipping, locations, and
general supply. A scorecard is often kept by buyers of suppliers timeliness, price and location.
Improving the process
Contract compromise, for over forty years both republicans and democrats have
supported it as the centerpiece of us affirmative action programees Increasing the effort of
using contract compromise by both parties of buyers and sellers could create an overall more
effective, cost efficient process.
Liability Issues: To improve the process for the seller, we could first look at liability
issues regarding shipping. Transferring the liability during shipping to the seller or sharing the
risk could be options to enhance the buyers position.
Contracts: Fixed price contracts made when the mat rates are low are good for the
buyers position. This enables the buyer to procure more mats through a change order or
predetermined procurement intervals. This also enables the buyer to stockpile mats until the rates
are high to sell them back to the supplier.



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References
Carr, J. (1988, 15 June) The American Roots of Contract Compliance. Retreived from
https://search-
ebscohostcom.csuglobal.idm.oclc.org/login.aspx?direct=true&db=khh&AN=4864509&si
te=ehost-live
James, t. (2009, 16 september) 5 Best Oractices toward Contract Compliance. Retreieved from
http://www.industryweek.com/companies-amp-executives/5-best-practices-toward-
contract-compliance