PROCUREMENT Glossary of Terms
Version 1 August 2012
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Glossary of terms
Addressable spend
Operational Efficiency
Addressed spend
Outturn cost
Adjudication
Parent company Guarantee
Agentrics
Payless notice
Allowance
Performance bond
Building information modelling
Plant
Bundle procurement
Pre order meeting agenda
Category
Professional Indemnity insurance
Category Management
Provisional sum (defined)
Category Management Plan
Provisional Sum (Undefined)
Category Sourcing Process
Request for information
Change order
Request for proposal
Comparable
Request for quotation
Consultant agreement
Retention
Contractors all risks Insurance
Retention bond
Cost avoidance
Small and Medium sized enterprises
Cost Control
Stage 1/2/3? Design
Cost Reduction
Subcontract agreement
Cost Saving
Supplier relationship management
Delay notice
Supply chain
Demurrage
Supply Chain management
Early Procurement Involvement
Tender launch meeting
Economies of Scale
Trend analysis
End Life Forecast
Valuation
Forecast
Value Cost reconciliation report
Lifecycle costing
Value Engineering
Logistics
Value Management
Market equivalent value
Variation
Non-addressable spend
Vendor
Notice to Commence
Win Plan
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Kier Construction Terminology (Abbreviation in brackets) Addressable spend
Definition
Addressed spend
Spend which is controlled by some type of framework, rebate or pricing agreement
Adjudication
the final judgment in a legal proceeding; the act of pronouncing judgment based on the evidence presented
Agentrics
An electronic bidding and sourcing tool currently being evaluated by the Group
Allowance
A sum of money set aside in the construction contract for items which have not been selected and specified.
Building information modelling (BIM)
Building Information Modelling (BIM) is the process of generating and managing data about the building, during its life cycle. Typically BIM uses three-dimensional, real-time, dynamic building modelling software to increase productivity in the design and construction stages.
Bundle procurement
The application of procurement benefits by utilising economies of scale with prospective vendors
Category (CAT)
A product or service
Category Management (CAT)
A strategic procurement approach to managing products and services, which satisfies stakeholder requirements by integrating supplier sourcing, supplier management, supplier development and supplier relationships management to deliver increased value
Category Management Plan
The formal plan which outlines the timing, resource requirements and perceived benefits of addressing individual categories, allowing priorities to be set and progress to be tracked The formal strategic sourcing process utilised as part of category management
Category Sourcing Process
Spend which is not currently address but is theoretically addressable by Procurement, subject to resource availability and / or willingness by Kier stakeholders to allow the procurement function to address it
Change order
Change to the works information instructed by the Employer.
Comparable
Similar in size, amount or quality of something else.
Consultant agreement (Consult/ag)
Trading terms and conditions agreed with the Consultant
Contractors all risks Insurance (CAR)
The policy covers all risk of damage to the "works, plant, equipment and materials during the course of construction
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Kier Construction Terminology (Abbreviation in brackets) Cost avoidance
Definition
Cost Control
the process of controlling how much a company or organization spends so that costs are not greater than an agreed budget, or a particular method that is used to do this
Cost Reduction
The reduction in cost of a material or service measured at a point in time, compared to a previous point in time, subject to comparable scope and specification
Cost Saving
Cost saving could be a temporary affair and may be at the cost of quality.
Delay notice
A formal written notice to inform the Employer or the Contractor regarding delay to the completion of activity or entire contract.
Demurrage
Additional fees charged by a carrier when rail freight cars and ships are held beyond a pre-agreed to time.
Early Procurement Involvement (EPI)
As the words suggest.
Economies of Scale (EoS)
The most efficient operating level. The point where it costs less per unit to produce
End Life Forecast (ELF)
An estimate of cost to completion of the project
Forecast
An estimation of the future demand for a product. It is usually stated as a quantity (or value) over a specific time period. There are a number of inputs into a forecast, such as: historical data, market trends, marketing data and sales force feedback.
Lifecycle costing
Lifecycle costing enables project sponsors and delivery teams to evaluate the combined capital and operating costs of construction work.
Logistics
Managing and controlling the flow of goods from the source of the production to the marketplace.
Market equivalent value (MEV)
Comparable- data analysis.
Non-addressable spend
Notice to Commence (NTC)
Spend currently "out of scope" to the procurement function, possible due to it being addressed by another Kier business function, or where it is client specified A formal written notice by the Employer to commence contract works.
Operational Efficiency
Benefits accrued through process efficiencies.
Outturn cost
The final cost following order or contract completion, taking into account all costs which were unknown at order placement
An expense that has been avoided.
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Kier Construction Terminology (Abbreviation in brackets)
Definition
Parent company Guarantee (PCG)
A parent company guarantee (PCG) to be provided by a contractor's parent company in connection with the contractor's obligations under a building or engineering contract.
Payless notice
A notice issued to subcontractors if the payment is reduced. A performance bond is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor.
Performance bond (Perfbond) Plant
Under NEC contract, plant is described as permanent material used in the works
Pre order meeting agenda (POMA)
Meeting held post tender to interrogate a company’s submission to ensure completeness.
Professional Indemnity insurance
An insurance policy that protects employers from liabilities arising from errors made by the designers.
Provisional sum (defined)
Defined provisional sums are sums of money intended for elements of the Works which have not been sufficiently designed but where there is certain defined information available, SMM7 states that ‘where Provisional sums are given for defined work the Contractor will be deemed to have made due allowance in programming, planning and pricing preliminaries’
Provisional Sum (Undefined)
relate to work where the employer is unable to provide detailed information and the contractor is not deemed to have made allowances for it in its price or programme (General Rule 10.6). In short, a contractor’s entitlement to an extension of time and/or indirect costs for a provisional sum depends largely on whether it is defined or undefined.
Request for information
A formal request for a supplier proposal which outlines the supplier's capability, capacity, commitment (perceived level of) and cost (attitude to cost management and cost transparency etc.)
Request for proposal (RFP)
A formal request for a supplier proposal, which includes cost / price and outlines detail as to how a product or service could or will be supplied
Request for quotation (RFQ)
A formal request for a supplier quotation
Retention
Monies retained from subcontractors and paid in full if all defects are rectified in a timely manner.
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Kier Construction Terminology (Abbreviation in brackets) Retention bond (Retbond)
Definition
Small and Medium sized enterprises (SME)
Defined under EU law - based on number of employees and either turnover or balance sheet total. Medium sized companies - employees <250, Turnover <50m euros or Balance sheet total <43m euros. Small companies - employees <50 , Turnover <10m euros or Balance sheet total <10m euros. Micro companies - employees <10, Turnover <2m euros or Balance sheet total <2m euros. These ceilings apply to the figures for individual firms only. A firm which is part of larger grouping may need to include employee/turnover/balance sheet data from that grouping too.
Stage 1/2/3? Design
RIBA Stages
Subcontract agreement (Sub/ag)
Trading terms and conditions agreed with the subcontractor
Supplier relationship management (SRM)
Supplier relationship management (SRM) is a discipline of working collaboratively with those suppliers that are vital to the success of your organisation, to maximise the potential value of those relationships
Supply chain (SCH)
Encompasses every effort involved in producing and delivering a final product, from the supplier's supplier to the customer's customer. Four basic processes - plan, source, make, deliver - broadly define these efforts, which include managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer is the oversight of materials, information, services and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies.
Supply Chain management (SCM)
It guarantees that the Subcontractor will carry out all necessary work to correct structural and/or other defects discovered immediately after completion of the contract, even if full payment has been made to the contractor.
Tender launch meeting (TLM)
See Subcontract Minimum Standard document
Trend analysis
Analysis involving comparison of the same item (such as monthly orders) over a significantly long period to (1) detect general patter of a relationship between associated factors or variables, and (2)
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Kier Construction Terminology (Abbreviation in brackets)
Definition project the future direction of this pattern.
Valuation
Application for payment
Value Cost reconciliation report (VCR1)
Comparison of cost incurred against value. Also known as earned value.
Value Engineering (VE)
The systematic process of reducing the cost of producing a product without reducing its quality or how effective it is.
Value Management
Value management is a style of management, particularly dedicated to motivating people, developing skills and promoting synergies and innovation, with the aim of maximising the overall performance of an organisation. Applied at the corporate level, value management relies on a value-based organisational culture taking into account value for both stakeholders and customers. At the operational level (project oriented activities), it implies, in addition, the use of appropriate methods and tools.
Variation
Change to the works information instructed by the Employer.
Vendor
A person or company that provides something for sale.
Win Plan
Strategy prepared to ensure that we win the project
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