From time to time, and as part of your bid submission, or response to a request for proposal or request for quotation, it may be necessary to include a warranty for the goods and services to be delivered. Without a doubt, offering a warranty can improve the attractiveness of your offer considerably, but the decision to offer it ought to be carefully considered. Here we outline a few pros and cons.
Pro #1. Offers some assurance to Clients
A key benefit of offering a warranty (or guarantee) is that it can lower prospective Clients’ hesitation to procure goods or services from you. Essentially, you are providing some assurance that in the event the goods or services are faulty, or not performing as expected – but excluding certain circumstances that you should specify – the Client will not be left in the lurch, and you will remedy the problem.
Pro #2. Differentiates your submission from the competition
Second, when, as part of your solicitation response, you offer a warranty, or guarantee for goods or services that you can provide, it can be a means of differentiating your submission from those of other bidders. In some instances, the Client requests all bidders to include details on the warranty or guarantee they intend to offer. However, in the instances where it is not stipulated, inclusion of such terms can offer you a distinct competitive advantage, and increase the overall attractiveness of your submission.
Pro #3. Can be considered a declaration of confidence
Finally, in offering a warranty (or guarantee), it means you are prepared to absorb the cost and effort to remedy problems Clients experience. Such a posture can be seen as a declaration of your confidence in the quality of the products and/or service you deliver, which can also help in assuring the Client of your superior offerings, thus differentiating your submission from other competing responses.
Con #1. Attracts miserable Clients
On the flipside, offering a warranty or guarantee can be a licence to Clients to expect that you will be at their beck and call. Although most Clients are honest, there are a few who will try find ways and means of exploiting this benefit, which ultimately costs you, the Consultant or Vendor, in both time and money
Con #2. Impossible to meet all expectations
Another disadvantage of offering a warranty or guarantee is the fact that very rarely will you be able to provide a solution that is absolutely perfect, and meet all of the Client’s expectations. The situation is further compounded if the challenges the Client is experiencing is outside the terms under which the warranty would be honoured, which in turn, can strain your relationship with the Client, and loss of future business.
Con #3. The administrative headache of a longstanding commitment
Finally, in offering a warranty or guarantee, it means that you (or your organisation) are prepared to honour that commitment, which may be effective for several weeks, months, or even years. It as means that adequate administrative and client management provisions would need to be made to, among other things, keep track of Clients, and the products and the services provided, should – sometime in the future – a matter need to be revisited.
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The Board of Directors of the Caribbean Development Bank (CDB) has approved a USD50 million (mn) loan to the Government of the British Virgin Islands. The funds will support efforts to restore economic stability and build resilience following the passage of Hurricanes Irma and Maria in 2017. Damage and loss as a result of the natural disasters were estimated at over USD3.6 billion, equivalent to more than 300 percent of the British Virgin Islands’ annual gross domestic product (GDP).
“This policy-based loan came about as a result of consultation and collaboration between CDB and the Government of the British Virgin Islands. It responds to the urgent need to restore livelihoods and essential services following the impact of the 2017 hurricanes. The funding will provide immediate liquidity support to the Government, as well as lay the foundation for wide-ranging reforms to enhance the country’s resilience and growth,” said Dr. Justin Ram, Director of Economics, CDB.
The policy-based loan is structured around two themes:
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Congratulations! You have won the project. What now follows is contract negotiation and signature. Although in some quarters that process is considered just a formality, it is an important step that can guide the entire execution of an assignment.
Typically, much is made of contract administration by the procuring team (or contracting party). The exercise tends to cover all activities related to the performance of Consultants and Vendors (of goods and services) in the fulfilling their contractual obligations, and to ensure appropriate actions are taken to promptly remedy any deficiencies observed when implementing the contract, or with regard to the scope or terms and conditions. Having said this, Consultants and the Vendors also ought to manage their contracts, to ensure:
- that they are efficiently and effectively executed;
- that the contracting party fulfils their obligations in a timely fashion; and
- that they are aware of the recourse and remedies available to them, as appropriate.
When should you begin to think about the contract and contract management?
Consultants and Vendors should keep the anticipated contract in mind when they are bidding on the project. Although it almost goes without saying that at that stage the contract is not being awarded, the content of your proposal could influence the final terms included in the contract. Further, through that submission, there is the opportunity to begin to indicate issues, especially administrative or project management issues, you consider important, which can be referenced during the negotiation process.
What should you be doing during the contract negotiations?
Sometimes, we can be so eager to start the project that we are prepared to gloss over the contract negotiation phase. Further, the procuring team, especially when it is a public body, frequently finds itself under the gun to start a project, and so wants to rush through the contract negotiation phase. However, during the contract negotiation period you, as the Consultant or Vendor, have the opportunity to ensure that you clearly understand the terms and conditions to which you are agreeing, along with the obligations of all parties concerned.
Further, although it may not augur well to be unduly pedantic when reviewing the contract, or try to extract more than what had been initially specified, it is important to be thorough in your review of the contract, since typically, it is written in favour of the drafter, which tends to be the contracting party.
When does managing a contract end?
Following contract signature, project execution usually begins, and you should be referring to the contract continually to ensure that you (and your team) are adhering to the terms and conditions specified. However, essentially, a contract should be managed right up performance of the final obligations by all parties. For the Consultant and Vendor, that tends to be submission of the final deliverables, or the completion of the specified scope of work. For the contracting party, the end of the contract is usually signalled by the acceptance of the final deliverables, and settlement of all outstanding payments.
Summary
Frequently, most contracts are implemented without any major issues arising. When challenges implementing the project are experienced, all parties tend to be aware of the reasons why, and some latitude may be exercised, which in fact, might not have been contemplated in the signed contract. Although such an approach can be mutually beneficial and welcomed by all concerned, either of the party (but especially the contracting party) always has the option (and the right) to ‘pull rank’; and seek to actively enforce the terms and conditions of the contract. By being versed in the terms and conditions therein, and ensuring that you are guided by them, you can limit your (and your team’s) exposure, should the need arise.
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The Caribbean Development Bank (CDB) has announced that it will provide USD16 million (mn) in funding to Dominica Electricity Services Limited (DOMLEC), to assist with the restoration of electricity generation services. On March 22, 2018, the Bank’s Board of Directors approved the provision of a loan of USD15.8 mn and a grant of USD200,000 to restore DOMLEC’s transmission and distribution system, and improve the company’s resilience to climate change.
Dominica’s electricity sector was severely affected by the passage of Hurricane Maria in September 2017, with approximately 75 percent of the network being destroyed or damaged. As at January 2018, less than 20 percent of electricity services had been restored.
“In the immediate aftermath of Hurricane Maria, Dominica was completely without electricity services. We know that the provision of electricity is critical to the social and economic wellbeing of citizens and residents of the island. DOMLEC has been working diligently to restore service to the island and this project aims to support those efforts, and accelerate the pace of reconstruction,” said Daniel Best, Director of Projects, CDB.
The project has several components, including:
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Despite the high vulnerability of the Caribbean Region to natural disasters and the effect they can have on mental health and psychosocial well-being, social resilience is often overlooked in mitigation and rebuilding efforts. In direct response to this issue, the Caribbean Development Bank (CDB) has announced that it will fund a programme to enhance capacity for mental health and psychosocial support in disaster management in the Caribbean.
“It is critical that a country’s response to any disaster includes a targeted psychosocial support and mental health component to rebuild individual and social resilience,” said Daniel Best, Director of Projects, CDB.
“We have witnessed first-hand how feelings of anxiety and distress can result from the inability to tolerate and withstand environmental and social threats, and lead to behaviours, including substance abuse, child and spousal abuse and gender-based violence. This can potentially have a long term debilitating impact on victims, and by extension, the development of Small Island Developing States,” he added.
Addressing mental health and psychosocial support has become increasingly relevant for governments and humanitarian actors. The grant from CDB will assist the Pan American Health Organisation (PAHO) with enhancing regional capacity to provide this kind of support in disaster management, and achieve three primary objectives:
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