88Direct and bulk purchasing contracts

To bypass the contractor or installer by purchasing plant directly from the manufacturer usually has an advantage of a saving in cost. The drawback is that the contractor does not have control of delivery or of quality, and this can lead to disputes or a defense against a claim for faulty workmanship or materials. Any saving can quickly become meaningless if the works are delayed, and a loss and expense claim is submitted. In a competitive situation, a bidder will keep his 'mark-up' to the absolute minimum, and a saving by approaching the manufacturer direct will be small. It is always possible to obtain a price with a manufacturer following competitive quotations, and then include a PC sum in the bid documents. This gives the bidder the opportunity to add a modest mark-up, and also place him in a position where he is responsible for ordering, obtaining delivery and then paying for the equipment, in addition to installing it. There is still a responsibility on the client or his agent for nominating the equipment.

Figure 8.1 Typical bid document for a principal contractor

Bulk purchase of equipment is carried out in order to bring the price down per item. Having established that a large number are required, a client can then negotiate or invite competitive bidder to supply the number involved over a certain period. Care needs to be taken that the number agreed are actually required within the period, otherwise the supplier can sue for damages if he is frustrated from supplying the number agreed.

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