Assignment 5: Managing The Contractor–Customer Relationship
Discuss the ethical issues that can arise in contracting.
A contract is a legally binding valid agreement between two or more parties. Having an ethical foundation for a very organization is of importance such that how the clients perceive the organization is important. It gives the organization a sense of pride and self-respect regardless of the nature of the business. Business contracts in every organization are legally binding documents that are effective in the ethical framework that must be observed by all the parties involved and the contractual obligations should be fulfilled. To maintain trust, ethical organizations should take a principled decision against customers who do not act in an ethical manner (Knauses, 2010). Trust ought get established both within and out of the organization.
Recommended cost and margin level has to exist. Once the contract price is determined, there should not be any hidden costs.
Conflict of interest
The business should not get involved in any form of contract that has both direct and indirect conflict with the consumer needs. Conflict of interest is uncouth such that it can lead to legal consequences and damage to the organization ethical foundation. In cases where conflict arises, the issues must be addressed publicly by declaring the conflict and refraining from taking part in the relevant decision-making and the party affected as well should as well refrain.
When a contract is obtained competitively, the exceptional value is presented. In cases where competitor receives the contract, the organization should aim at reducing their prices but still increase quality of services unto customers. Unfair competition through either price fixing or collusion is unethical and affects market competitiveness.
Laws and regulations
They are aimed at protecting employees, consumers and the market players. When an offer is developed and contract signed, the legal and regulatory constraints are kept in mind. In adherence to regulatory requirements, the companies have to comply by preparing and executing the contracts within the set constraints. To be on the safe side, the organization has to determine the legal limits through practicing within the borderline.
2. Analyze and discuss the strengths and weaknesses of the dispute process using the concepts discussed in the text.
Contractual disputes can be frustrating. The contractor-customer relationship that is built over a period is destroyed and this impacts the organization. The contractual cost in effect is increased and can as well be nullified. Achieving the value of money can as well be impacted on. This makes everyone in the organization to work towards avoiding the dispute and put an emphasis on improving the relationship. Disputes are never intended and whenever the do fast becomes important and cost effective resolution procedures can not be inflated. Efficient dispute management involves selecting appropriate dispute resolution available.
To ensure appropriate dispute resolution, the dispute resolution alternatives should be used in the case where both parties are comfortable and acceptable to all. The central government should give a procurement guidance that can be best deployed based on the circumstances. Each of the department in the organization should improve flexibility in getting into an agreement on the financial compensation.
Due to the nature of disruption and expenses associated with a contract dispute that damages the relationship, it is important to avoid disputes. It is important to ensure that the contract wordings reflect the party’s intentions to avoid escalations.
3. Describe the importance of the communication process in the contractor– customer relationship.
For efficacy, communication comes into play. A good communication should have a focus on planning, implementation and post-project assessment. A clear communication between the customer and the contractor guarantees success in the project.
Keeping a proper communication; a contractor-customer relationship creates a degree of quality of the relationship. The relationship gets to survive if the two maintains a healthy communication. Inadequate feedback may result in a misunderstanding hence conflict. The information communicated should be free of any error on service offered to create an interest between the contractor and the customer.
The expectation of each customer on quality differs and it becomes important that they communicate to the contractor detailed quality expectations. Any unforeseen or anticipated circumstances that may affect the delivery of projects should be addressed to ensure that the customer is in the process.
4. Describe the risks and responsibilities in the contractor-customer relationship.
Businesses are driven by acquiring resources, processes and delivering products and services and managing risks. Risks greatly affect the relationship that exists between the organization, consumers and supplier. Risks are deferred to be a contractual obligation and ignoring the reality of assuming risk (Hawkins, 2011). The customer can easily be lost making it important to recognize risk and manage them to ensure continued relationship.
Problems should be monitored and detected through the creation of appropriate contract management techniques. Effective risk management has to be considered in the contractor-customer relationship. Risk exploitation is a major factor in developing value for appropriate risk mitigation. Relationships have become multidimensional such that success in no longer solely dependent on outfacing segments in a business process but a major differentiator integrated across the business ( Early, 2010). customers try to get complex solutions through outsourcing. Leadership within the organization should ensure that the goals and objectives created are in line with the expectation from the contractors and consumers. A more integral solution should be ventured into that embraces the growing consumer needs.
Early, W. F. (2010). Contractor and Client Relations to Assure Process Safety. New Jersey: John Wiley & Sons.
Hawkins, D. E. (2011). The importance of relationships.
Knauses, D. (2010). The Role Of Business Ethics In Relationships With Customers. Forbes.