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ACM801S - ADVANCE CONTRACT MANAGEMENT - 1ST OPP JUNE 2025 |
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nAmlBIA unlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF MARKETING, LOGISTICSAND SPORT MANAGEMENT
QUALIFICATION: POSTGRADUATE DIPLOMA: PROCUREMENT MANAGEMENT
QUALIFICATION CODE: 08PDPM
COURSE CODE: ACM801S
LEVEL: 8
COURSE NAME: ADVANCE CONTRACT MANAGEMENT
SESSION: JUNE 2025
PAPER: THEORY
DURATION: 3 HOURS
MARKS: 100
FIRST OPPORTUNITY QUESTION PAPER
EXAMINER(S) MR. LINUS HAMUKOTO
MODERATOR: MS. ESTERHAMUKWAYA
INSTRUCTIONS
1. Answer ALL the questions.
2. Write clearly and neatly.
3. Number your answers clearly.
THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
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SECTIONA: FILL-INQUESTIONS(40 MARKS}
QUESTION1
Below are 20 statements. Each has a missing term represented by a blank space. Write down
or identify the correct missing word. Each correct answer is equivalent to 2 marks.
1.1. During negotiations, a category manager agrees to modify the specification to suit the
supplier's processes after the supplier offers a significant price reduction. This mutual
compromise, where each party gives something up to move the negotiation forward, is
known as a ____
concession.
1.2. ____
is a process in which a third party actively helps disputants resolve their
conflict and reach an agreed-upon outcome, often by proposing solutions.
1.3. Failure by a party to fulfil its contractual obligations is legally referred to as a ___ _
of contract.
1.4. In contract law, ____
is the value exchanged by parties, which may include goods,
services, or money, that legitimises the agreement.
1.5. Threatening or harming a party or their property to force a decision or action is
considered a ----
1.6. A false statement believed to be true and made without intent to mislead is termed
1.7. An expression of willingness to enter into a binding agreement under specific terms
made by one party to another is a(n) ___ _
1.8. ____
refers to the value exchanged between the parties, which makes the
contract legally binding.
1.9. The subject matter of the contract must be ---~·
otherwise, the agreement is
void.
1.10. For most formal contracts, ____
is required to serve as evidence that the contract
exists.
Using your knowledge of contract management, fill in the missing concepts related to
contract negotiation tactics.
1.11. In the _____
tactic, negotiators show appreciation for concessions but save them
for use in future bargaining.
1.12. The _____
tactic occurs when a party downplays the value of what the other side
is offering to justify a lower offer.
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1.13. The _____
tactic involves adding small extra requests after the main agreement
is nearly finalized.
Using your knowledge of contract management, fill in the missing concepts related to
buyers' bargaining power.
1.14. Buyers have low bargaining power when buyer switching costs are _____
_
1.15. A buyer who is not price sensitive has ______
bargaining power.
1.16. When buyers are less concentrated than sellers, their collective bargaining power is
1.17. If the product is unique and specialised, and buyers have few alternatives, the seller's
power is considered to be _____
_
1.18. In negotiations, reviewing the ___
and focused during the discussions.
beforehand helps the buying team stay aligned
1.19. Cecilia is negotiating with a supplier that sees her organisation as a ___
due to low spending volume.
customer,
1.20. Ensuring adherence to legal and internal policies during contract management
contributes primarily to __ _
SECTION A: 40 TOTAL MARKS
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SECTIONB: STRUCTUREDQUESTIONS(40 MARKS)
QUESTION2 (10 MARKS)
Using the Value Risk Matrix (VRM), apply your understanding, analyse and provide a
classification of the contract. Your justification is critical in answering this question based on
the contract's value and associated risks.
2.1 Your organisation is negotiating a contract worth N$2.5 million annually with a cloud
service provider to manage your entire IT infrastructure. The contract will impact every
department in the organisation. There are significant risks if the service fails, including
data loss and operational disruption.
2 Marks
2.2 A contract worth N$25,000 annually is being signed with a supplier for standard office
stationery. The contract poses little to no operational risk. Multiple suppliers can offer the
same products at similar prices.
2 Marks
2.3 Your facilities department has entered a contract valued at N$150,000 annually for the
regular maintenance of HVAC systems. The service is crucial during peak seasons, like
summer, to avoid operational breakdowns. Alternative suppliers are available, but
switching may cause temporary service disruption.
2 Marks
2.4 A new contract worth N$1.8 million (one-time purchase) is being negotiated to purchase
a highly specialised piece of manufacturing equipment unique to your production line.
The supplier is one of only two available globally. Any failure or delay in delivery could halt
production for weeks.
2 Marks
2.5 The HR department is entering a contract valued at N$100,000 annually with a catering
company for in-house events and staff lunches. Several vendors offer similar services. The
risk is relatively low, as there are many alternatives in case of dissatisfaction. 2 Marks
QUESTION3 (10 MARKS)
In 2023, EcoBuild Ltd., a mid-sized construction firm, was awarded a contract worth N$100
million by the Central Procurement Board of Namibia on behalf of the Ministry of Works and
Transport to build a government office complex in Windhoek, Namibia. The project was
scheduled to be completed within 12 months.
A liquidated damages clause was included, stating:
"The Contractor shall be liable to pay the Employer liquidated damages of 0.1% of the
Contract Price per calendar day, up to a maximum of 10% of the total Contract Price,
for failure to complete the Works by the Time for Completion, unless an extension of
time has been approved by the Engineer."
The contract liquidated damages equates to a penalty of $100,000 per day for delays beyond
the agreed completion date. The employer argued:
o Delays were not formally notified as per the contract's requirement.
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o Weather conditions were typical(no rainfall) for the season, based on meteorological
data.
o Customs delays were foreseeable and should have been addressed in the risk
management plan.
Project Details:
Start Date: January 5, 2023
Scheduled Completion: January 4, 2024
Contract Value: N$100,000,000
Daily Liquidated Damages: N$100,000
Total Delay: 45 calendar days
Actual Completion Date: February 18, 2024
1) What is the total amount of liquidated damages to be enforced by the client?
2 Marks
2) Was the enforcement of liquidated damages by the client justified? Why or why not?
3) How should EcoBuild Ltd. have managed the risks that led to delays?
5 Marks
3 Marks
QUESTION 4 (20 MARKS)
You are a Procurement Performance Analyst at NamTech Supplies, a state-owned enterprise
responsible for sourcing, logistics, and contract management of technical and industrial
supplies for various government departments.
The organisation is undergoing a strategic transformation to enhance operational efficiency,
reduce procurement delays, improve compliance, and achieve value for money. As part of the
transformation, you have been assigned the task of developing Key Performance Indicators
(KPls) using Critical Success Factors (CSFs).
Strategic Goal:
"Ta achieve procurement excellence through enhanced supplier performance,
process efficiency, regulatory compliance, and cost optimisation."
(a) As per your knowledge on the development of Critical success factors, you are required
to Identify five (5) Critical Success Factors (CSFs)that align with the strategic goal of
NamTech Supplies and include a strategic objective for each CSF.
10 Marks
(b) For each CSF,develop at least two (2) SMARTKPls?
10 Marks
SECTION B: 40 TOTAL MARKS
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SECTION C: STRUCTURED QUESTIONS (20 MARKS)
QUESTION 5 (20 MARKS)
The Ministry of Health and Social Services in Namibia has initiated a procurement process for
the construction of a rural health clinic. After evaluation, three contractors have been
shortlisted for final contract negotiations, each offering different bid amounts and contract
delivery timelines:
!contractor
INamBuild Ltd
IB"d
• (~AD)
Amount
!Proposed Delivery Period
I
1119,000,000
1112months
I
1~IA=fr=iC=o=n=st=ru=c=t~(P~ty~)=Lt~d==~l.l~17~,=50=0~,0=0=0===el~l10=m=o=nt=h=s=========I
IBuildTekNamibia
ll1s,ooo,ooo
119months
Negotiation Dynamics:
• With Nam Build Ltd, the Ministry focuses on a collaborative discussion, agreeing to slightly
extend the timeline to 13 months in exchange for additional social infrastructure
contributions by the contractor. This negotiation resulted in shared benefits and improved
contract terms.
• In contrast, AfriConstruct experienced a more aggressive negotiation. The Ministry
pushed for further cost reductions and imposed tight delivery milestones, despite
AfriConstruct's concerns about material shortages. The contract was signed under
pressure.
• With BuildTek Namibia, the negotiation was rushed and poorly communicated. Both
parties felt misaligned on contract expectations. The contractor accepted unfavourable
terms just to win the deal, while the Ministry doubted the firm's capacity.
(a) Identify and describe the three negotiation styles used by the Ministry as illustrated in
the case study.
(12 marks)
(b) Which negotiation approach should be adopted in public procurement and why?
(8 marks)
SECTION C: 20 TOTAL MARKS
TOTAL MARKS:100
ALL THE BEST
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