Solution

Executive Summary

In this second assessment, through a focus on Royal Commission for Alula (RCU) organisation, contract terms and conditions have been evaluated. The evaluation has focused on the effectiveness of these terms and conditions in;

• Ensuring management of risks of poor quality, extension of time, costs increase and unethical practices
• Making sure appropriate performance measures are monitored and managed

Also, as part of this report, the battle of forms have been evaluated with the best practice in ensuring management of these battle of forms identified. This has also been reflected in this assessment recommendation for ensuring organisation own terms and conditions are used. Apart from quoting the relevant terms and conditions, a set of tools have been used (specifications analysis, risk register, Mendelow analysis among others). For instance, by using standardisation valuation model, the importance of the contract in context of RCU has been identified. Further, through Mendelow analysis of different stakeholders, the relationship with contracts has been established. Further, by using a risk register, the best practice in managing the risk of extension of time has been evaluated.

In this assessment, it has been established that the RCU contract terms and conditions have been instrumental to avoid many risks which could at the end lead to issues with the organisation ability to deliver high quality services to their customers. This is since they inform on performance, costs, risk management, quality levels and indemnity. Specifically, in the COVID-19 pandemic where there has been a significant disruption of their supply chain, the use of terms and conditions has been instrumental for their success. For battle of forms, RCU has its terms and conditions to offer protection from the vendor or supplier.

From the findings obtained in this assessment, various recommendations are relevant and entail;

• The importance of strictly abiding on terms and conditions of the contract by PS&M team need to be emphasised
• Expand their KPIs and SLA’s for broadening their terms and conditions
• Benchmarking with other organisations to ensure at all times, their terms and conditions are up to date with happenings in business environment
• For every category of spend by the organisation, a separate set of terms and conditions would be established
• Engage attorneys in drafting of their terms and conditions to ensure they are aligned with Saudi Arabia laws

Table of Contents

1.0 Introduction. 4

1.1 Organisation Background. 4

1.2 Identified Terms and Conditions 5

2.0 Evaluation of the Selected Terms and Conditions in RCU.. 6

2.1 Risk of Poor Quality. 7

2.2 Risk of Extension of Time. 10

3.0 Performance Measures Monitoring and Management. 13

4.0 Battle of Forms. 15

5.0 Conclusion and Recommendations. 17

References. 19

Appendices. 21

Appendix 1: RCU Terms and Conditions (T&Cs) Summary. 21

Figure 1:Different RCU Strategies. 5

Figure 2:RCU Mendelow Stakeholders Analysis. 6

Figure 3:Contract Lifecycle Management 7

Figure 4:RCU Risk and Impact in their contract 8

Figure 5:Warranties and Conditions Compared. 9

Figure 6:Contract Implementation in RCU Phases. 12

Figure 7:Ethical Behaviors in RCU.. 14

Table 1:RCU Risk register 10

1.0 Introduction

1.1 Organisation Background

Royal Commission for AlUla (RCU) is highly ranked as a successful organisation managing natural and historical locations based in North- West Saudi Arabia (KSA). The success of their mandate is to ensure that KSA premier as a good destination for nature, culture management and heritage (RCU, 2022). The foundation of RCU is from the KSA Vision 2030 with their output approximated to range from SAR 120bn for KSA GDP development as at year 2035 (RCU, 2021). This is intended to improve the KSA economy by the input of AlUla organisation. Their commitment scope is influenced by achievement of excellence and appropriate positioning to work with institutions international by involving different players. The organisation practices is summarised in figure 1;

Figure 1:Different RCU Strategies

As evidenced in RCU (2022a findings identifying that the KSA government has in full made an investment of approximately $2 billion. This is as a seed capital to develop AlUla historical areas of growth. Further, more than $3.2 billion similarly include investment in public-private partnerships to prioritise infrastructures for projects success as at 2023 year. The rationale of this is what RCU (2022) including AlUla operating upto 25,000 kilometres square inclusive of lush Oasis valleys, Sandstones mountains and traditional cultural heritage sites.

1.2 Identified Terms and Conditions

A blanket or a standard terms and conditions (T&Cs) have been selected used by RCU different spend categories (see appendix 1). Considering the varying categories and sub-categories of RCU spend terms and conditions are applicable to guide their relationship with suppliers. RCU as a first party, suppliers and second d party and different stakeholders have risks and power distributed as guided in T&Cs. The power and level of interest as illustrated in figure 2 Mendelow Matrix is used to define the risks distribution among the different stakeholders.

Figure 2:RCU Mendelow Stakeholders Analysis

High Power; Low-Interest- RCU is yet to integrate technology in their T&Cs which need to be done. This is to improve their capacity to achieve value for money outcomes. This is with suppliers relations improved.

Low Power and High influence- The administration of RCU have a major role to play in the T&Cs implementation. They link RCU with the KSA government laws for successful integration.

High power; high influence- Procurement and Supply Management (PS&M) as first party are mandated to impact the relations of all stakeholders. The T&Cs implementation is dependent on their input.

Low power; low interest- The management teams and legal department has not much power as evidenced in the T&Cs. Their core mandate is ensuring facilitation of the content of the T&Cs aligned with organisation core strategy of success in tourism sector.

Further, based on the identified relationship with different stakeholders, the T&Cs are mandated to ensure risks management is appropriate. They are reflected in contract management cycle and guided by terms and conditions. As evidenced in CIPS (2022), by dictating the relationships of different parties in a contract, the success of the contract is achieved. Any essential negotiation is pursued with changes I the contracts set as a priority. In the entire contract management cycle (see figure 3), the T&Cs are relevant which manage entire risks in their work environment.

Figure 3:Contract Lifecycle Management

2.0 Evaluation of the Selected Terms and Conditions in RCU

For RCU, in their contracts, the identified terms and conditions are important to stipulate how they relate with parties engaged. The scope of their relationship is on risks sharing and value/impact. As evidenced in CIPS Notes 2022, by using the vulnerability and relative value or impact model,  the terms and conditions impact to suppliers relationships is identified (see figure 4);

Figure 4:RCU Risk and Impact in their contract

Functional– This is characterised by high vulnerability and risk but low value and impact. As such, part of the T&Cs include a highlight of all the issues to be solved by the product and the supplier is supposed to provide that. The T&Cs protect the organisation in terms of quality and safety levels/controls.

Performance– This is characterised by both high vulnerability and risk and high relative value in impact. For RCU, procuring services such as IT systems, logistics and facilitation belong to this category. The specifications are drafted in the T&Cs, creativity embraced in their development with supplier taking the specification risk.

Conformance– Very few of the RCU sourced products and services have low vulnerability and risk and high value or impact. Hence, apart from instances of time extension and force majeure, the T&Cs do not anticipate this.

Detailed– This has a high relative value/impact and low relative value. Hence, despite of the risks being minimal, the T&Cs highlight the extent in which protection from harm related to losses, claims, costs, accident and injuries are protected.

2.1 Risk of Poor Quality

As defined in Cao and Gao (2018) the quality in contract identify the overall technical requirements in a contract which relate to quality of product/services. Hence, it involve the vendor/supplier/contractor ensuring that the provided goods and services are conforming with the contractual requirements.  For RCU, the quality determinants entail being valid, acceptable, capacity and legal. The T&Cs note that;

Hence, this is considered a warranty since there is an opportunity granted to the supplier/vendor to re-perform services for correcting the quality issues. As shown in figure 5, it is the comparison of the conditions and warranties which position this legislation as a warranty. This is owing to the requirement of RCU as the first party to take the costs but in condition.

Figure 5:Warranties and Conditions Compared

Since quality is a critical factor, the T&Cs also offers a provision of use of risk register to monitor and analyse incurred risks. Adopting the definition of Kudszus et al. (2020) a risk register is a table of projected risks allowing tracking of identified risks and any core information regarding to its use. In regard to this, RCU T&Cs note that;

An example of RCU risk register is procurement of personal protection equipment (PPEs) for all employees after the emergence of COVID-19. A summary of the risk register is as illustrated in table 1.

Table 1:RCU Risk register

Owing to the importance of ensuring that the T&Cs developed by RCU are in line with the KSA laws by the virtue the organisation operate as a public sector organisations, this need to be improved. Despite of the T&Cs only focusing on the issue of taxation, they are also relevant in covering the issues of quality of the contract implementation.

There is more that need to be done by possibly engaging law experts to align the T&Cs of RCU with the KSA government procurement laws and other regulations.

2.2 Risk of Extension of Time

Adopting the definition of Lee et al. (2020), in a contract implementation, extension of time is granted in an event the work progress s impacted by excusable delaying event. Extension of time become a risk when what CIPS (2021) identify as Clin Vs Walter Lilly & Co court of appeal ruling prevails. In the ruling, it highlighted on the need for having an elaborate risk allocation in contracts which is more relevant particularly after emergence of COVID-19 pandemic. For RCU T&C’s, they note that;

Hence, as evidenced in the RCU terms and conditions, they cannot be classified as warranty since they offer a provision of the contract termination for failing to adhere to the contract T&Cs. The 15 days provided in the contract is intended to ensure that the supplier is reporting on an occurrence which lead to delaying the contract in line with the agreed timelines. There are instances where environmental issues/challenges affect the capacity of an organisation to successfully implement a contract. In Hansen (2020) report evaluating if COVID-19 outbreak is a force majeure event, these had been noted to be occurrences past the management of an organisation in their operations. Specifically, the contract terms and conditions note that;

Hence, as evidenced in the contract, occurrences such as COVID-19 pandemic which has affected majority of the contract implementation in RCU is even linked with the KSA laws. However, the PS&M teams lacks sufficient knowledge and understanding on the relevance of the Force Majeure concept and its relevance in the context of their contract. This need to be appropriately managed to eliminate this gap which limit success of RCU contract adoption. This need to be integrated in the RCU Contract implementation phases in figure 6;

Figure 6:Contract Implementation in RCU Phases

2.3 Risk of Increased Costs

As evidenced in Heravi and Mohammadian (2021) the cost overruns risk is as a consequence of prevalent of badly written conditions of contracts. Nevertheless, there are broadly prevalent circumstances which are integrated for prioritising on aspects which impact or potentially impacting a specific contract. In terms of costs, RCU terms and conditions note that;

Further, for RCU, they integrate Key Performance Indicators (KPIs) which are meant for ensuring that a clearly agreed pricing is used for the contracts. Often, this has contributed to challenges with the PS&M since they have remained hellbent on when these contracts could be altered. This inform the need for harnessing the awareness level of the contracts and how different occurrences could inform on the contract changes on costs. As evidence in Alebrahim vs BM Design London Ltd [2020] EWHC 3393 (TCC) case which involved a contract for refurbishment of a residential property, the contractor had increased the estimated costs initially (Creedy et al., 2010). The court of law noted that the employer can only pay for the trade price items and not any price which is not agreed upon. Further, in this case, the RCU terms and conditions note that,

Hence, there is no instances where the buyer/RCU can incur any further costs which were not initially stipulated in their contract implementation terms and conditions. Through a gain sharing however, there are liens and encumbrances which are noted to be adopted aligned with a country regulations where they operate in KSA.

2.4 Risks of Unethical Practice

Adopting the definition of Grabowski et al. (2019)……….

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