Solution

Executive Summary

This report has focused on evaluating Royal Commission for AlUla (RCU) contract terms and conditions. The area of focus in the contract entail its relevance in assisting the management of issues associated with quality, risk of time extension, risk of costs increase and unethical practices impacting the stakeholders. Other than this, the performance measures and management in the organisation operations has been put into account. For achieving this, RCU operating in the KSA tourism and culture sector has put into account. The contract selected is used in most of the services which are sourced by the organisation from different suppliers. This is to define the level of risk and power that each has in the contract implementation.

The findings which have been obtained in this report highlight that RCU services spend is defined with a set of factors which are cumulatively integrated as terms and conditions. The importance of this is to ensure successful management of the entire encountered challenges.  In summary, the terms and conditions represent aspects of force majeure, performance level, quality, costs incurred, indemnity, insurance and risks management. Further, the obtained findings have evidenced that the different terms and conditions in procurement and supply department are core go guarantee the success of the entity. The importance of these terms and conditions is that they enable RCU to dominate their area of practice and remain competitive in their operations.

This report has similarly pursued a review of the Battle of Forms and their relevance in ensuring a common ground is arrived at in the contract implementation. This is by having similar terms and conditions rather than taking a hard position.

From the results of this report analysis, a set of recommendations have been suggested which include;

• Improve the cover of risks by the contracts by having different terms and conditions documents for the various contracts
• Achieve a mutual agreement on the terms and conditions to mitigate the evident issue of battle of form
• Adopt different KPIs and reporting for implementing the contract
• Introduce modern technologies in the process implementation
• Awareness creation among the PS&M employees with an intention of improving their ability to understand their contracts terms and condition

Table of Contents

1.0 Introduction. 4

1.1 Organisation Background. 4

1.2 Terms and Conditions Selected. 5

2.0 RCU Terms and Conditions. 7

2.1 Risk of Poor Quality. 8

2.2 Risk of Extension of Time. 10

2.3 Risks of Increased Costs. 12

2.4 Risks of Unethical Practice. 13

3.0 Performance Measures Monitoring and Management. 14

4.0 Battle of Forms. 17

5.0 Conclusion and Recommendations. 17

5.1 Conclusions 17

5.2 Recommendations. 18

References. 19

Appendices. 21

Appendix 1: RCU Contract Terms and Conditions 21

Figure 1:AlUla Areas of Operations. 5

Figure 2:Mendelow Stakeholders Analysis. 6

Figure 3:CIPS Cycle of Contract Management Application. 7

Figure 4:Vulnerability and Risk and Relative Value and Impact 8

Figure 5:Comparison of Conditions and Warranties. 10

Figure 6:Contract Execution Phases 13

Figure 7:Performance Monitoring and Management 16

Table 1:RCU Terms and conditions summary. 9

Table 2:Risk register 11

1.0 Introduction

1.1 Organisation Background

In this assessment, Royal Commission for AlUla (RCU) organisation has been selected for evaluation. RCU is an organisation which was established in July 2017 as a Saudi Commission with their core purpose being preservation and development of the 2,000 year-old archaeological and historical site of AlUla in North-Western Saudi Arabia (RCU, 2021). RCU core target is to embark in a long-term strategy for developing and delivering a sensitive, sustainable transformation of the region while ensuring they reaffirm it as a major important archaeological and cultural destinations. This is while ensuring it is prepared for welcoming visitors globally. As illustrated in figure 1, the organisation invests in several areas which guarantee their success in their operations.

Figure 1:AlUla Areas of Operations

In the different areas of practice as illustrated in figure 1, they intend to harness and cultivate tourism and leisure in Saudi Arabia (KSA) in line with the Vision 2030 stipulations. To evidence the organisation relevance to KSA economy, PR Newswire (2022) report had indicated that the organisation overall development value was upward of $15 billion (SAR 57 billion representing the largest oasis regeneration project. This is $2 billion being invested in primary infrastructure with ready opportunities for private investments. For the success of these investment, their procurement and supply department must be in place to ensure procurement of the appropriate IT system. This is with optimum value for money attained.

1.2 Terms and Conditions Selected

As shown in appendix 1, the selected terms and conditions are standard/blanket irrespective of the spend/risk involved. In particular, since RCU is majorly involved in sourcing for different services categories of products, the contract is mainly in this area. It involve the distribution of risks and power to first party (RCU) and the second party who is the supplier company or the vendor. In order to identify the relevance of this contract terms and conditions to the suppliers, the Mendelow Stakeholders analysis (CIPS, 2022) can be used (see figure 2);

Figure 2:Mendelow Stakeholders Analysis

High-power, low interest- Due to the low interest and risk involved, the government institutions and the community has no significant impact on the implementation of the terms and conditions. Nevertheless, the quality standards of the services offered directly impact them as the end users of RCU services.

Low-power; high influence- Here, the management team and innovation department relate with the PS&M to ensure success in adoption of the terms and conditions. This is while influencing how the stakeholders relate.

High-power; high-influence– For the PS&M and suppliers, their risk is very high as defined in the terms and conditions. In this regard, they influence the scope of success in their operations as defined by the terms and conditions. Their relationship must be collaborative, consultative with expertise integrated.

Low-power; low interest– In regard to the KSA administration and competitors, they have an influence on the terms and conditions developed. Since they relate with RCU direct, the set KSA legislations impact how the contract terms and conditions are executed.

Further, for RCU contracts, for the purpose of ensuring that the allocated risks are suitable for managing the risk, the contract management cycle is used in defining the terms and conditions. As evidenced in CIPS (2022a) this is used in guiding suppliers and buyers in distribution of the risks by their adherence to the contractual needs. This is with appropriate negotiations and essential changes prioritised. As summarised in figure 3, in the contract cycle, the risks management is in alignment with PS&M management of the internal risks and externally in their operating environment.

Figure 3:CIPS Cycle of Contract Management Application

2.0 RCU Terms and Conditions

As earlier aforementioned, the RCU terms and conditions are relevant in defining the relationship of the different stakeholders, sharing of risks and ensuring appropriate successful contract execution. As illustrated in figure 4, the relevance of the terms and conditions in the contract depend on the types of specifications which are important for a contract.

Figure 4:Vulnerability and Risk and Relative Value and Impact

For the identified contract terms and conditions, it is structured in a manner in which is performance based/ This is with a high vulnerability and risk and high relative value and impact. As defined in COFC (2022) the performance category of contracts have their primary interest on performance, costs and overall contract implementation. This is result guided in terms of the function and cost. While functional is also relevant, it deviates from the area in which no testing methods or pre-delivery is needed prior the actual contract implementation. A summary of these terms and conditions is illustrated in table 1;

Table 1:RCU Terms and conditions summary

2.1 Risk of Poor Quality

Adopting the definition of Groot-Kormelinck et al. (2021) quality in the contracts means that the overall technical requirements in a contract linked to the product or services is achieved. This means that the products and services are conforming with the contractual requirements. In this case, for the selected RCU contract terms and conditions, the requirements are stipulated to include aspects of validity, acceptability, capacity and legality. In particular, the terms and conditions note;

This is not a warranty since it is not of less importance by offering the injured party with one remedy which is damages. It is a condition as it entail fundamental relevance of a contract by prioritising on the contract terms (see figure 5 for the comparisons);

Figure 5:Comparison of Conditions and Warranties

Owing to the importance of the quality of the services as stipulated in the terms and conditions, a risk register is used in monitoring/analysis of the risks. This is defined in CIPS (2021) as a list of risks which could have a direct implication on the contract implementation. For instance, recently, in the procurement of an IT system to harness flexible working during the COVID-19 pandemic, a risk register of the contract was used (see table 2);

Table 2:Risk register

Considering table 2 which identify on how the risks evaluation is done in RCU, it is evident that there are gaps in the contract implementation. The only area that highlights on their quality risks in the contract include;

There is hence a need for improving the contract terms and conditions to ensure that they are customised to RCU as opposed to relying on external legislations on KSA.

2.2 Risk of Extension of Time

Please click the icon to access this assessment in full