Paying the wrong price for goods, services and projects will erode margin, or eradicate it. It isn't only a question of the initial price, it is the through life costs that will also impact on profitability.
Probing the origin of prices requires expert knowledge, negotiation and post contract award, and contract management. An ability to understand the suppliers pricing strategy will go some way to effective negotiation. Making high quality pricing decisions is a hallmark of a world-class procurement operation. The quality of the pricing decision will be a significant contributor to profitability and the cost of goods and services provided to third parties.
The logic of pricing decisions applies to all categories of procurement, including high risk projects such as IT and Construction. This data set of Procurisk® will probe the whole gamut of pricing decisions and show where short and long-term risk exists. This data set will identify risk and when mitigation strategies are deployed there can be short-term positive impacts on the bottom line.
Many instances of improvement can be shown such as enhanced control over Time and Materials contracts, contracts using Price Variation Formulae and partnering Gainshare contracts. In some sectors dealing with raw material price volatility can be an important facet of competitive edge.