ISO9001 & Contract Review

Published: 02nd June 2008
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Copyright (c) 2008 Ed Bones



In an attempt to define an effective set of management processes, ISO 9001:2000 has a section devoted to the management of the contract process. Earlier versions of the Standard (e.g. ISO9001:1994) defined this activity as Contract Review, a clear indication of its nature and purpose. ISO 9001:2000 has located it in a section (7.2.2) "Review of requirements related to the product". In both cases the intention was to ensure that organisations were able to, and required to, clearly assess the customer requirements prior to entering into a contract, and also to determine their capability to meet those requirements.



But isn't this obvious? Possibly, and no one is claiming any originality for this inclusion in the Standard. The real question is what led the compilers of the Standard to believe it to be necessary to re-state the obvious. How often as individuals have we been told, "I didn't know you meant that", or "Oh, that's what you meant"? These are clear indications of a supplier's misunderstanding of the customer requirement, OR a lack of understanding of how to meet the customer requirement, OR simply an inability to meet the requirement; maybe in most cases, a combination of these leads to a customer becoming discontented. Contract Review as we will call it here, is designed to eliminate any misunderstanding of the requirement, while providing an assurance of the supplier's ability and capability to meet the requirements.



At its simplest, the requirement leads the potential supplier to fully understand the customer's needs and expectations, while assessing his (the suppliers) ability to adequately meet those needs. This ability isn't simply confined to the production and delivery of a product or service; it includes provision in a time specific domain and at a cost suitable to the client. Also, there is an implicit need, if not otherwise specified, that the product is fit for purpose, conforms to legislative requirements, and will be supported in an appropriate method after sale. The Standard requires the potential supplier to verify this prior to the submission of a bid or quote.



Assuming an acceptable bid, the next step would normally be the delivery to the supplier of a contract or purchase order. The Standard requires a review of this document prior to acceptance, to confirm the continued acceptable status of the requirement and the ability of the organisation to meet the demands of the offered contract. This latter element might seem obvious to the point of being unnecessary, but with any organisation there is a great temptation to accept any and all orders, particularly during a general down-turn in business prospects, and to worry about the consequences later. This strategy is not good for either party, so the requirement is for the potential supplier to conduct another review where key aspects of the proffered contract are compared to the organisations ability to deliver to the requirements. These include: - Ensuring that the product (or service) requirements are (adequately) defined. - Any requirements that differ from those previously expressed (the bid invitation and quotation) are resolved. - Confirming that the organisation has the capacity to meet the defined requirements.



Most observers of this review requirement would probably agree on the reasonableness of the requirements, and maybe add further detail, but independent audit experience suggests this review is seldom carried out with any rigour, frequently being confined to a cursory assessment by a sales department manager, more concerned with incoming order value than the organisations technical and administrative ability to deliver.



If companies are to improve their image in the market place, and with their customer base, the requirement to seriously review the commitments they are about to make with any new contract is an essential step towards this improvement strategy.





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Ed Bones formed Meon Consulting to assist clients with managing their businesses in a manner compliant with ISO 9001/14001. Ed had earlier held a number of senior positions with big companies in the UK, Europe and the USA. He has written and delivered lectures on quality improvement and TQM. http://www.rent-an-auditor.co.uk Please visit http://www.rent-an-auditor.co.uk/contactus.html to obtain your FREE copy of the Presentation.


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