TYPES OF SPECIFICATIONS WHEN CONTRACTING

TYPES OF SPECIFICATIONS WHEN CONTRACTING

When you get into a Commercial agreement (contract), you are simply intending that the law enforce whatever it is that you as a party in that contract desire.  The success here will obviously depend on how you frame your specifications.

But what are specifications? Or even types of specifications when contracting

Specifications are statements of requirements to be satisfied in the supply of a product or service

There are two main types of specification when contracting namely:

#1 CONFORMANCE SPECIFICATION

With this type of specification the buyer says what they want and how they want it and the supplier has to meet this

Examples of conformance specification are:

• Engineering drawing
• A chemical formula
• Model name, number or brand etc

#2 PERFORMANCE OR FUNCTIONAL SPECIFICATION

In this case the buyer simply explains problems the product should solve and the supplier provides such. In essence this is less rigid than conformance specification.

Examples of what typical specifications may be like include;

• Required quality levels
• Required safety levels and controls

Compared to conformance specification, performance specification has a number of ADVANTAGES such as;

1. The specifications are easier to draft
2. The efficacy of specifications does not depend on technical knowledge of the buyer
3. Supplier can use their creativity to develop the products
4. Greater share of specification risk is borne by the supplier.

When is it advisable to use performance specification?

1. When the supplier has more technical or relevant skills than that of the buyer
2. When technology is constantly changing in the suppliers industries in which case it will be hard to specify methodologies
3. When there is a clear criteria for evaluating alternative solutions suggested by the suppliers competing for the contract

When there is enough time to assess the functionality of the product as proposed