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Contract review - capability



My question is regarding the difference between capability review as contract review and new product development (design). Our very small company (20 emps.) manufactures mostly to supplied customer specifications. Occasionally, a customer will come to us with something that we have not done before. Depending on the situation, we may have an internal conversation about it and decide that we can produce the part in question. Other times, we may do more elaborate tests/prototypes. We are confused about where the line is between contract review and design. Thanks for any insight.


Captain Nice
Staff member
I wouldn't get too hung up in the distinction. You do different things with different projects. Be able to produce and be ready to discuss a project book or similar (project summary index, whatever - some compaies keep a single project file).

The 'contract review' part is basically everything you go thru prior to accepting a contract (PO) from your customer. There may be many changes made subsequently in response to, among other things, test results.

On the other hand you may do testing and such before submitting your bid to the customer for the contract (if a bid system is part of the situation).

What you do as contract review for Project A may very well be quite different from that of Project B. But - most of the basics should be the same: Can we do it? How much will it cost and how much can we make? How many can we make per unit time? How many does the customer want?

Sometimes the contract is in part or fully for research. Example, customer wants 5 laser cutters with a specific power. They have never been build before. It may be that the research for making the product is (at that time in history) beyond the state of the art (can't be built, but it was a good theory!!!).

At some point you reach an agreement to take on a project in return for some form of payment. What did you do before you reached that point?

Typically it is easiest to put together a flow chart of the sequence of the basic and typical steps you go through.

You say: "Other times, we may do more elaborate tests/prototypes." Are they paying you for the prototypes and such? Do you do them on your own? When does it reach the point where some type of agreement is made?

Does that help or have I confused you?

BP for Chris


Thanks. Yes,I think we are trying too hard to make things fit perfectly into ISO. Most sample prototypes we do on our own. We do get paid for some projects. On paid test projects, agreement is usually reached after the customer has tested out the sample product. I would say that the paid projects are the "never has been done before" type that require considerable research on our part.

[This message has been edited by Marc Smith (edited 14 February 2000).]
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