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Jemshah
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Asked: 2023-01-08T04:56:22+00:00 In:

Explain five circumstances under which progress ier method may be appropriate for use in purchasing operations. (10 marks)July 2020

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Explain five circumstances under which progress ier method may be appropriate
for use in purchasing operations. (10 marks)July 2020

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    1. Long-term contracts: The progress payment method is often used for long-term contracts that involve the delivery of goods or services over an extended period of time. This allows the organization to make payments as the work progresses, rather than paying for the entire contract upfront.
    2. Large or complex projects: The progress payment method can be useful for large or complex projects that involve multiple stages or phases of work. This allows the organization to make payments based on the completion of specific milestones, rather than paying for the entire project at once.
    3. High-risk projects: In cases where the project carries a high level of risk, the progress payment method can be used to mitigate this risk by allowing the organization to assess the quality and progress of the work before making additional payments.
    4. Limited funds: If the organization has limited funds available, the progress payment method can allow it to spread the cost of the project over time, rather than having to pay for everything upfront.
    5. Supplier preference: In some cases, the supplier may prefer the progress payment method as it can provide a steady stream of income over the course of the project. This can be particularly beneficial for smaller suppliers that may not have the financial resources to carry the cost of the project until it is completed.
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