Dictionary of Procurement Terms

The economic worth of a good or service, conveyed by pricing.

The concept that an amount of money is worth more now than the identical sum would be worth in the future, based on the financial principle that money can earn interest.

The value obtained when trading one piece of equipment for another.

A fair return on investment.

1. Feature or benefit added to an existing good or service that increases its usefulness or worth to the buyer or end user. 2. The increased worth of a good or service as it progresses through production and distribution.

A critical and systematic assessment of the functions of a good or service to ensure the cost of the good or service is no greater than is necessary to perform the functions of that good or service and meet standards, specifications, procedures, and practices. See also: Value Engineering.

An organized, systematic approach to providing the necessary functions in a project at the lowest possible cost by substituting methods and materials with less costly alternatives without negatively affecting functionality. See also: Value Analysis.

A fixed-price contract with a provision for rewarding the supplier for faster delivery or superior performance.

A statement used by a company to differentiate its overall offerings in the marketplace to increase the attractiveness of its goods and services by highlighting and explaining features, benefits, or innovations.

A company that adds a feature or service to an existing good or service bought from another source and resells it as an integrated good or improved service.