Parts in house

[hairykrishna]

If you had someone contracted to build something, with part of the advance payment unlocking on "parts in house" how would you interpret that?

An argument from the supplier is that a lot of the parts are short lead time and actually only get ordered immediately before being attached to the assembly. So a lot of parts are not 'in house' until later in the build. I see this argument...to a point. But it makes me wonder why they have parts in house as the milestone. I had naively(?) interpreted 'parts in house' as being 'all the bits are there ready to be attached together'.

[Piersman2]

I'm with you.

Are ALL the parts in house? No. Well when they're ALL in house I'll pay you.

What else can it possibly mean?

His argument about short lead items not being ordered until JIT makes no sense either, if they're not going to order them until JIT, then why would they expect to be paid for them upfront?

[Superleg48]

These sorts of things are always best clarified before work commences, so everyone knows what everyone means. Same page and all of that.

[hairykrishna]

Superleg48 said:

These sorts of things are always best clarified before work commences, so everyone knows what everyone means. Same page and all of that.

With the benefit of hindsight I agree. Unfortunately that ship has sailed some time ago.

[iphonedyou]

Piersman2 said:

I'm with you.

His argument about short lead items not being ordered until JIT makes no sense either, if they're not going to order them until JIT, then why would they expect to be paid for them upfront?

Well, taken in isolation - the upfront payment would be to stay cashflow neutral (or positive). Irrespective of the gap between the JIT order and payment milestone.