Procurement or contract strategy plans are important parts of any sound business model and more often than not, if these are not properly implemented, a project may fail badly. We shall proceed to analyse three case studies from different industries in this paper and observe how strategies or the lack of them influences the final outcome of a project.
There was no procurement or contract strategy plan, and the project failed.
Procurement is always a tricky issue so it is important to have a proper plan in place when procuring anything from goods to services. I was involved in a case where there was no procurement or contract strategy plan and consequently the project failed. In 2005, a decision was made at the bank where I used to work that new servers were required and a complete overhaul of the IT system was needed. However when the bank decided to commission quotes, it left everything to the senior IT manager who had his own ideas about the system which was to be procured.
Consequently a system was chosen which was not suited to the bank’s requirements and due to the fact that the manager had close links with the supplier, the cost of the system’s installation skyrocketed with the result that the bank had to pay far more than the original cost of the whole system. No contract was signed with the supplier with the result that the obligations of the latter were not implemented at all and the bank had to suffer additional costs for that.
The system did not work as it should have and after several attempts to get everything organized properly, it was decided that it had to be scrapped and another system implemented. This was all due to the fact that the procurement and contract strategy plan was not implemented at any stage thus losing the bank hundreds of thousands of dollars for absolutely nothing.
The procurement or contract strategy plan was inadequate, and the project failed.
In another case, a building company was entrusted to complete a block of flats on land purchased from another developer who could not complete the project. Although several meetings were held with the client on how the building of the flats was to proceed, there was no real plan although some sort of contract was drawn up.
The builders eventually set about the project with zest and speed but unfortunately due to the fact that the plan was inadequate, they began running into problems. It transpired that there had been no clearance from the planning authorities to add two extra floors to the development so a lot of time and money was wasted in meetings back and forth with the relevant authorities in an attempt to modify the plans.
The procurement or contract strategy plan was inadequate, and the project eventually was completed.
There can be cases when a project strategy or a procurement plan is inadequate and a project is brought to successful fruition. This particular project involved the instruction of English language to children from the Philippines who had absolutely no idea of English before. The school did not draw up a procurement strategy for teachers who were intended for this group but decided to assign a couple of young but promising teachers to the task. There was no contract strategy either, as the teachers didn’t really have much experience with students of this ilk and their contract did not stipulate the detail with which they had to teach.
However through sheer hard work and much initiative the project was a huge success as the students managed to adapt and enthusiastically learn although there was absolutely no structure in the course instruction. Obviously the whole situation could have been tackled much better if a lesson plan had been drawn up and assessment modules were created beforehand. But in this case, improvisation and initiative with contracts and/or strategies worked wonders.
These three particular cases which happened in real life show us that procurement strategies and contract strategies are important but not always essential to good business. In the first two cases we saw how the lack of strategy or an inadequate one seriously affected the project outcome whilst in the third, an inadequate plan resulted in success although that was based on personal and collective initiative.
Queensland Department of Public Works (2009); Procurement Strategy and Contract Selection; Retrieved from; http://www.works.qld.gov.au/downloads/bpu/cwmf_pscs.pdf
Seamus Cooley Quantity Surveyors (2010); Building Procurement; Retrieved from: http://www.scquantitysurveyors.com/procurement.html
Los Angeles World Airports; The Contracting Process at Los Angeles World Airports; Retrieved from: http://www.lawa.org/welcome_LAWA.aspx?id=536
Bailey, Farmer Crocker (2010); Procurement, Principles & Management (10th Edition); Prentice Hall
Hernandez Garcia R (2009); International Public Procurement: A Guide to Best Practice;
Globe,Law and Business