Project Procurement - Principles and Case Study


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Project Procurement - Principles and Case Study

  1. 1. Case Studies demonstrating Principles of Procurement<br />KiranRadhakrishnan<br />Roll No. 8<br />ISEM – X<br />
  2. 2. Differences between Procurement vs Purchasing<br />Both are activities performed in relation to their goods and services, but done with a different method and approach<br />
  3. 3. Differences between Procurement vs Purchasing<br />“Form of buying that consists of getting goods or services by paying a certain amount of price or money. The amount of money or price paid in this case will be in accordance with the quality and quantity of the goods or services. We ensure that the right thing comes at the right place at the right time”<br />Purchasing<br />“Acquisition of goods and services at the best possible total cost of ownership. This is done to meet the demands of the purchaser taking into account the factors of quantity and quality, and time and location as well.”<br />“Management of suppliers to achieve strategic business value”<br />Procurement<br />
  4. 4. <Examples; Overview of types><br />
  5. 5. Differences between Procurement vs Purchasing<br />Purchasing - both individuals and groups such as companies and organizations. <br />Procurement - mainly by companies and organizations or such other groups.<br />
  6. 6. Steps in Procurement<br />Information gathering<br />Supplier contact<br />Background review<br />Negotiation<br />Fulfilment<br />Consumption<br />Maintenance and disposal<br />Renewal<br />
  7. 7. Principles<br />Principles of Procurement<br />Get away from an adversarial relation with suppliers – the relation should be strategic and benefit both in the long run<br />Move from price consideration to total cost of ownership – you can’t just buy cheap things and then pay huge amounts on maintenance, paper work, etc.<br />Have minimum number of suppliers<br />Move from short-term to long-term – thus avoiding total cost of ownership<br />...<br />
  8. 8. Principles<br />Principles of Procurement<br />...<br />5. Procurement strategy – vision of where the business should take their suppliers<br />6. Supplier has access to expertise company needs and often can supply multiple products, and often design and make more appropriate products<br />7. Reduced inventory costs. Inventory can be reduced when there is a trust based relation with suppliers. We can move from just-in-case inventory storage to just-in-time delivery of supplies<br />8. Streamline processes within your organisation and streamline/standardise them with your supplier<br />
  9. 9. Principles in Public Procurement<br />1. Transparency<br />2. Competition<br />3. Economy<br />4. Efficiency<br />5. Fairness<br />6. Accountability.<br />
  10. 10. CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>A 17 km rail link in Malmo, the 3rd largest city in Sweden
  11. 11. The tunnel portion extends 6 km under the city centre
  12. 12. Inaugurated in December ‘10
  13. 13. Wasunder construction since March 2005
  14. 14. Involves building of two parallel railway tunnels under the city of Malmö, as well as three new railway stations and railway tracks
  15. 15. Shows how EIA can be integrated into the Project EMS and construction contract procurements</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>EMS has become a frequently used tool among construction companies in Sweden
  16. 16. Green procurement is being encouraged by authorities in many countries
  17. 17. Ensures environmental goals are transferred to suppliers
  18. 18. Commitments made to environmental impacts are ensured by linking EMS to EIA – by using green procurement
  19. 19. Even if the international EMS standard ISO 14001 has become widely implemented, companies may also choose to work according to another EMS.
  20. 20. 90% companies go with EMS</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>But EMS difficult to implement in construction companies due to temporary nature of projects
  21. 21. Successful EMS  collaboration between the government, professional bodies and training institutions is crucial
  22. 22. EIA also required under Swedish law
  23. 23. Noticed that there is insufficient link up between the EIA and project teams</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>Green public procurement can be described as a way for governmental organisations to state environmental preferences in their purchases and procurements.
  24. 24. In this way, green initiatives in the private sector can be promoted
  25. 25. Some common environmental requirements concern the presence of an EMS or parts of an EMS, waste separation, handling of chemical products and compliance with some technical, project-specific environmental requirements</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>Environmental criteria can also be part of the decision-making processes in the procurement — prequalification and tender evaluation.
  26. 26. Limiting of firms to those meeting envt. Qualifications
  27. 27. Also encouraged to provide environmental preferences along with the bid document
  28. 28. But effectiveness of green procurement issues are difficult to evaluate - rarely followed up and the most significant environmental issues are not addressed</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br />The project is owned by the Swedish Rail Administration<br />and is run by the City Tunnel Project Organisation. The construction works are organised into three subprojects.<br />Two of these consists of one contract each — the tunnel construction and the building of the Malmö central station. The third subproject consists of 20 smaller construction contracts<br />
  29. 29. CASE STUDY 1<br />City Tunnel Project, Malmo<br />
  30. 30. CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>For the procurements of the construction contracts in the project, both mandatory environmental requirements and environmental evaluation criteria were applied.
  31. 31. The tender documents also describe the measures that the contractor should take to comply with the environmental requirements, the required monitoring measures, and the parameters that should be reported monthly to the client. In addition, it is described how the contractor should notify the client if certain levels were exceeded.</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>The contractor’s EMS should include all activities that were to be performed by the contractor as well as by its subcontractors. Also, the system needed to follow the international standard, ISO 14001.
  32. 32. In addition to the mandatory requirements, environmental evaluation criteria were also applied in the procurements - were regarded as a way to find a contractor who was likely to comply with the mandatory environmental requirements.
  33. 33. part of every tender - the environmental criterion was assigned a 10% weighting of the total score.</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>The environmental monitoring programme describes the monitoring measures and routines. The contractors are responsible for the monitoring of their own work. However, the client also checks the monitoring routines of the contractors, through regular audits and meetings.
  34. 34. The monitoring data that the contractors report to the client are stored in a common database, called MFS-Geo, which was designed specifically for the project. Thereafter, the client verifies this monitoring data</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br /><ul><li>EIA – basis for all work
  35. 35. Environment impact study done, and environmental restrictions were framed by the court
  36. 36. Included in EMS
  37. 37. The City Tunnel Project includes both design and-build contracts and traditional contracts. In design-and build-contracting, the contractor has the complete responsibility for both design and construction, including the selection of construction methods. In this case, it could be unfortunate if the client decided upon the techniques to use during the planning of the project.</li></li></ul><li>CASE STUDY 1<br />City Tunnel Project, Malmo<br />The findings of the EIA were incorporated into the contractors’ EMSs, which thereafter were used as tools to handle the environmental aspects.<br />The procurement stage may thus be regarded as one way to facilitate the link between the EIA and the follow-up of the environmental requirements and management of the environmental aspects.<br />
  38. 38. CASE STUDY 2<br />BurjKhalifa, Dubai<br /><ul><li>When built, became the tallest building in the world
  39. 39. Built by Emaar Properties
  40. 40. Construction began in 2004 and completed in 2009
  41. 41. Overcame recession
  42. 42. Turner Construction Company – project manager</li></li></ul><li>CASE STUDY 2<br />BurjKhalifa, Dubai<br />WBS:<br />Idea formation of the BurjKhalifa project<br />Choosing the building site and running assessment on all variables (codes, politicians, risks, financials, human resources, building materials).<br />Choosing contractors for architecture, engineering, and construction.<br />Hiring workers for the project.<br />Planning purchase and delivery of materials.<br />Choosing subcontractors for inner construction work on pools and aesthetics.<br />Using EVM as a method of assessing and tracking project management.<br />