Written by: Donna Kirk – Pro Leaders Academy Pty Ltd
John Donne famously wrote, “No man is an island.” He could have been talking about a project because projects cannot be completed without drawing from resources outside of the project team. And it is generally the procurement team that manages this process for the project.
It is an interconnected process that when working well delivers successful projects.
When the two disciplines are disconnected and don’t fully understand each role within a project, the risk of delays and cost overruns can increase.
The questions that need to be answered before any project scoping is signed off
Procurement teams should be able to provide input at the initial scope because most projects will involve obtaining resources to get things done, by way of purchasing goods and services or a contractual agreement for specific services necessary to satisfy the project’s objectives.
However, there are questions that require answering in the early stages of any project as to whether goods and services should be purchased externally or is it best to produce the goods or services in-house. Is a good relationship with external companies necessary and cost-effective in the long-term for purchased goods? Would the cost of building your own product be too costly and blow out the project’s budget?
The answer to the question will largely depend on the purpose of the project outcome and what is readily available on the market that requires little to no changes to meet the project’s objectives.
Cost and time are the most important deciding factors as sometimes bespoke development can be costly and time-consuming to produce fit-for-purpose products. On the other hand, if you buy something off-the-shelf, there are significant costs involved with customisation or workaround on top of the purchase price to make the product fit the purpose. In some situations, customising something that doesn’t quite fit can become a project nightmare when time and cost are blown out and the benefits are missed. When having to rework or add features in a cumbersome way to make the product work, it will end up being more costly to maintain and may even make the product difficult to use for the end user.
This thought, however, only applies to products. Where services are being considered, this is generally the reverse with inhouse human resources. Ensuring that suitably skilled staff that are available at the time that you need them for the project is not often easy to achieve. The use of contracted services are often used to meet this need; however this often comes at a higher cost when consulting services are required on demand.
By trading time with costs, the use of external resources are good to meet an on-demand requirement, but depending on the intended purpose of the project’s outcome, will depend on whether you are trading time with cost or the other way around.
In addition, procuring goods and services generally goes through a process that stipulates how resources can be obtained to get things done. This process includes managing relationships and negotiating for the best product at the best price. There are often constraints in a relationship with vendors that revolves around cost and time. And who better than to advise the Project Manager – the procurement team.
Interconnections and Communications
A strong connection and continual conversation with the procurement team by the project manager from the scoping period through to BAU is crucial to a project’s success.
By including the procurement team at the start of a project – during the scoping period will provide answers to questions, provide alternative solutions to challenges, and provide greater understanding by all parties around time frames, budgets, and contractual requirements.
Once fully informed decisions have been made, a project can move forward with confidence that the steps being taking are financially sound and fit within the project’s timeframe.
The project manager is involved with procurement, in the same way as any other aspect they control in the project management process. Recognising that procurement is a process the project manager might not own with the same authority as other parts of the project. While the project manager may have the authority to make agreements with contractors on behalf of the company, the project manager is often not the person who administers that contract once in place.
Procurement discussions incorporate areas such as risk identification and management, stakeholder engagement, activity cost estimates….all areas familiar to project managers!
The continuing challenge of today projects
Despite the close workings of each discipline and the understanding of the interconnectivity, we still each of these disciplines as separate departments in organisations and businesses; Operations – Finance.
Consider what might be achieved if Project and Procurement teams better understood each other’s disciplines – even just a little? The restraints and considerations that each are required to manage independently of each other. The risks and opportunities that each work amongst.
Would we see less cost overruns or delays due to lack of resources? Would we see more robust and fair contracts? Would we see a higher degree of value for money?
All fair questions to ask.
Let’s keep this discussion going – what do you think are the issues or challenges that are the result of Procurement and Projects being disconnected disciplines?
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