Procurement Systems 5/11/2017

Suranga Jayasena
Suranga Jayasena

1 2

 … the process of obtaining supplies of  Are... ◦ ...

something, especially for a government or an ◦ Unique
organization ◦ Tailor made
 commonly involves ◦ Poor working
(1) purchase planning, (2) standards determination, conditions
(3) specifications development, (4) supplier ◦ Risky
research and selection, (5) value analysis, (6) ◦ Exhibition of Creativity
financing, (7) price negotiation, (8) making the ◦ Exhibition of
purchase, (9) supply contract administration, (10) technological
inventory control and stores, and (11) disposals advancements
and other related functions.

3 4

 ...is our plan that is intended to achieve our

 Usually aim, i.e. the project (successfully)
◦ Complex  ...influenced by
◦ Expensive ◦ Roles of client and third parties
◦ Lengthy, and ◦ Client’s project objectives
◦ Hostile ◦ Project Constraints
 By means of a TMO ◦ Risks and their management
◦ Temporary Multiorganization, i.e. the project team, ◦ Design and Funding
the members of which are frequently unknown to
each other.

5 6

Suranga Jayasena 1
Procurement Systems 5/11/2017

Continued
 A project begins with him  The real client
 The sponsor of construction process ◦ Identification is very important
 Whose needs must be met ◦ Multiple parties within client organization
◦ Conflicting needs
◦ Appointing a single clients’ representative would
 Who is the real client? minimize problems
◦ Present client may not be the tenant

7 8

Continued
 Client Characteristics  ...may stem from
◦ Public/Private ◦ Regulations, internal rules, customs and beliefs
◦ Knowledge and experience in Construction  Influence/restricts actions which might
◦ Use of the project otherwise assist in the successful
 For own industrial/commercial activities achievement of client’s objectives
 To lease, rent or sell
◦ Nature of client’s business

9 10

Continued
 Each procurement system we design will carry
different levels of risks to each party
 Allocating to a party who can better manage
is usually beneficial  Risk management process
◦ Identification of potential risks
 General principles of risk management can be
◦ Assessment of their effects
utilized in design of procurement system
◦ Develop method of risk response
◦ Provide for residual risk

11 12

Suranga Jayasena 2
Procurement Systems 5/11/2017

Back to

Continued
 ...is the structure we develop
◦ To fulfil the clients’ needs
◦ Within the given constraints
 Risk management strategies (ACAT) ◦ With proper management of risks
◦ Avoid: eliminate, withdraw from or not get
involved ◦ With suitable parties Interacting one another
◦ Control: optimize - mitigate
◦ Accept: and budget
◦ Transfer: outsource or insure

13 14

 ...in another perspective,  …is a set of interacting or interdependent

is the architecture of our TMO
◦ players and their interaction with each other
 We may call it a system, because...
elements forming an integrated whole
 An organized, purposeful structure regarded
as a whole and consisting of interrelated and
interdependent elements.
◦ These elements continually influence one another
(directly or indirectly) to maintain their activity and
the existence of the system, in order to achieve the
goal of the system.

15 16

Continued Continued

 All systems  All systems

◦ (a) have inputs, outputs, and feedback mechanisms ◦ ………, and
◦ (b) maintain an internal steady-state (called ◦ (d) have boundaries that are usually defined by the
homeostasis) despite a changing external system observer.
environment
◦ (c) display properties that are peculiar to the whole  Systems underlie every phenomenon, and are
(called emergent properties) but are not possessed
everywhere one looks for them.
by any of the individual elements

17 18

Suranga Jayasena 3
Procurement Systems 5/11/2017

Continued
 We talk about  …is something we design
◦ Parties involved (elements) and selection of parties
◦ Relationship between parties (interaction)
◦ Features of the system (emergent properties)
and
◦ Effectiveness under volatile environment
(homeostasis)  … in fact is the project strategy we develop

19 20

Continued
 A simple definition:
 The organization structure adopted by the
client for the implementation of a project.
◦ at times “eventual operation” also included
 Various complex systems
 Can not be easily classified if all significant
parameters are considers
 Thus, begin with a single parameter:
the responsibilities of Design and
Construction
 Are two parties, or a single party

21 22

Continued Continued
 Looks only at who is responsible for the  We’ll use the word “approach” to distinguish
Design and who is for Construction, from the this level of classification.
client’s point of view.

 Separated: if two separate parties are

responsible
 Integrated: if a single party is responsible for
both

Separated Integrated
Approach Approach

23 24

Suranga Jayasena 4
Procurement Systems 5/11/2017

 Popular is the conventional method

◦ However, not limited to Client
Contractual
 Called “traditional method” in the industry Functional

◦ What in fact is the tradition is questionable

 Conventional = accepted social behaviour Design
Consultants
Architect or
Lead
Quantity
Surveyor
◦ Seems a more suitable word Consultant

Domestic Main Nominated

SubCons Contractor SubCons

25 26

Continued
 Popular is the design and build method
 Design < > Construction  Few close variants
 In addition ◦ Package deal
◦ Project delivery is a sequential process ◦ Develop and construct
◦ Design is virtually completed before construction ◦ Turnkey
begins, i.e. separated in time line
◦ Choice of a suitable party and a contract for each
important responsibility
◦ Each party manages their own part of responsibility

27 28

Continued

Client  Design >< Construction

In addition
Contractual
Functional 
◦ Project delivery is a faster process
Design Design & Cost ◦ Design and construction processes overlaps, i.e.
Advisor Build Advisor integrated in time line
Contractor
◦ Limited choice of a suitable party and a contract for
each important responsibility
 Best Designer <> Best Constructor
Domestic Quantity ◦ Single party manages total responsibility
Designers
SubCons Surveyor

29 30

Suranga Jayasena 5
Procurement Systems 5/11/2017

31

Suranga Jayasena 6