Contract Procurement in Project Management

Running head: CONTRACT PROCUREMENT
Contract Procurement (Project management)
Name of the Student
Name of the University
Author Note

1
CONTRACT PROCUREMENT
Table of Contents
Part A: Introduction.............................................................................................................2
Part B: Key Risks and their Mitigation................................................................................3
Part C: Summary of Key Findings.......................................................................................6
Part D: Reflection Journal...................................................................................................8
References..........................................................................................................................10

2
CONTRACT PROCUREMENT
Part A: Introduction
Procurement can be described as a process of selecting the vendors and establishing
payment terms with the vendors. Procurement is mainly concerned with acquiring of a particular
good or services that is vital for a project or an organization as a whole (Burke, 2013). A
structured procurement process has certain specific needs which include negotiation, recognition
and maintenance. The procurement context of new Royal Adelaide Hospital is discussed in the
report (Baird, 2013). This was one of the largest social infrastructure projects that are undertaken
by the state. A private procurement arrangement was followed for the execution of the project. A
35 years project contract was entered between SA health and the state. The main aim of the
project was to provide 800 beds and 40 technical suites. The new Royal Adelaide Hospital
project, in terms of its scale, complexity, cost and resources can be termed as a generational
project. Establishment and maintenance of an effective management with robust is crucial for the
successful project delivery of the complex project. Efficient management and proper decision
making in a system is essential along with the regular monitoring and review of the project. The
current status of the project is complete and it is ready for the patients to avail the services of the
new hospital. The reviewing of the arrangements of the procurement context in this particular
project is one of the significant reasons behind the success of this project. The proper and
effective monitoring process helped the delivery of the project with the intended benefits and the
requirements of the project. The project has seen to provide a specific focus in the governance of
the project, organization structure and assurance processes. The risk management processes of
the project ensured elimination of the risks present in the project. The project has a number of
other important arrangement and initiatives that had a positive impact on the project. The
construction budget set for the project is $2.3 billion and this budget comprised of the nominal

3
CONTRACT PROCUREMENT
construction cost along with the cost by Project Co and state funded works. The approved budget
for the project as on 30 June 2015 was 140.1 million without considering the capital works and
the contingencies cost.
The new Royal Adelaide Hospital project was well managed and could be completed
more or less within the set schedule of the project. However, there were a number of
complexities in the project that resulted in certain project delays and cost revision. Regular
project monitoring and effective project governance could unveil the key issues and the
challenges associated with the project (Hornstein, 2015). There was a need for improving the
budgetary and financial condition of the project which can be considered as one of the key issues
in the project (Edwards & Bowen, 2013). From the context of procurement, there was a need for
modifications in timing and the scope of the project which were not agreed with the project Co
and therefore it was at an extreme risk. The new Royal Adelaide Hospital project was quite
complex and the presence of a significant complexities in the project resulted in the certain key
challenges in the project. It has been observed that there was lack of clear communication and
decision lines that resulted in certain project issues. The risk associated with the project included
delay in the project due to significant budget revision, cost pressures and failure to meet the PPP
contractual requirements with the project (Masterman & Masterman, 2013). Along with this, the
inadequate management of the claims made against the state had resulted in increase in the
complexities of the project. However, the appropriate project governance and an efficient leader
added to the successful completion of the project.
Part B: Key Risks and their Mitigation