Introduction to Contracts and Procurement

This report intends to shed light on the process of procurement within the cannon of project management through an analysis of the construction of the new Royal Adelaide Hospital in South Australia. The report begins by providing an outline of the project and the procurement process used for the completion of the project. The report discusses the various risks like the financial, constructional and other risks faced by the authorities during the completion of the project.

Running head: INTRODUCTION TO CONTRACTS AND PROCUREMENT
Introduction to Contracts and Procurement
Name of the Student:
Name of the University:
Author’s Note:

1INTRODUCTION TO CONTRACTS AND PROCUREMENT
Executive Summary
This report intends to shed light on the process of procurement within the cannon of project
management through an analysis of the construction of the new Royal Adelaide Hospital in
South Australia. The report begins by providing an outline of the project and the procurement
process used for the completion of the project. The report discusses the various risks like the
financial, constructional and other risks faced by the authorities during the completion of the
project. The report next discusses the best practices like effective collaboration of project
managers, procurement managers and governmental authorities along with the formulation of
cost effective contracts that the authorities could have used for the completion of the project.
The report concludes with a personal reflection wherein I would reflect on the process of
procurement through the perspective of the knowledge that I have gained through the course.

2INTRODUCTION TO CONTRACTS AND PROCUREMENT
Table of Contents
Introduction................................................................................................................................3
NRAH and Procurement............................................................................................................3
Risks and their mitigation..........................................................................................................4
Best practices for procurement and contracts management.......................................................6
Personal Reflection....................................................................................................................7
Conclusion..................................................................................................................................8
References................................................................................................................................10

3INTRODUCTION TO CONTRACTS AND PROCUREMENT
Introduction
The process of procurement has emerged as one of the most important ones within the
framework of the contemporary work and helps the organizations to obtain the kind of
materials or goods that are needed (Wang et al., 2016). As opined by Dave et al. (2016),
procurement is mainly concerned with the process of finding, agreeing as well as acquiring of
products or goods are external agencies. However, there are various factors that the
organizations need to take into effective consideration during such a process like the risks
involved, financial constraints and others (Patrucco, Luzzini & Ronchi, 2016). Roberts and
Siemiatycki (2015) are of the viewpoint that the effectiveness of the process under discussion
here depends to a large extent on the efficiency with which the organization is being able to
mitigate the adverse effects of the risks involved in the process and also address the financial
and other kinds of constraints. This report will shed light on the process of procurement and
its various related aspects in the particular context of the new Royal Adelaide Hospital
(NRAH).
NRAH and Procurement
The NRAH is a part of the initiative of the Australian national government to improve
the health care facilities which are available to the Australian people (Rah.sa.gov.au, 2018).
The total estimated cost of the project is more than $2.4 billion and is the 3rd most expensive
building of the world along with the most expensive building of Australia (News.com.au,
2018). The hospital is known for the technical advancements like the use of robots and others
along with the personalized rooms which it offers to the patients (Abc.net.au, 2018). In this
regard, it needs to be said that the hospital in terms of the life cycle journey is at the growth
stage and it is expected that it would offer better health care services in comparison to the
earlier RAH. However, because of the procurement process which was used the hospital

4INTRODUCTION TO CONTRACTS AND PROCUREMENT
faced various kinds of issues along with a delay 17 months and several additional costs
(News.com.au, 2018).
The major drawback of the project under discussion here and the procurement that it
used was the fact that the project completely disregarded the needs of the patients and also
that of the health care professionals (Abc.net.au, 2018). According to News.com.au (2018),
the project is not only an ambitious one but at the same time attempted too much and that too
within a very short time. More importantly, the project also failed to take into effective
financial cost and other factors relevant to the project. The project was directly under the
supervision of the national government of Australia although it was built by the contractors
which undertook and completed the work on behalf of the national government (Abc.net.au,
2018). Furthermore, the national government is expected to repay the cost of the project to
the contractors by 2046 and after that the NRAH would be the property of the national
government (News.com.au, 2018). The effective collaboration between the national
government and the constructed greatly facilitated the effective completion of the project
although there were some disputes related to finance and others.
Risks and their mitigation
As opined by Oelze et al. (2016), there are various kinds of risks involved in the
process of construction of a building and the success of the concerned project depends to a
great extent on the effectiveness with which these risks are being mitigated. In the particular
context of the construction of the NRAH there were various kinds of risks involved in the
process like the financial risks, construction risks and others. For example, it was seen that
the national government as well as the contractors had miscalculated the cost of construction
and the net result of this was the fact that the government had to bear additional cost
(Abc.net.au, 2018). The national government ended up paying more than $600 for the

5INTRODUCTION TO CONTRACTS AND PROCUREMENT
miscalculation in the cost of the construction of the new hospital (News.com.au, 2018).
Furthermore, it is also seen that the contractors thoroughly disregarded the needs of the
patients as well as the health care professionals. The net result of this is the fact that the
emergency room of the concerned is too small as well as narrow to accommodate all the
patients which it gets. As a matter of fact in the past eight months since its initiation alone
more than four patients had lost their lives because of the delay in the health care services
(Abc.net.au, 2018).
Although the hospital boasts of 2300 car parking spot yet the parking space for the
ambulances have been made too narrow (News.com.au, 2018). The end result of this is the
fact that the patients are not able to reach the health care professionals on time and this has
also resulted in the death of a number of patients. The same holds true with the waiting rooms
and the place wherein the documents are signed by the exiting patients. This result in the
rooms being occupied by the patients for a longer duration of time and thus many patients
who actually need the services fail to get rooms (Abc.net.au, 2018). More importantly, many
patients have even complained about the quality of the food which is being served to them
and the technology that is being used by the hospital at times lapses (News.com.au, 2018).
The net result of this is the fact that there are instances wherein the operation theatres have
become powerless because of technical snaps.
The Health Ministry of the nation along with the national government had taken
various mitigation measures for the mitigation of these risks (Abc.net.au, 2018). For example,
it is seen that the national government had hired contractors to improve the infrastructure of
the emergency rooms and also the parking lots for the ambulances (News.com.au, 2018).
Furthermore, attempts have been made by the authorities to use the site of the old RAH for
providing emergency and other services to the patients (Rah.sa.gov.au, 2018). In addition to
these, initiatives are being made to improve the quality of technology which is being used by

6INTRODUCTION TO CONTRACTS AND PROCUREMENT
the hospital to deliver health care services to the patients through the procurement of better
technological resources (Abc.net.au, 2018). The authorities have realized the pitfalls of the
projects and in conjugation with the health care professionals and other experts they are
trying to overcome these issues so as to deliver better quality facilities to the patients. The
common theme in all these procurement changes which the authorities are making is to
improve the quality of health care services and also to mitigate the risks that the project is
facing in the most effective manner (News.com.au, 2018).
Best practices for procurement and contracts management
The risks as well as the pitfalls of the NRAH project clearly indicates the importance
of effective planning, contract management and other policies that the organizations need to
follow for the process of procurement. As opined by Osei-Kyei and Chan (2015), one of the
most important processes related to procurement is that of effective planning since it helps
the organizations to considerably reduce the cost of the project and helps in its timely
completion as well. In this regard, the notions of lean and agile procurements are important
ones to note (De Araújo et al., 2017). As the case of NRAH clearly indicates due to lack of
effective planning there was not only a delay in the completion of the project but also the
national government ended up incurring additional costs as well. Edler and Yeow (2016) are
of the viewpoint that the role of the project managers is an important one in the effective
completion of the projects and ensures that the project is being completed in a manner which
will take into effective consideration the needs of the organization. As becomes evident from
the case of the NRAH the authorities clearly failed to take into effective consideration the
perspective of the hospital and also of the patients and this ended up costing the lives of many
patients.

7INTRODUCTION TO CONTRACTS AND PROCUREMENT
As opined by Perrenoud et al. (2017), the procurement managers also play a vital role
in the completion of a project and are imbued with the responsibility of analyzing the needs
of the entire construction process. In this regard, it needs to be said that in the majority of the
construction sites a lot of material is been wasted and this adds up to the cost incurred by the
organization (Knutsson & Thomasson, 2014). However, the use of the methods of lead
procurement helps the procurement managers to overcome this problem. In addition to this,
had the authorities followed the method of agile procurement they would have been able to
not only explore the different options which were available for the completion of the project
but also to complete it in a much effective manner as well (Ghazali, Rashid & Sadullah,
2018). The processes of effective supervision and governance are also important ones to note
in this regard since they contribute in a substantial manner towards the completion of the
project (Wang et al., 2016). In this context it needs to be said that had the national
government used effective governance and supervision techniques then it would have been
able to complete the project in a much better manner. Formulation of cost effective contracts
is another option which the authorities could have utilized for the completion of the
concerned project (Dave et al., 2016). These in short are some of the best practices or
recommendations that the governmental authorities might have followed for the effective
completion of the project under discussion here.
Personal Reflection
I personally believe that the concept of procurement is one of the most important ones
from the perspective of the process of project management. Furthermore, as the course work
materials clearly indicated that this process helps in the effective completion of the projects
through helping the organizations to obtain the materials that are necessary for the project. In
addition to this, I also believe in the fact that the effectiveness of a particular project and also

8INTRODUCTION TO CONTRACTS AND PROCUREMENT
its completion depends to a large extent on the collaboration of the project managers with the
organization. This collaboration not only enables the project managers to understand the
needs of the project but also complete the project in a better manner. More importantly, I also
hold the viewpoint that the procurement managers play a substantial role in the effective
management as well as the completion of the projects. This is also important from the
viewpoint of the cost which is being incurred by the organizations for the completion of the
projects. I believe that the procurement managers through an effective analysis of the
demands and also the needs of the project are required to provide the best possible options to
the organizations and also to reduce the cost incurred by it as well. More importantly, they
also help in a substantial manner towards the timely completion of the projects by virtue of
offering the raw materials and other goods on a timely basis. Thus, it can be said that within
the cannon of project management the process of procurement has emerged as an
indispensible entity.
Conclusion
To conclude, the success or the failure of a project depends to a large extent on the
process of procurement which has been used for the completion of the project. The process of
procurement is an important one within the spectrum of project managers since it helps the
project managers to not only procure the required materials for the completion of projects but
also helps in the mitigation of risks as well. In addition to this, it is also seen that effective
collaboration is needed on the part of the project managers, procurement managers and the
organizations for the completion of projects. The case of Royal Adelaide Hospital clearly
indicates the need for the effective collaboration of these entities for the completion of any
project. More importantly, the organizations also need to take into effective consideration the

9INTRODUCTION TO CONTRACTS AND PROCUREMENT
processes of planning, agile procurement, lean procurement and others for the completion of
projects.

10INTRODUCTION TO CONTRACTS AND PROCUREMENT
References
Abc.net.au, (2018). Australia's most expensive building: What you need to know. [online].
Retrieved from https://www.abc.net.au/news/2017-01-24/new-royal-adelaide-
hospital-all-you-need-to-know/8206416
Dave, B., Kubler, S., Främling, K., & Koskela, L. (2016). Opportunities for enhanced lean
construction management using Internet of Things standards. Automation in
construction, 61, 86-97. Retrieved from
https://www.sciencedirect.com/science/article/pii/S0926580515002149
De Araújo, M. C. B., Alencar, L. H., & de Miranda Mota, C. M. (2017). Project procurement
management: A structured literature review. International Journal of Project
Management, 35(3), 353-377. Retrieved from
https://www.sciencedirect.com/science/article/abs/pii/S0263786317300595
Edler, J., & Yeow, J. (2016). Connecting demand and supply: The role of intermediation in
public procurement of innovation. Research Policy, 45(2), 414-426. Retrieved from
https://www.sciencedirect.com/science/article/pii/S0048733315001638
Ghazali, F. E. M., Rashid, S. A., & Sadullah, A. F. M. (2018). Disparity between the
Procurement Process Best Practice for Public Private Partnership (PPP) Projects in the
UK and Malaysia. Proceedings of the Institution of Civil Engineers-Management,
Procurement and Law, 1-29. Retrieved from
https://www.icevirtuallibrary.com/doi/abs/10.1680/jmapl.17.00057
Knutsson, H., & Thomasson, A. (2014). Innovation in the Public Procurement Process: A
study of the creation of innovation-friendly public procurement. Public Management

11INTRODUCTION TO CONTRACTS AND PROCUREMENT
Review, 16(2), 242-255. Retrieved from
https://www.tandfonline.com/doi/abs/10.1080/14719037.2013.806574
News.com.au, (2018). $2bn bungles at Australia’s most expensive building puts ‘lives at
risk’. [online]. Retrieved from https://www.news.com.au/lifestyle/health/billion-
dollar-bungles-at-the-royal-adelaide-hospital-australias-most-expensive-building-
puts-lives-at-risk/news-story/21e0e5a278e9a4d1f5cab0b153c702e9
Oelze, N., Hoejmose, S. U., Habisch, A., & Millington, A. (2016). Sustainable development
in supply chain management: The role of organizational learning for policy
implementation. Business Strategy and the Environment, 25(4), 241-260. Retrieved
from https://onlinelibrary.wiley.com/doi/abs/10.1002/bse.1869
Osei-Kyei, R., & Chan, A. P. (2015). Review of studies on the Critical Success Factors for
Public–Private Partnership (PPP) projects from 1990 to 2013. International Journal of
Project Management, 33(6), 1335-1346. Retrieved from
https://www.sciencedirect.com/science/article/abs/pii/S0263786315000411
Patrucco, A. S., Luzzini, D., & Ronchi, S. (2016). Evaluating the effectiveness of public
procurement performance management systems in local governments. Local
Government Studies, 42(5), 739-761. Retrieved from
https://www.tandfonline.com/doi/abs/10.1080/03003930.2016.1181059
Perrenoud, A., Lines, B. C., Savicky, J., & Sullivan, K. T. (2017). Using best-value
procurement to measure the impact of initial risk-management capability on
qualitative construction performance. Journal of Management in Engineering, 33(5),
04017019. Retrieved from https://ascelibrary.org/doi/abs/10.1061/(ASCE)ME.1943-
5479.0000535

12INTRODUCTION TO CONTRACTS AND PROCUREMENT
Rah.sa.gov.au, (2018). RAH | Royal Adelaide Hospital. [online]. Retrieved from
http://www.rah.sa.gov.au/
Roberts, D. J., & Siemiatycki, M. (2015). Fostering meaningful partnerships in public–private
partnerships: innovations in partnership design and process management to create
value. Environment and Planning C: Government and Policy, 33(4), 780-793.
Retrieved from https://journals.sagepub.com/doi/abs/10.1068/c12250
Wang, G., Gunasekaran, A., Ngai, E. W., & Papadopoulos, T. (2016). Big data analytics in
logistics and supply chain management: Certain investigations for research and
applications. International Journal of Production Economics, 176, 98-110. Retrieved
from https://www.sciencedirect.com/science/article/pii/S0925527316300056