Contracts and Procurement in Project Management - Risks and Mitigation Techniques

Running head: CONTRACTS AND PROCUREMENT
Contracts and Procurement
Name of Student
Name of University
Author Note

1
CONTRACTS AND PROCUREMENT
Table of Contents
Part A: Introduction.............................................................................................................2
Part B: Risks and Mitigation Techniques............................................................................4
Part C: Summary of Key Findings.......................................................................................6
Part D: Reflection Journal...................................................................................................8
References..........................................................................................................................11

2
CONTRACTS AND PROCUREMENT
Part A: Introduction
Project procurement is an important consideration of project life cycle as procurements
and contracts are integral for successful management of a project. In this context, the project of
new Royal Adelaide hospital can be discussed. Appropriate procurement management is
important for complex projects (Mignone et al., 2016). The purpose of project procurement
management is to establish and maintain the relationship with the vendors for different goods
and services during project lifecycle. Procurement management is a planned process and is
divided into four major processes such as planning, selection, administering and closing
procurements. The procurement selection process is one of the most important parts for
procurement management. This is because the procurement contracts are generally decided and
awarded through collaborations among various managers. The purpose of this report is to discuss
the procurement context associated with the new Royal Adelaide hospital project (New Royal
Adelaide Hospital report, 2015). Along with that, the key issues, risks and their mitigation
approaches will be discussed as well. The project was particularly complex due to its size (Audit
Report, 2018). The new Royal Adelaide hospital project progressed in a planned manner and
therefore, with the help of the audit report of the year 2015, it is possible to identify the key
issues associated with the project.
The report aims in discussing the project environment and organisational aspects of
leadership and governance. It is essential to evaluate the project environment since it has a huge
impact on the procurement management process.
New Royal Adelaide hospital is one of the costliest buildings. However, since the
beginning of the construction project, certain issues and unforeseen delays in this project are

3
CONTRACTS AND PROCUREMENT
observed. This resulted in increase in the project cost as certain modifications were needed in the
project. The project was set to complete in April 2016, which could not be achieved. The missing
completion date further triggered the state government in issuing a default notice against the
construction that added to the risks and issues in the project (Kerzner & Kerzner, 2017). Thus, it
is clear that there was a huge mismanagement in implementation of new Royal Adelaide hospital
project. The issues and risks associated with the project were multiplied by unlawful influence of
union by increasing maximum penalties.
Thus, it can be said that project was implemented in a complex project environment.
According to the project audit report of 2015, there were issues in associated with the project
governance. There was a need of improvement in the assurance framework associated with
project governance (Burke, 2013). Furthermore, it was found out that the SA Health had not
completed any updated business case for the project. A formal and robust business monitoring
process was necessary for appropriate project governance which was not followed in this case. A
greater transparency in project management and governance of project could have eliminated the
risk of project delay and cost overrun (New Royal Adelaide Hospital report, 2015). Furthermore,
it has been observed that there were certain internal issue among the project team and a need for
better risk management and contingency practises in the project. The project environment can be
termed as complex mainly because there was a need for improving the budget and the finance
associated with the project, which was not done on time (Domingues, Zlatkovic & Roumboutsos,
2014). From the audit report of the project, it is clear that not all forecasts were adequately
documented. Improper documentation was a major issue associated with the project that added
to the complexity in the current situation. The project is delayed and the major reason behind the
same is lack of proper leadership and governance. Currently, the testing and commissioning of