Contracts & Procurements: Best Practices and Key Findings

This document provides insights into contracts and procurements in the context of the New Royal Adelaide Hospital project. It discusses the organization background, procurement context, major complexities, project leadership and governance, risks and mitigations, best practices, and the duties and responsibilities of project and procurement managers. The document also highlights key findings and offers reflections on the learnings from the project.

Contracts & Procurements
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Table of Contents
Introduction...........................................................................................................................................2
Organization Background..................................................................................................................2
Procurement Context.........................................................................................................................2
Major Complexities...........................................................................................................................2
Environment & Organization Aspects, Project Leadership & Governance........................................3
Risks, Mitigations & Learnings.............................................................................................................3
Summary of Key Findings.....................................................................................................................6
Best Practices....................................................................................................................................6
Project & Procurement Managers: Primary Duties & Responsibilities..............................................7
Reflection Journal..................................................................................................................................8
References...........................................................................................................................................10
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New Royal Adelaide Hospital
Introduction
Organization Background
The report is prepared for new Royal Adelaide Hospital (RAH). The hospital authorities have
decided to move the existing infrastructure at the hospital to a new and improved set-up that
will be equipped with latest techniques and facilities. The move will be beneficial for the
medical fraternity as well as for the patients and their families. The project is a large-scale
project and a whooping budget of $2.3 Billion is sanctioned to accomplish the project tasks
and activities.
The main aim of the project is to improve the healthcare quality and make sure that the
overall experience of the patients is good. The new facility that will be set-up will have 800
patient beds and there will be single inpatient and 40 technical suites developed. There is a lot
of innovation being done in the healthcare industry in terms of the medical equipment and
tools. The installation of the same will be done at the new facility with enhanced information
security and protection mechanisms in place (McMahon, 2015).
Procurement Context
There are several processes that will be involved in the project and one such process will be
procurement of tools and equipment. The management of the procurement processes was
started by South Australian Health with the creation of Strategic Acquisition Plan. The plan
that was developed was then sent to the State Procurement Board (SPB) for approval and go-
ahead. There are a number of medical tools and equipment that were to be procured along
with the tools for technical infrastructure, fittings, and furniture (Scurfield, 2016).
The details of the procurement process along with the strategy to carry out the same were
included in the procurement plan.
Major Complexities
The primary aim of the project was to make sure that the patients were provided with the
medically advanced facilities and the overall experience of the patients with the hospital was
improved. This led to the emergence of the need to procure a large number of tools and
equipment. Therefore, procurement of all of such materials was necessary. All of this
information was not included in the acquisition plan that was earlier prepared. There were
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also certain complexities that were detected in the probity assurance levels (Azadegan &
Ashenbaum, 2009).
Schedule risks came up during the procurement processes as the schedule that was
determined to carry out the procurement activities was not correct. There were gaps detected
in the actual and estimated values which led to further delays and the team could not match
up to the determined schedule and timeline (Verbano & Crema, 2015).
There were also numerous changes that appeared in terms of the procurement method that
was adopted. The management did not succeed in the change management process.
Environment & Organization Aspects, Project Leadership & Governance
A total budget of $2.3 Billion was allotted to the project. There was involvement of a number
of regulatory and authorising bodies that was also involved. Two such primary bodies were
South Australian (SA) Health and State Procurement Board (SPB). The internal regulation
and management was done by the respective department leaders and Project Managers.
The involvement and presence of so many entities and authorising bodies did more harm to
the project. This is because there were ownership issues that came up as an outcome. The
communication between all of the associated parties and their availability became a prime
matter of concern. There were a lot many changes that were expected with the project;
however, the actual emergence of the issues and changes became a matter of concern for the
leadership. The emergence of all of these issues at once became too difficult to handle for the
management. The use of adequate methodology and inter-mixing of the leadership styles
could have saved the project (Tadelis, 2012).
Risks, Mitigations & Learnings
The contractual and procurement process is exposed to several risks and issues. There were
several such issues that emerged in this project as well. The details of such risks along with
mitigation and learnings are mapped in the table below.
Risk Category of the
Risk
Mitigations Learnings
The strategies and plans
for handling the contracts
and associated changes
Contracts Risk All of the regulatory and
authorising bodies must
ensure that the contracts
The project estimates that are
made in the initial phases of
the project are determined
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were not adequate which
could have led to the
adverse implications on
the project estimates and
scope.
management is included in
the project planning phase
and there is a defined strategy
set-up in place to handle the
process (Zwikael & Ahn,
2010).
after analysing all of the
project values and details.
The adherence to these
estimated values must always
be made to ensure that the
project risks and gaps are
avoided.
Poor leadership Contracts Risk SA Health is the primary
regulatory body that shall
carry out the primary
leadership and management
activities.
It is extremely necessary that
the project leaders have the
adequate skills to manage the
project activities.
The clarity of the roles
and responsibilities was
absent for the resources
involved in the
contractual processes
which led to the
difficulties in fulfilling
the requirements.
Contracts Risk The use of RACI
(Responsibility,
Accountability, Contribution,
and Informed) matrix shall be
done and it must be prepared
in the initial project phases to
inform about the project
responsibilities to the
resources.
There are different
knowledge areas in the
project and the management
of all of these knowledge
areas is essential to make
sure that the project success
is achieved. The human
resources are an integral part
of the project and the
resource management plan
must be defined in the initial
phase itself.
Poor decision-making
due to lack of
communication
Contracts Risk There shall be enhanced
communication and reporting
involved in the project and
the use of automated tools for
communication shall be done.
The project changes and all
the project updates shall be
communicated to the project
stakeholders through the
internal and external
meetings along with the use
of several methods for the
purpose of communication.
Incorrect estimations Contracts Risk The project management plan
shall be prepared in the initial
There are several estimations
done in the project in terms
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phase along with the
development of the
implementation plan.
of the cost estimations,
schedule estimations, effort
estimations, and likewise.
These estimates must be
accurately made so that the
project resources and
stakeholders are aware of the
project boundaries and
constraints.
Procurement planning
was not done properly in
terms of the
identification of the
material to be procured
Procurements Risk The use of different
methodologies and analysis
tools shall be done to
determine the procurement
strategy along with the details
of the items to be procured
(Burtonshaw-Gunn, 2005).
Procurement management is
one of the significant areas in
the project and the resources
assigned with the
responsibility of carrying out
procurement management
must make sure that the
detailed planning and
analysis is involved.
Gaps in levels of probity
assurance
Procurements Risk SA Health shall make sure it
clearly specifies the probity
assurance levels in its plans
and processes so that there are
no gaps observed.
The senior management and
regulatory authorities in the
project must ensure that they
maintain enhanced
communication with the
members of the project team
and the other stakeholders
involved in the project.
Poor reviews and audits Procurements Risk There must be regular reviews
and audits conducted to
determine the gaps, if any
along with the compliance
checks. The steps of action
shall be determined
accordingly.
The senior authorities and
leadership in the project has
the responsibility to make
sure that the project
compliance levels are always
maintained and there are no
gaps in the project at any
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instance.
Changes in the scope Procurements Risk The changes in the project
must be approved through a
defined cycle and the Project
Sponsor and CEO must
approve the changes before
they are handed over to the
project team for the
execution.
There must be tolerance
levels set for the project
scope and other project
estimations so that the
changes beyond the set value
are not entertained in the
project.
Operational issues Procurements Risk The trainings and professional
development sessions shall be
arranged for the resources
involved.
It must be ensured that the
members of the project team
are provided with the
trainings and development
sessions to enhance their
skills.
Summary of Key Findings
Best Practices
 There must be Contracts and Project Procurement Plan prepared in the initiation and
planning phases of the project.
 The conduction of regular reviews and audits shall be done to make sure that the
project does not have any gaps and loopholes.
 There are a number of Key Performance Indicators (KPIs) that must be utilized while
reviewing the procurement and contractual procedures.
 Project costs and schedules must always be on track and there shall be use of analysis
techniques, such as earned value analysis done to determine the gaps.
 The project communications in terms of the procurement requirements, updates,
changes, and issues shall be maintained at all times (Olatunji, 2014).
 The regulatory bodies shall review the audit reports to provide their comments on the
improvement measures.
 Conflict resolution must be done by the senior management to make sure that the
continuity is not disturbed.
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 There are various changes that may come up during the procurement processes which
must be handled with the usage of a defined methodology.
 There are various risks that may come up during the procurement processes which
must be handled with the usage of a defined methodology.
Project & Procurement Managers: Primary Duties & Responsibilities
Project Manager is the primary resource that is involved in a project. The resource is assigned
with several duties and responsibilities during the entire timeline of the project. The primary
responsibility of the Project Manager is to correctly plan the project so that the initiation of
the project is correct to meet the determined objectives. There are different knowledge areas
that are involved in a project and the integration of these knowledge areas is ensured by the
Project Manager at all times during the lifecycle of the project (Anantatmula, 2010). There
are several estimates required to be done in the project in terms of the project scope, project
costs, project schedule, and effort required. These estimations are done by the project
manager with contribution from the other resources. There may also be several risks and
changes that may occur in a project during the timeline (Lovell, 2011). The Project Manager
prepares the plans to deal with such situations and makes sure that these occurrences do not
cause any impact on the continuity of the project. The communication guidelines and
mechanisms are set up by the Project Manager along with the stakeholder mapping. There are
reviews and audits conducted in a project and the Project Manager is one of the primary
resources involved in the process along with a major responsibility in the resolution of
internal conflicts (Meng & Boyd, 2017).
Procurement Manager is also essential resource in a project and is assigned with some of the
major responsibilities. There are certain tools, equipment, and material required to be
procured in every project. The Procurement Manager carries out the analysis to determine the
list of the material that is to be procured. There is a formal Procurement Plan prepared by the
resource which is approved by the senior management. There is also a process carried out to
identify and analyse the vendors present in the market. The Procurement Manager along with
the entire team carries out the analysis to select the vendor for the procurement of the goods
and services. The negotiations with the vendor are also done by the Procurement Manager
along with the other senior resources. The contractual processes are necessary to be carried
out in the procurement activities and the handling of all of these processes is done by the
Procurement Manager. There are also several changes that may come up and these changes
are handled by the Procurement Manager.
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Reflection Journal
There are different areas involved in the project and procurement management and
contractual processes are a significant part of the projects. I could acquire the details of these
processes and could gain an understanding of the roles and responsibilities of the resources
that are involved in this process. I also got the chance to get to know about the various risks
and challenges that may come up and the methodology that shall be adopted to deal with
these risks.
My key learnings from the project involved different areas of project and project
management. The project estimates that are made in the initial phases of the project are
determined after analysing all of the project values and details. The adherence to these
estimated values must always be made to ensure that the project risks and gaps are avoided. It
is extremely necessary that the project leaders have the adequate skills to manage the project
activities. There are different knowledge areas in the project and the management of all of
these knowledge areas is essential to make sure that the project success is achieved. The
human resources are an integral part of the project and the resource management plan must
be defined in the initial phase itself. The project changes and all the project updates shall be
communicated to the project stakeholders through the internal and external meetings along
with the use of several methods for the purpose of communication. There are several
estimations done in the project in terms of the cost estimations, schedule estimations, effort
estimations, and likewise. These estimates must be accurately made so that the project
resources and stakeholders are aware of the project boundaries and constraints. Procurement
management is one of the significant areas in the project and the resources assigned with the
responsibility of carrying out procurement management must make sure that the detailed
planning and analysis is involved. The senior management and regulatory authorities in the
project must ensure that they maintain enhanced communication with the members of the
project team and the other stakeholders involved in the project. The senior authorities and
leadership in the project has the responsibility to make sure that the project compliance levels
are always maintained and there are no gaps in the project at any instance. There must be
tolerance levels set for the project scope and other project estimations so that the changes
beyond the set value are not entertained in the project. It must be ensured that the members of
the project team are provided with the trainings and development sessions to enhance their
skills.
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I also learnt about the roles and responsibilities that are carried out by the Project Manager
and Procurement Manager during the project timeline. There are certain areas that I could not
explore and would like to study about, if provided an opportunity.
There are different types of contracts that have been designed and the use of these contracts is
done in the projects. I would like to gain knowledge on the contract types and their
applicability to the projects as per the project scenarios and factors.
.
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References
Anantatmula, V. (2010). Project Manager Leadership Role in Improving Project
Performance. Engineering Management Journal, 22(1), 13-22.
http://dx.doi.org/10.1080/10429247.2010.11431849
Azadegan, A., & Ashenbaum, B. (2009). E-procurement in services: the lagging application
of innovation. International Journal Of Procurement Management, 2(1), 25. doi:
10.1504/ijpm.2009.021728
Burtonshaw-Gunn, S. (2005). Management of Risk in private funded international
infrastructure projects. The International Conference On Business & Technology
Transfer, 2004.2(0), 24-29. doi: 10.1299/jsmeicbtt.2004.2.0_24
Lovell, R. (2011). Power and the project manager. International Journal Of Project
Management, 11(2), 73-78. doi: 10.1016/0263-7863(93)90014-e
McMahon, P. (2015). New Royal Adelaide Hospital report: November 2015. Audit.sa.gov.au.
Retrieved 05 April 2019, from https://www.audit.sa.gov.au/LinkClick.aspx?
fileticket=lKSniN7sYQk
%3D&tabid=283&portalid=0&mid=959&forcedownload=true
Meng, X., & Boyd, P. (2017). The role of the project manager in relationship management.
International Journal Of Project Management, 35(5), 717-728.
http://dx.doi.org/10.1016/j.ijproman.2017.03.001
Scurfield, A. (2016). Procurement's key role in healthcare technology. Supply Management.
Retrieved 05 April 2019, from
https://www.cips.org/supply-management/opinion/2016/september/procurements-key-
role-in-healthcare-technology/
Tadelis, S. (2012). Public procurement design: Lessons from the private sector. International
Journal Of Industrial Organization, 30(3), 297-302.
http://dx.doi.org/10.1016/j.ijindorg.2012.02.002
Verbano, C., & Crema, M. (2015). Risk indicators for managing the energy procurement
process. International Journal Of Productivity And Performance Management, 64(2),
228-242. http://dx.doi.org/10.1108/ijppm-06-2013-0102
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Zwikael, O., & Ahn, M. (2010). The Effectiveness of Risk Management: An Analysis of
Project Risk Planning Across Industries and Countries. Risk Analysis, 31(1), 25-37.
doi: 10.1111/j.1539-6924.2010.01470.x
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