Procurement Systems for Hospital Construction - Desklib

This study material from Desklib covers the procurement process for hospital construction, including market analysis, tender design, risk management, and stakeholder analysis. It also discusses procurement strategy, sourcing strategy, and selection criteria. The content includes a detailed explanation of the procurement cycle and the portfolio matrix. Course code, course name, and college/university are not mentioned.

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Project Procurement Systems
Name:
Course
Professor’s name
University name
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Date of submission

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Executive Summary
Neilly Davies is a civil, structural and hydraulic engineer based in Sydney Australia. It
has a forty year construction experience in building commercial and residential buildings across
Australia. They also specialize in Hospital and clinic construction. There is however a
procurement process in getting the hospital build by the company. In order to establish the
LMCM by the method of comparable market prices (market analysis), the customer must
determine the precise parameters of the subject of procurement, as well as the main conditions
affecting the price, the conditions for executing the contract (Antoniou, Konstantinidis, and
Aretoulis, 2016).
Procurement and tender design process
The tender and procurement process are
1. Form a procurement team
2. Develop the tender and evaluation criteria
3. Pre Qual(PQQ) lond list
4. Issue tender
5. Tender briefing meeting
6. Initial evaluation

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7. Supplier shortlist
8. Presentations visits
9. Selection and negotiation
10. Tender awarding
The following are the procurement processes and steps
Market analysis and analysis of the business needs
The specified information is revealed during the preparation and formation of the customer's
needs, as well as in the preparation of technical requirements, specifications and technical tasks
for the supply of contractors, the performance of work, the provision of services that are the
subject of the contract and the preparation of procurement documentation (Chong, and Preece,
2014). Thus, in case of the need for a split-system, the customer identifies the possible
characteristics of the required equipment, for example:
 Dimensions of hospital and equipment fitting;
 Type (monoblock, multi-split system, split-system);
 Type of indoor unit (channel, cassette, column, mobile, outdoor-ceiling, wall, window);
 number of internal blocks of a multi-split system;
 noise level;
 operating modes (cooling, cooling / heating);
 serviced area;
 presence of the remote control;

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 mode of forced ventilation;
 presence of motion sensor;
 inverter power control;
 the presence of automatic mode;
 presence of night mode;
 presence of a mode of air drying;
 the presence of filters for fine air purification and others.
Proceeding from the possible characteristics of the equipment, the customer identifies the
characteristics corresponding to his needs, for example, the customer determined that he needs a
wall split - a system with a working mode for cooling and heating, with a serviced area of 30 to
50 square meters, with inverter power control . Further, the customer needs to carry out a market
analysis in order to identify proposals that meet the established requirements for products for
certain parameters (De Araújo, Alencar, and de Miranda Mota, 2017).
Analyzing and engaging the market
Information on specific models of hospital to be build, their contractors and suppliers can
be obtained in the information and telecommunications network "Internet", as well as in catalogs
and other reference publications. Based on the results of the market analysis, the customer has
identified specific models that fully meet all the requirements specified by the customer, namely:
Demand analysis

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Demand for the contract is high. Veting of the companys is usually done after companies
have expressed interest. Further, using the register of government contracts placed in the
information and telecommunications network "Internet" at the hospital website, it is necessary to
find price information on contractors chosen by the customer of the split-system model (Fuller,
Valacich, and Schneider, 2017).
Scope Time frame Quality Quantity
Ward construction 5 months Top quality 1 ward
Ward equiping 1 month Top quality 4 machines
Business case
The mechanism for searching information in the register of contracts is described in
"Recommendations for the search for publicly available price information contained in the
register of contracts entered into by the customer. It should be remembered that in order to
identify information as close as possible to the requirements of the customer, it is advisable to
take into account the various conditions of contract performance that are similar to the customer's
requirements (for example, the terms and procedure for delivery, the amount of delivery, the
terms and procedure for payment, availability of collateral, etc.).In the course of market analysis,
the customer can also identify prices for homogeneous contractors. In our case (Ibrahim, and
Githae, 2014)
Risk management

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Given the significant difference in the volume of contractors in the examples found, it is
advisable to apply correction factors and indices, the list and size of which need to be justified
and lead in the justification of the NMCC.
Stakeholder analysis
Suppose that the customer considered the use of correction factors and indices is not
appropriate, in this case, the sought values obtained from the register of state and municipal
contracts are used. It is necessary to determine the coefficient of variation - the average value of
the price is the aggregate of prices is assumed to be contractors quotations
Procurement plan
Procurement or supply is a key function responsible for acquiring all the material
resources necessary for the organization, including leasing, leasing, bartering and contract work.
Thus, contractors provide a mechanism that initiates and controls the material flow from the
supplier to the consumer. The organization of procurement depends on the type and size of the
organization. In a small organization, one person can be responsible for all contractors, in the
medium and large - a purchasing or supply department that performs centralized contractors
(Kerzner, and Kerzner, 2017). There are two types of procurement: internal and external.
Domestic procurement involves the purchase of materials in various units of your organization,
external contractors from specialized suppliers, usually on a contract basis. Specialists note that
"world-class companies show a deep interest in the production process of their suppliers up to
the assessment of suppliers of their suppliers". The concept of traditional relations between buyer
and seller "is replaced by a concept of close cooperation at arm's length, long-term contracts

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replace the practice of short-term contractors, because the effectiveness of supply depends on the
economic performance of the organization (Wang, 2015).
Communication plan
The hospital chooses the best quoted prices with the best return to investment and quality
work done. This ensures that the hospital does not get substandard or low quality work while
also preventing massive capital outlay that may be asked by greedy contractors. Neilly Davies
however are known to be the best in providing quality contracts in the country and would have
quality for the money given.
Purchasing management in the organization begins with the solution of the problem of
the MOU (Make-or-Buy) - "make or buy." Its essence consists in choosing one of the
alternatives: to make a component product using the firm's resources and not to depend on
market fluctuations or to buy it from specialized suppliers that guarantee high quality of MR at
reasonable prices (Liu et al, 2015).
Main objectives of procurement
- to ensure a continuous flow of material resources and services required for the operation of an
enterprise with a minimum level of risk;
- develop relationships with competent, optimal civil contractors;
- work closely with suppliers on product quality and logistics services (warehousing, packaging,
transportation);

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- maintain, whenever possible, reduce investment in work in progress;
- provide an opportunity to implement forward contractors that minimize the impact of higher
prices for MR and risks of procurement activities
- to purchase MR with minimal total costs by achieving a reasonable compromise between the
costs of maintaining quality in construction and saving costs obtained through quality hospital
construction (Lloyd-Walker, and Walker, 2015);
- Constantly monitor the market situation, forecast and plan the indicators of purchasing activity
and the need for working capital;
- strive to strengthen the competitive positions of the organization;
- To achieve harmonious relations with other functional areas of the enterprise;
- to achieve the achievement of procurement objectives with the minimum possible
administrative (administrative) costs.
Procurement plan
Procurement is of strategic importance for the organization, contributes to the unification
of many of its functions and the achievement of its goals. The contribution of procurement
activity can be assessed by analyzing the following key functions:
1.Access to external markets and awareness - provides the opportunity to provide the company
with information about new technologies, new materials and services, new sources of supply and
changes in market conditions. This allows procurement specialists to make more accurate

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forecasts and take into account the requests of other functional units and support them in making
important managerial decisions (Naoum, and Egbu, 2015).
2. Relationship management and development - involves solving the problems of searching,
selecting, evaluating and attracting suppliers at an early stage of developing new products and
services, which contributes to the realization of the idea of a "compressed time", that is, the rapid
entry of the organization into the market with new proposals that provide it success and
leadership.
3. Implement a global procurement strategy that provides for the formation of a global
procurement team in an organization serving customers around the world without any deviations
in the quality and timing of deliveries, which makes it possible to optimize the level of
satisfaction or level of customer service. Cycle of purchasing activities carried out in the process
of a completely new purchase includes the following actions: - Strategic planning of MR
procurement; - Current and operational planning of MR requirements based on the customer
order or annual production program (Naoum, and Egbu, 2015).
Supply Market Analysis
- Determination of the type, volume and term of procurement MR, the time of their
payment, as well as planning the terms of supply - prices, leasing and down payments, discounts,
loan terms, MR delivery and frequency of contractors (single, regular or excl. - Selection of the
procurement strategy and method - Survey of the procurement market to identify potential
suppliers, as well as the costs of acquiring and delivering the necessary MR - Evaluation of

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potential suppliers, selection of the optimal supplier and development of a communication policy
(establishing contacts with it) preparation and placement of purchase orders from specific
suppliers on the basis of one-off contracts, general contracts for several deliveries, long-term
contracts and open contracts, as well as the choice of MR traffic channels from the post - the
formation of a budget and a financial plan for the procurement of materials with subsequent
monitoring of their implementation (Rajeh, Tookey, and Rotimi, 2015)
Procurement strategy
The main functions in procurement management are: - elimination of losses in the
delivery of MR, loss from marriage in the production of GP, - maximum reduction in production
waste and efficient use of secondary material resources, - transportation of returnable , -
exclusion of intermediate contractors about warehousing and minimization of the MR
constraction level in the company's warehouses. For some typical contractors, some activities are
not available. The implementation of the procurement cycle is accompanied by certain costs. The
total costs of procurement activities are made up of the costs of performing all the operations of
the logistics management cycle of procurement: The main stages of development of dermatology
and venereology. Functions of time in satellite technology. The strategy is a set of rules for
making decisions that the company is guided by in its activities.
The prerequisite for choosing a purchasing strategy is portfolio analysis of contractors,
which allows you to compare the occupied position of an enterprise in the market as a buyer with
a position in the same market of its seller.The technique of portfolio analysis allows you to
concentrate and summarize the analysis of the enterprise and the environment in a single matrix.

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Options Analysis
Phase 1. Classification of procurement types
First, all MR purchased are classified on two grounds: the degree of production
importance and the risk of procurement. The degree of industrial importance of certain purchased
MR is determined on the basis of such criteria as the share of the value of production in annual
consumption and the influence of product quality on the growth of production (Ruparathna, and
Hewage, 2015).
Risk management in procurement
The risk of procurement is related, on the one hand, to entering a specific market for contractors,
but, on the other hand, with production (changes in production and sales activities). In
accordance with this classification, the MR purchased are divided into four classes:
Sourcing Strategy and selection criteria
strategic products - products with a high degree of industrial importance and high risk of
procurement;
scarce products - products with a low degree of production importance, but with a high risk of
contractors; requires long-term contacts with alternative sources to avoid potential problems;
conventional products - products with a high degree of production importance and low risk of
procurement; simple procurement procedures are used;
Undefined products - products with a low degree of production importance and low risk of
contractors; Simple procurement procedures are also used.

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Phase 2. Analysis of the procurement market
In the analysis of the procurement market, the supplier's position is compared with the
company's own position in this market. With regular research of the procurement market, it is
possible to assess the reliability of suppliers in terms of the volumes, terms and quality of the
products supplied. Based on the analysis of own needs and procurement options, the enterprise
also evaluates the terms of supply.
Phase 3. Strategic positioning
All those classified in the first phase of the MR are ordered using the portfolio-matrix
"the degree of supply influence - the degree of the influence of demand" (. This allows you to
identify areas with different chances for successful procurement or an area with a certain
potential risk, as well as assess the risk of procurement from a particular supplier. The matrix
enables the consumer enterprises to determine the strategy of behavior in the procurement
market (Naoum, and Egbu, 2015).
Conclusion
Portfolio matrix has three areas of risk, stay in which requires the company to a certain strategy:
A strategy of active market behavior in which a consumer enterprise uses its position in the
procurement market to pressure suppliers to reduce product prices. There is a danger of breaking
long-term consumer-supplier relationships;
an equalization strategy is used to purchase an MR in the absence of obvious risk and a particular
benefit from external contractors. But in this case there is a danger on the part of the suppliers of
any actions that destabilize the procurement market.

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References
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