Importance of Procurement in Project Management

This article discusses the importance of procurement in project management and explores different procurement methods. It analyzes the advantages and disadvantages of each method and concludes that the design build procurement method is the most appropriate.

Running head: PROJECT MANAGEMENT
Project management
Name of the student
Name of the University
Author’s Note

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1. Introduction
According to Naoum and Egbu (2015), procurement is defined as one of the procedure
that helps in selecting vendors, establishing payment terms as well as negotiation contracts as
well as actual purchasing of various types of goods. On other hand, it is stated by Wang et al.
(2018) that procurement is mainly concerned with procuring different types of goods, services as
well as work that is considered to be important for an organization. Procurement is considered as
one of the strategic function that helps in improving the profitability of the organization. In
addition to this, it is identified that procurement helps in streamlining different processes by
reducing the cost and prices of the raw materials in order to identify the better sources of supply.
In this paper, a number of journal articles are generally reviewed in order to reflect the
importance of procurement by describing the advantages as well as disadvantages of each of the
method by putting forward proper argument for the procurement choice that is most suitable for
an organization.
2. Discussion
According to Ogunsanmi (2016), the methods that is adopted for procuring the
construction projects generally continues to attract the attention of the project stakeholders
within the construction industry because of the most significant role that they play in the
procedure of project delivery. Each and every construction projects are generally procured with
the help of a specific method and it is found that no project can be procured successfully without
the adopting a proper method. On the other hand, it is stated by Idoro (2012) that a procurement
methodology generally helps in creating a positive impact on the quality, success as well as
quantum of construction project delivery. In addition to this, it is identified that proper method of

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procurement is generally required to be adopted within the project in order to determine whether
the undertaken project is delivered successfully or not.
It is opined by Naoum and Egbu (2015) that traditional contract method is identified as
the one of the important research studies or the most important option for properly procuring the
construction project in Nigeria. This method is mainly considered as the forerunner of the entire
contract procurement arrangement within the entire construction industry. Depending on the
entire understanding, it is identified as one of the project delivery procedure that is helpful in
designing as well as constructing different phases of the project. In addition to this, it is found
that traditional contract method is generally categorized into design as well as construction phase
with appropriate defined phases of the project (Kumar, Nair and Piecha 2015). Moreover, it is
found that cost disadvantage is generally entailed with the traditional contract method as the cost
can rise if large number of changes are generally required.
On the other hand, design build is one of the procurement method where both the design
as well as construction phases of the project are generally integrated for carrying out the project
by a single party under the same contract. In addition to this, it is identified that (Lundstrom and
Johanson (2015) it is one of the recent arrangement that is generally conceived as a solution to
the number of shortcomings within the traditional contract method. It is found that researchers
generally describe the method as one of the arrangement where the developers generally contract
with the single party or entity for performing both the construction and design facility of a
project under the specific DB contract. Moreover, the DB method generally combines with the
fragmented responsibilities which are generally associated with the traditional contract method
into a proper entity that helps in providing both construction as well as design phases of the

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project. The main disadvantage that is associated with this method is that tender returns become
difficult in context to comparison if proper pricing document is not documented.
It is opined by Stehbens, Wilson and Skitmore (1999) that Fixed price lump sum
contracts are generally established with the help of the competitive tender which creates pressure
on the contractors for reducing the profit margin for winning the tender. The lower the rate of
profit margin, the contractors will not find any type of contract that generally identifies the
documentation errors for recovering some of the money. Thus, it is found that the fixed price
lump contracts are not considered conducive to partnering. While comparing with the Woodford
Prison project, is considered as design and construct project that generally have allowed
flexibility to the contractor in context to project pricing and as the contractor can be able to
control design based cost savings (Idoro 2012). Thus, it is identified that design and construct
project are generally referred to be much more conducive to partnering as it is more likely to
generate much more arguments over money. On the other hand, it is found that it generally can
bring more risk to the project contractors in comparison to other types of contracts.
After proper analysis, it is found that design build procurement method is most
appropriate procurement method. This procurement method is considered appropriate as it
generally utilized experienced professionals in order to prepare detailed as well as suitable
construction plans and specifications in order to solicit various types of competitive bids for the
purpose of construction and generally awards the construction based contract with very much
low bid (Naoum and Egbu 2015). The main advantage of design build methods is that
construction can begin earlier by minimizing the entire delivery time from the inspection to
completion. In addition to this, the employers can be able to properly engage with the specialist
as well as other contractors in the entire procedure of design. On the other hand, it is stated by

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Wang et al. (2018) that if the specification within the design build method is too open to
interpretation then the contractor generally exploits the advantages by proposing the
specification for the products.
3. Conclusion
It can be concluded from the entire paper that design build procurement method is
considered to be most appropriate procurement after analyzing the advantages as well as
disadvantages of different method of procurement. The design build method is considered to be
suitable as it prepares detailed as well as suitable construction plans and specification in order to
complete the work of construction effectively. Moreover, it is identified that construction can
begin earlier by minimizing the entire delivery.

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References
De Araújo, M.C.B., Alencar, L.H. and de Miranda Mota, C.M., 2017. Project procurement
management: A structured literature review. International Journal of Project
Management, 35(3), pp.353-377.
Idoro, G., 2012. Comparing levels of use of project plans and performance of traditional contract
and design-build construction projects in Nigeria. Journal of Engineering, Design and
Technology, 10(1), pp.7-33.
Kumar, A., Nair, A. and Piecha, J., 2015. Measuring efficiency in international public
procurement. Journal of Public Procurement, 15(3), pp.365-389.
Lundström, R. and Johanson, M., 2015. A comparison of a traditional and an unconventional
construction project procurement method”. In 31th IMP conference, 25-29 August 2015,
Kolding, Denmark..
Naoum, S. and Egbu, C., 2015. Critical review of procurement method research in construction
journals. Procedia Economics and Finance, 21, pp.6-13.
Ogunsanmi, O.E., 2016. Comparisons of procurement characteristics of traditional and labour-
only procurements in housing projects in Nigeria. Covenant Journal of Research in the Built
Environment, 3(2).
Stehbens, K.L., Wilson, O.D. and Skitmore, M., 1999. Construction project partnering: two case
studies.

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Wang, K.W., Hsu, Y.Y., Yu, W.D. and Cheng, S.T., 2018. Determination of Project
Procurement Method with a Graphical Analytic Model. Sustainability, 10(10), p.3583.
References