AVM Wine Supply Project: Procurement Strategies and Contract Analysis

This report analyzes a wine supply project for Adelaide Venue Management (AVM) for the financial year 2017-18. AVM sought a year-round supply of high-quality wine directly from vineyards, attractively packaged and labeled. The report details project particulars including the client (AVM), project location (wine manufacturing factory), a $3 million budget, and a 78-day project duration. Key parties involved include the Operations Manager, Finance Manager, Inventory Manager, and external logistics providers. The report outlines the organizational chart, procurement strategies, tendering methods, contract types, and tender evaluation processes. It also discusses the importance of pre-qualification for contractor selection and the types of specifications used in the project, highlighting the need for a fair and efficient procurement process to ensure a consistent supply of high-quality wine within budget and timeline.

Running Head: PROCUREMENT AND CONTRACTS
Procurement and Contracts
Name of the Student
Name of the University

1PROCUREMENT AND CONTRACTS
Table of Contents
Introduction......................................................................................................................................2
3a. Project Particulars......................................................................................................................2
Project Client...............................................................................................................................2
Project Location...........................................................................................................................3
Project Budget.............................................................................................................................3
Project Duration...........................................................................................................................5
Parties Involved...........................................................................................................................6
Organisational Chart....................................................................................................................7
References........................................................................................................................................9

2PROCUREMENT AND CONTRACTS
Introduction
This project is based on the wine supply for Adelaide Venue Management for financial
year of 2017-18. The client, AVM has released a tender that requires year round supply of high
quality wine directly manufactured from the vineyards and the wine bottles properly prepared
and attractively labeled. The client has set certain criteria regarding the service and quality of the
wine required (Larson and Gray 2017). The criteria include supply of wine for the whole
financial year in attractive packages and bottles, consideration of minimum price for the whole
project, contract based supply and others. The wine supplier must follow the terms of the
contract and ensure highest quality wines are delivered to the client. Furthermore, the quality of
the wine should be such that they can be preserved for a long time as this contract involves
supply for the entire financial year.
This document is based on the development of project particulars that is a part of a
detailed project plan.
3a. Project Particulars
Project Client
The client of this project is Adelaide Venue Management that hosts various events and
parties throughout the year. In these events, the company serves high quality wine to the
customers and hence, in order to supply the wine, the company needs year round supply of wine
from a wine manufacturer who has proper vineyard for manufacturing high quality wines that are
not imported.

3PROCUREMENT AND CONTRACTS
In addition to the main client, there are also other clients like various event management
companies, many VIP persons, private and business organisations and others who purchase
wines from the company. However, the focus of this project is on AVM as they have released a
tender for a wine supply project.
Project Location
There is no specific location of the project. The location will be the wine manufacturing
factory where the chosen company will manufacture wine from the fruits that are grown in their
own vineyards. After manufacturing the wine, it will be poured into several well-crafted and well
designed bottles. When the bottling is complete, the bottles will be labeled with attractive design
and brand name after which, the bottles will be packaged and dispatched.
Project Budget
For determining the budget of the project, the following unit costs have been used for
human and material resources (Fleming and Koppelman 2016).
Resource Name Type Max. Units Std. Rate
Operations Manager Work 100% $150.00/hr
Finance Manager Work 100% $100.00/hr
Inventory Manager Work 100% $95.00/hr
Labour Costs Material $500,000.00
Logistics Costs Material $500,000.00
Wine Costs Material $2,000,000.00

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The costs shown in the above table include the wages of the project personnel involved in
the unit of $ per hour. On the other hand, the material costs are considered in total costs i.e. total
cost of labour, logistics and wine.
Considering the resource usage values, the total budget of the project is found to be
around $3 million. This entire budget includes the costs of wine to be delivered, logistics and
labor costs as well as the salaries of all the personnel who are involved in the project. The
company has been chosen because it bid the lowest amount during tendering process and has
promise to completed the project within the $3 million budget excluding contingency costs.
However, this budget cannot be exceeded as it may lead to significant financial problems for
both project management company and the parent organisation (client) (Schwalbe 2015).
Project Duration
The project will require 78 working days for completion (24/5/17 to 8/9/17).
The overall project is to be conducted in a number of phases with specific outcomes
related to the project. The main activities of the project (work breakdown) are listed below:
 View Tender Released by the Client
 Review the Tender Requirements
 Send Bidder for Attending the Tendering Process
 Bid for the Project
 Win the Bid by Outbidding the Competitors
 Discuss Contract Details with the Client
 Discuss the Estimated Amount of Wine Required by the Client Per Year
 Discuss Cost of Wine to be delivered
 Discuss Additional Costs like Labour and Logistics
 Finalise the Contract
 Sign the Contract
 Develop Formal Documentation Regarding the Contract Requirements
 Prepare a Document Regarding the Method of Product Packaging and Delivery
 Forward the Document to the Client
 Finalise All the Details Related to the Contract

5PROCUREMENT AND CONTRACTS
 Receive Order from the Client
 Analyse the Quantity of Wine to be delivered
 Check if the Quantity Can be delivered within the Given Deadline
 Send Order Confirmation to the Client
 Send the Order to the Inventory
 Set a Deadline Date for Delivery
 Packaging of the Wine Bottles in the Store Room
 Ready the Wine Packages for Delivery
 Hire Logistics Services
 Load Delivery Trucks with the Wine Packages
 Send the Trucks to the Client
 Unloading of the Trucks
 Receive the Payment for the Order
 Send Digital Invoice to the Client against the Order
Now, all these activities must be completed within the given timeline in order to avoid
unnecessary monetary costs that may result in losses for the company. As per the schedule
requirement, the first activity i.e. “view tender released by the client” starts on 24/5/2017 and the
final activity i.e. “send digital invoice to client” ends on 8/9/2017. Within this time, the working
days have been calculated by removing the holidays and weekends from the entire period.
In addition to determining the overall duration of the project, the schedule also helped in
estimating the budget for the project. The resources already specified earlier have been allocated
to each of the activities listed above and the total cost of each activity is calculated by
multiplying the resource unit costs by the working hours that fall within the specific duration.
Parties Involved
The parties involved in the project are as follows along with their resource usage / costs.
Resource Name Type Std. Rate
Operations Manager Internal $150.00/hr
Finance Manager Internal $100.00/hr
Inventory Manager Internal $95.00/hr
Client External -

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Operations Manager
Laborers
Inventory ManagerFinance Manager Vineyard Manager
Laborers
Packaging Staff
Logistics External $500,000
Labour Internal $500,000
Organisational Chart
The organisational chart of the project is shown as follows.
Figure 1: Organisational Chart
(Source: Created by Author)
In the organisation chart that is involved in the project, it can be seen that the main
stakeholder is the operations manager who acts as the project manager in the project. The
operations manager will control the entire project and will guide the project stakeholders in the

7PROCUREMENT AND CONTRACTS
right direction in the project. The operations manager will also have direct access to the clients
and will perform activities like receive order from client, forward the order to the inventory,
forward messages to the client and others. The finance manager and the inventory manager work
under him and play various roles in the project. The finance manager will manage various
finance related activities in the project and will also control the flow of cash from the client to
the company. The finance manager is also responsible for forwarding invoice to the client after
payment is complete. The inventory manager controls all the activities in the inventory including
the packaging of wines, hiring logistics, loading of wine packages in the trucks and dispatching
the orders. Under the inventory manager, the inventory laborers work who have the duties of
manufacturing the wines and others. The packaging team packages the wines into bottles and
labels them. On the other hand, the laborers under the vineyard manager gather fruit juices and
process them into containers before sending them to manufacturing staff. There are also other
stakeholders in the organisation but they are not directly involved in this project and hence, they
have been excluded.

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References
Fleming, Q.W. and Koppelman, J.M., 2016, December. Earned value project management.
Project Management Institute.
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Larson, E.W. and Gray, C.F., 2017. Project management: The managerial process. McGraw-Hill
Education.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.