Procurement and Contracts: Royal Adelaide Hospital Project

This report analyzes the procurement and contract management aspects of the Royal Adelaide Hospital project, a major social infrastructure initiative undertaken by the State. It begins by examining the project's history, including the Public Private Partnership (PPP) agreement with South Australia Health Partnership Pty Ltd, and its aims to transform healthcare delivery. The report then explores various procurement methods, with a detailed focus on the PPP model, and discusses the general procurement and financial risks associated with complex projects, including those faced by the nRAH project. Furthermore, it addresses risk mitigation strategies and examines vendor negotiations, management, and key accountability areas for project and procurement managers to ensure successful outcomes. The report also explores the different procurement methods and gives an in-depth review of the Public Private Partnership (PPP) procurement method.

Running head: PROCUREMENT AND CONTRACTS
PROCUREMENT AND CONTRACTS
Name of the Student:
Name of the University:
Author Note:

1PROCUREMENT AND CONTRACTS
Answer to Question 1:
One of the greatest social infrastructure projects is the recent Royal Adelaide hospital
that has been taken by the State. The project is equipped with the Public Private Partnership
agreement. The agreement was signed by the South Australia Health Partnership Pty Ltd.
And the State (Ma and Voo, 2014). The hospital focuses to turn the status from the big scale
public private partnership hospital to recent fitness care provider. The procurement of the
project involves many difficulties to manage with respect to aspects like complexity, cost
and so on. The decision-making process and methods are reviewed in a regular manner by
the management that gives a bigger scope of the development of the hospital. The current
development of the project is going well but the development of the hospital is in low rate
because of the delay in expected plan. The design facilities and the construction part is on
time but the delay is occurring due to the getting the clinical apparatus and the Information
Communication Technology. The works that are funded by the external State are also on time
and are not in delay because they are handle by the APTI (Department of Planning, Transport
and Infrastructure). The management failed to co-operate with the employees and also cannot
motivate them to operate effectively and efficiently because the project is multifaceted.
Another reason for the delay is that the hospital achieved the medical facilities and ICT very
lately. The project faced some containment claims which leads the hospital to pay a
settlement amount as well as remediation. The management decided to recover the project by
generating a framework which advice the Royal Adelaide Hospital project to implement in a
new method which will contain zero barriers in the development of the project. The
framework was represented to the committee that defines the role and operation of iPMO
(integrated Programme Management Office). It also contains some risk of the project and
also supplied some mitigating method of the risk which helps to develop the project. The
project was governed with the help of the effective framework. The committee follow the

2PROCUREMENT AND CONTRACTS
framework and considering the framework they edit their operation which help to develop the
project in a well manner. According to the budget analysis, the project cost was not made
properly so it faces an economic disaster. The completion of the project is due to the
framework which helped the committee to take right decision at right place. Another key
feature is that the State accede to pay $68.6 million to the project Co for the claimation deeds
and for the remediation the State pays $23.8 million.
Answer to the Question 2:
There are four types of procurement methods, they are:
Traditional method:
The oldest procurement method is the traditional procurement method. The main
feature of this type of method is that there is a difference between the design and the
construction process. Some other features include: Contractors are hired by the competitive
tendering, the design should be completed before the tendering process and the actual
construction method, Project duration is high, Construction costs is also high and the deign is
controlled but the client.
Design and build method:
In this procurement method, the contractor is responsible for both the construction
and design. The features of this method are: The contractor is appointed by two stage
tendering process (the quality and the competitive unit is preserved), the design is set by the
client and it cannot be edited by the client once it has been handed to the contractor and the
project takes less time as the design and the construction process proceed in parallel way.
Management Contract Method:

3PROCUREMENT AND CONTRACTS
In this procurement method, the client involves a consultant who makes the project
designs and specifications and then the client appoints a contractor. This method helps the
contractor to reinforce a well consultancy relationship with the client as the payment is done
on the basis of costings of the work packages with the agreed fee of the contractor. The
process is little lengthy, so it takes time for the project completion
PPP method:
This method is the relationship between the private and public sectors for the purpose
of achieving management, maintenance and financing of a project. It is a governmental
service funded by government or some private business (Li et al., 2013). Therefore, it is
considered as the tool of infrastructure development. Some advantage of PPP method is: the
public operators achieve the advantages of the private sectors, the public money is well used
for the development, offer improved quality infrastructure, Construction and maintenance
cost is low.
Answer to Question 3:
Inadequate Need: Investment in a project is greet issue for the organization. In procurement
method, investment should be enough as per the requirement. the method but spending
higher they enough amount will cause a financial crisis for the project. The project cost
analysis is done for the estimating the cost of the project. The required elements should
implemented in the project, the rest extra elements should be avoided by any organization.
The solution for this type of risk is to use the big data, a robust software of procure will be
beneficial as it contains the tools and can analyse the cost of overall project and can help the
client from investing extra cost.
Power Supply Management: Every organization should contain a transparent, easy to
operate and a centralised vendor solving method. If an organization does not have a complete

4PROCUREMENT AND CONTRACTS
vetted process which includes approvals, payments, purchases and request, it will be a great
difficulty for the organization to manage the supply chain. The problem can be solved by
using AI and cloud-based software which will handle the vendor management and its issue.
Inefficient Contract: The recent procurement practitioners appreciate the simple agreement.
Contract are the main strategic plan and an opportunity which forms a mutual partnership
between the vendors without any effective management. This risk can be mitigated by a
central document library which will approve the vendors. The legal reports should be
updated.
Fraud: Some risks are created by the lack of data and unintentional efficiency. The risk
include embezzlement, invoice fraud and theft. This risk can be mitigated by clear and an
automated procurement method which will be the barrier for the fraud.
The financial hazard of the Royal Adelaide Hospital of South Australia can suffer
some financial risks too like credit risk, equity risk, asset backed risk.
Answer to Question 4:
The procurement manager is the key operational person who can deliver a successful
outcome for the organization. The procurement officer of the Royal Adelaide Hospital project
should follow some operations like:
Procurement of documents: The procurement manager should create the document like
request for proposals, request for bids and request for quotes.
Scope: The procurement manager should guarantee both the product and project scope.
Staffing: The procurement manager should develop the responsibilities of his or her team in a
regular basis.

5PROCUREMENT AND CONTRACTS
Schedule: The procurement officer should ensure that the vendor employed for the operation
should operate efficiently.
Performance report: The manager should give an update on regular basis about the
performance of the vendor.
Answer to Question 5:
There are four types of procurement methods, they are:
Traditional method:
The oldest procurement method is the traditional procurement method. The main
feature of this type of method is that there is a difference between the design and the
construction process. Some other features include: Contractors are hired by the competitive
tendering, the design should be completed before the tendering process and the actual
construction method, Project duration is high, Construction costs is also high and the design
is controlled but the client.
Design and build method:
In this procurement method, the contractor is responsible for both the construction
and design. The features of this method are: The contractor is appointed by two stage
tendering process (the quality and the competitive unit is preserved), the design is set by the
client and it cannot be edited by the client once it has been handed to the contractor and the
project takes less time as the design and the construction process proceed in parallel way.
Management Contract Method:
In this procurement method, the client involves a consultant who makes the project
designs and specifications and then the client appoints a contractor. This method helps the
contractor to reinforce a well consultancy relationship with the client as the payment is done

6PROCUREMENT AND CONTRACTS
on the basis of costings of the work packages with the agreed fee of the contractor. The
process is little lengthy, so it takes time for the project completion
PPP method:
This method is the relationship between the private and public sectors for the purpose
of achieving management, maintenance and financing of a project. It is a governmental
service funded by government or some private business. Therefore, it is considered as the tool
of infrastructure development. Some advantage of PPP method is: the public operators
achieve the advantages of the private sectors, the public money is well used for the
development, offer improved quality infrastructure, Construction and maintenance cost is
low.
References:
Li, X., Ge, M., Zhang, H., & Wicker, J. (2013). A method for improving uncalibrated phase
delay estimation and ambiguity-fixing in real-time precise point positioning. Journal
of Geodesy, 87(5), 405-416.
Ma, T., & Voo, M. (2014, November). A comparative study of construction joint ventures in
Australia and Malaysia. In THE 2014 (5TH) INTERNATIONAL CONFERENCE ON
ENGINEERING, PROJECT, AND PRODUCTION MANAGEMENT (p. 45).