Procurement Systems. Introduction Dynamic systems vs closed systems Tools to improve procurement...
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Transcript of Procurement Systems. Introduction Dynamic systems vs closed systems Tools to improve procurement...
Procurement Systems
Introduction
• Dynamic systems vs closed systems
Tools to improve procurement process
• Organizational learning
• Web technologies
• Flexible procurement strategy
Developmentally oriented procurement systemsProduct vs. Process considerations
• Clients becoming more active
• Value for money
• Sustainable construction
• External rather than internal considerations (value for money)
Inappropriateness of the TPS in the developmental context
Wells (1986) identified several problems in developing countries:
• Inadequate capacity• Lack of procedural norms• Lack of skilled labour• Lack of suitable materials • Lack of plant and equipment• Absence of support industries• Problems identified in the UK model of the construction
industry were more pronounced in the developmental context
Socio-economic imperatives
• Sustainable employment creation
• Affirmative action
• Promotion of SME’s
• Development of public sector capacity to manage the delivery process
• These imperatives become the criteria for procurement selection
Procurement activity and evaluative criteriaMateru’s success factors (1986):• Active community participation at design and
implementation stages• The concurrent consideration of design, maintenance
and cost recovery • Provision of economic opportunity for project participants
not only in terms of immediate job creation but also in terms of longer-term skills development and capacity growth
• Flexible management, contractual and payment procedures which are appropriate to an intensely uncertain and indecisive environment
Lessons from case studies
• The use of available local resources to complement the existing resources in the formal construction industry.
• Align the formal sector interests with that of the less formal.
Procurement reform in South AfricaKey reform components:• Removal of the barriers to entry by improving
access to tendering information, simplification of documents and procedures and the establishment of procurement advice centres
• Breakout procurement (unbundling large projects into smaller packages for SME’s) employing local people and providing them with sustainable skills
Organizational learning
• A process (individual learning is much easier)
• Knowledge-based industry
• “Knowledge is power”
• Retaining project experiences
• Process and product innovation
• Eg. British Petroleum and Mobil
Organizational learning (2)
In building construction?
• Not formalized; unique projects
Benefits
• Process innovation
• More competitive
Model
Organizational double loop learning
Design
Change
Evaluate
Plan
DoAct
Check
Procedures
Challengeoperatingassumptions
Activitygroups
Investment with technology change
Hardware
Software
Humanware
100%
0%
Investment
LearningEnterprise
TraditionalEnterprise
Critical Success Factor
• Leadership by Client
– Knowledge-based deliverables
Mechanisms
Post-project evaluation
• Formal mechanism for facilitating org. learning
• Provides project background
• Highlights significant events
Project debriefing workshops
Significant investment in resources!
Web technologies
Impact of I.T. on construction procurement in HK and Australia
• CAD
• VR (4D)
• Email / E-transfer of files
• Video / Voice
• Internet / Intranet
Australia
• Pilot study 1997 (17 firms)
Methodology
• Survey questionnaire directed at senior management
Australia (2)
I.T. All PM QS CM
Email 4 4 4 5
File transfer 4 3 3.5 5
Voice mail 3 2.5 3.5 4
Video conferencing
3 2.5 2 4
Intranet 4 4 2.5 2
Internet 4 3.5 3 5
Awareness
(1= very unaware, 5= very aware)
Australia (3)
Results of I.T. Awareness
• Awareness is generally moderate
• Higher utilization of technologies by contractors than consultants
• Contractors used technologies for routine communication
• Consultants rely on face-to-face contact to foster trust
Australia (4)
Web Technology
All PM QS CM All PM QS CM
Email 4 3.5 4.5 4 5 5 5 5
File transfer 4 3 3.5 5 5 5 5 5
Voice mail 2 1.5 3 5 4 4 4 5
Video conferencing
1 1 1 2 3 2 3 5
Intranet 2 2.5 2 1 4.5 5 4 5
Internet 3.5 2.5 4 3.5 5 4 5 5
Current Use Next 2-3 yrs
Patterns of Use
(1= no use, 5= regular use)
Australia (5)
Video / Voice technologies
• No significant advantage of virtual meetings
• Inhibiting trust and relationship building
• Construction is a ‘people’ industry favoring personal contact
Australia (6)
Main Use of I.T. (Competitive)PM • Planning and coordinatingQS• Estimating Contractors• Communication• Marketing / Recruitment
Australia (7)
Concerns
• Security of data
• Training and support for I.T.
• Cost
Client role for I.T. intake
Hong Kong
• 1998 (84 contractors)
Methodology by Betts and Shafagi (1997)
• 28 questions to assess use and mgmt of I.T.
• Survey questionnaire to public works contractors
Hong Kong (2)
Results
• Higher use of I.T. among Group C contractors
• Overall I.T. performance is good
• Use of I.T. is not aligned with company objectives
• I.T. staff, resources are limited
Strategic benefits of I.T.
• A wealth of information
• 24/7
• Reduce communication cost
• Deliver project status
• Visualization technologies
Multiple Delivery Methods for infrastructure projects• Use of full range of delivery and finance
methods over the past decade – mixed strategy
• Choice of delivery method impacts a range of elements
Delivery options
Direct (Finance)
IIIII
IV I
Segmented Integrated
Indirect (Finance)
Build-operate-transfer (BOT)
Design-bid-buildTurnkeyParallel Prime
Build-own-operate (BOO)Design-build-operate-transfer (DBOT)
Design-build-operate (DBO)Turnkey with financePure operate and maintain
Design-build-operate-maintain
Build-own-operate-transfer (BOOT)
Construction management
Fast trackDesign-build
US Infrastructure procurement strategy
Direct
Segmented Combined
Indirect
IIV
III II
1850
1900
1950
3 quad procurement strategy
Indirect
Combined
Direct
Segmented
IIV
IIIII
3 quad procurement strategy (2)• Promotes sustainability
• Promotes competition
• Promotes transparency
3 quad procurement strategy (3)• Continuous evaluation of the entire
procurement process
• Leads to better, faster, cleaner, cheaper
Effects of 3 quad strategy
• Innovation
• Diversity of specialists
• Capital availability
3 quad procurement strategy
• Diet – eat from all the food groups
• Purely public or private delivery mechanisms are unreliable, unstable, and averse to innovation
• Promotes sustainable improvements in technology and quality
• Contingency theory
Links
Intelibuild – BIM consultants
http://intelibuild.com/