Strategic Project Procurement

PMN605

Assessment Item 2 

                 Table of Contents

1) Contract Monitoring and Delivery in Operations/Manufacture     

1(a).Validity and Reliability of “legacy”……………………………………………………………..  3

1(b) Progress Assessment and Recommendations of the Commonwealth Games……………………  4                    

2) Supply Chain Management & Government Procurement

2(a) “Developers with a Queensland Presence” and their part of the expressions of                    interest for the GCCG Village…………………………………………………………………………….   5

2(b) Suggestions for Government Procurement Policy that may increase International business interest………………………………………………………………………………………………………………….   6

3) Big Question #2

3(a) Risk Approach by the Queensland State Government to procure GCCG Village 2018……….    7   3(b) Alternative Approaches the QLD State Government could follow for GCCG Village 2018 procurement…………………………………………………………………………………………     8

4) Big Question #3

4) Assessment and Justification of procurement versus other Project management dimensions that affect outcomes………………………………………………………………………………………    9

5) Big Question #4

5) Assessment of Congruence of Theory and Practice and discussing whether The Project Procurement   Discipline can be considered a Project Management body of Scientific Knowledge………………    11

6) Bibliography……………………………………………………………… 13

1. Contract Monitoring and Delivery in Operations/Manufacture        

1(a) Validity and Reliability of Legacy

The concept of legacy in project procurement is dominant in its assessment and implementation and even grander in initiatives of a multi-million dollar magnitude like that apparent in the Commonwealth Games. The legacies in place for the Commonwealth in these regards have been branched into economic, social (community) and sport/health (lifestyle) (Pye, et.al, 2013). Pursuing legacies that have been integrated into the organizational themes, influencing goals, objectives and missions will create a metric that allows for regular updates on project progress. Legacies nurture an environment that conforms to the mechanics of long term project planning and finalization by harnessing validity tools like that of Contract monitoring for the performance assessment aspect,. By putting in place all the stated inputs designated through the legacies, relevant research pinpointing the VFM of projects like the Commonwealth, might prove to be more holistic than KPIs and other self-monitoring assessment systems that are biased and are hence argued to have a limited scope of checking the risk and benefits of a project. 

Legacy components in the overall project planning process serves as a benchmark for long term project maintenance. It functions as a standard and constructs an operational framework and in the case of the Commonwealth Games or other events of a similar scale focuses more on static orientation and laying out groundwork more than factor in possible external uncertainties that might manifest itself during the course of its finalization. Under this umbrella of legacy the Commonwealth Games have formed a Master schedule (Queensland Audit Office, 2014) to regularly conduct progress reports towards the actualization of legacy goals. Contracting according to the legacy allows the project planner to monitor resource allocation, finance planning and primarily risk accountability. 

The drawback of these legacies in terms of benefits realization is it’s rigidity and lack of versatile maneuvering processes that might be called upon due to the possibility of uncertainties such as financial cutbacks, government intervention, pressure groups or even workforce related issues over a long period of time. Monitoring guidelines that are carried out in this process are also restricted to efficiency and performance standards defined by KPIs which as touched upon earlier invite self-serving tendencies in its measurement and analysis. Research and understanding of KPIs and the whole procurement assessment process in general is insufficient as there is no indisputably concrete method of whether any strategy across all departments at regular intervals is assessing its efficiency properly. Approaches towards flexibility in contract making where they set aside contingencies for variables in the legacy building schema are hampered by such insufficiencies in data therefore rendering it unreliable.

1(b) Progress Assessment of the Gold Coast Commonwealth Games 2018 and Recommendations

Legacy strategy and operational plans for the games conducted in 2014 have illustrated a major shortage in funding options and despite having stated objectives and clear-cut goals this inability to generate working capital to move from one stage of the operational process to the other is affected. This in turn hinders scheduling and timelines for certain stages. Without any viable sources of monetary backing the games are not meeting these time-oriented demands.  Therefore, assessment at this operational level has ascertained it as unsuccessful and although time-frames have been drawn out, targets set about within this time-frame have not been clearly defined and met. 

In terms of planning and legacy building, the project is on cue yet as in the case with operations, the vague targets and specific outcomes stated in the planning outline is absent of any evaluative capacity. Community health and well-being as the center of legacy themes is an intangible potential benefit which makes it extremely difficult to attribute, however infrastructure renovation in transport facilities within the affected community can be calculated resolutely. In reference to the same report the Queensland government forecasts “a possible 2 billion AUD by creating 30000 full time jobs” over the duration of the project as well providing outsourcing opportunities for businesses to involve themselves in the project. (Queensland Audit Office, 2014). Procurement agendas have included the mention of partnership with various agencies in manpower and infrastructure development however it stops at just describing the who rather than how and why, as no evaluative vehicle has been recognized in cross examining how these groups are meeting these targets in a meaningful manner. 

The evident void of any evaluative planning will jeopardize the quality of the performance and service outcomes. The major amendment in the plan should be to introduce and ensure that strategy and action plans are easily comprehended and that all levels of this plan have an evaluative dynamic entrenched in it so that time-frames and targets can be easily measured and realized. Once regular assessment are made at this level, financing should be assimilated by highlighting deficiencies in the procurement plan and providing a contract to agencies interested in the risk bearing – profit gaining set of responsibilities and rewards. This arrangement should allow for more leverage in their favor, for instance, having perks and add-ons for their services by branching them out to other international business opportunities given the stature and reach of a project like the Commonwealth games.

2. Supply Chain Management (SCM) & Government Procurement 

2(a) “Developers with a Queensland Presence” and their part of the expressions of interest for the GCCG Village

Local interests in the Queensland community will tip the scales of determining the cost and benefits of the Gold Coast Games 2018 as the majority of supplier cycles and resources will comprise of these local enterprises. Understanding the top to bottom SCM process from planning to control and monitoring is eventually to brandish a service or product that possesses a VFM appeal. Queensland’s economic and market situation will have to acclimatize to the size of the procurement and hence more financing will be required, investment in all sectors in all contractors involved in the project. A factory producing athletic sportswear from swimming gear to athletic spikes will have to pump in more capital to generate a greater volume of products to meet the great demand exacted by such a project. Supply chain diplomacy will include many different give and take scenarios that will occur within the local business community and due to the international exposure of the project; pressure to facilitate high quality SCM is even greater. 

In this case, local involvement promotes more non discrete relationships as cultural or communication barriers will not be as prevalent amongst the internal workforce setting rather contracting internationally. The ambience gravitates towards more cooperation between lead suppliers and contractors on flow of materials and logistics rather than rushing in to focus on amalgamating materials on site. Other benefits to the Queensland village are that of employment and overall welfare improvements, with the upsurge of jobs now available due to its procurement. Infrastructure on a whole will be improved upon making way for greater transport systems, sporting facilities, to coincide with the success of the project. Other community benefits will boost reputation as an international mega-sports venue will create an edge for the tourism perspective and various businesses from secondary to tertiary sectors will be positively influenced by such a project. The motivation is greater for local business to expand to international markets through its coverage as a supplier in this event. 

On the other hand, complexities lie in the remuneration of such events, the cost of building and catering to the volume of such ventures may include a high degree of losses incurred should the project prove unfavorable returns- wise to certain suppliers. As in the case with most mega sports projects like the Commonwealth games, the utility of certain facilities manufactured for the project may only be confined to the project alone and might prove to be redundant afterwards. The nature of such events introduces many sporting facilities and venues for example that are an attraction during the phase of the games but lose its ability to generate value for customers as no such events may occur during the time in between one Commonwealth games event to the other in the same venue. 

2(b) Suggestions for Government Procurement Policy that may increase International business interest

Following the heterogeneous archetype of Dunning’s of internationalization there are numerous the government procurement policy can adopt an approach that doesn’t prioritize ownership and internalization as key attraction to multinational contractors but rather on the location of the project. (Dunning, J. H, 1988). The Australian government should recognize the cultural distance that exists between global market leaders and their own and diagnose this gap by administrating liberal economic policies that encourage such global investors into their market, The comparative advantages countries like China or Japan possess in the industrial sector and in terms of manpower should be made available to Australia by eliminating barriers to entry. (Rahman A. et al, 2012)  Especially in terms of technology and infrastructure, having to mitigate the workload of local contractors and the necessity of keeping to project schedules requires a gargantuan labor intensive effort which China can sufficiently cater to. 

In terms of tapping into MNC interests, Resource seeking foreign direct investment approaches should further by complemented by such policies allowing which factors in their oligopolistic advantages like minimal costs of asset transferability and technological innovation (Dunning & Rugman, 1985). For many of these firms branching out internationally is a natural succession in their expansion goals. Crossing geographic borders naturally allows access to a wider demographic and market size. Monetary Government pressure such as tariffs and taxes should be lessened and support though subsidization should also be at the center of their approach. (Loree and Guisinger, 1995). 

The Queensland government should retain a long term appointment of its representatives to assure investment confidence in such an international venture. (Smith E, 2015) The shuffling of government membership should not affect or change the policies employed to enhance foreign direct investment avenues. Providing comprehensive media support and protection should also encourage foreign investors into the Games Village project. Other incentives for foreign investment can include to compensate the absence of future markets like discussed earlier whereby a guarantee of compensation should be provided by the government to the MNCs for their facilities and products in case they are not utilized and therefore obsolete after the event. 

Litigation is a major barrier to many MNCs and contracts should be drafted in a manner that convinces them of prevention such legal sensitivities.

3. Big Question #2

     3(a) Risk Approach by the Queensland State Government to procure GCCG Village 2018

The QLD state Government has fashioned a risk allocation method of coping with the risk of procuring the GCCG Village primarily focusing on absorbing demand risk and also taking it in as a single contract which possesses more risk with larger concessions made on risk and return. It all boils down to distinguishing which risk approach to follow: risk allocation or risk sharing.  In terms of laying groundwork in preparation for the event, the risk factor especially in the financing area, have seen user groups and other stakeholders taking up the invitation to pump in capital backing for upgrades in major sporting venues throughout Queensland to host the games  more adequately. Now this is an instance of risk sharing, but to move to the next stage of procurement innovation, a semblance of risk allocation should be practiced in cohesion with risk sharing to get the best of both worlds. The evidence of private sector funding from Grocon in particular have set the ground running with certain facilities already available for use and viewing to kick start  preliminary infrastructural developments for the games. 

The QOA report shed more light on the glaring shortcomings in the financing process and further presses on the issues of abstract time-frames and no evaluative panel in place to cross reference action and strategy plans with existing goals and objectives. This disharmony is most probably a consequence of risk allocation having secluded a major portion of infrastructural rebuilding activities to private businesses. Its lack of clarity in setting goals has hampered cross agency interdependencies and therefore led to fallout between targets and current progress of the procurement. Distributing risk of a certain faculty of the project lifespan to a single agency without any face-to-face daily administration has brought on claims of lack of accountability and authority and rightly so as, supplier agencies make their benefits the prerogative instead of thinking of the bigger picture, if left to their own devices. 

 A strategic risk register is currently in the reckoning to establish integrated risk management systems and processes coordinated by the DTESB. The register’s purpose will be to provide the Minister for Tourism, Major Events, Small Business and the Commonwealth Games with an assessment of those strategic risks considered to potentially have the greatest impact on meeting GC2018 objectives as considered by Government departments and Games partners (GC Annual Report, 2013 – 2014). There is no substantial proof however of its application as most of the internal process and monitoring have been either kept under wraps or not been put in place at all. With lack of any conclusive data regarding the issue, the assessment of its risk approach strategies at an operational level is still a big question mark. 

3(b) Alternative Approaches the QLD State Government could follow for GCCG Village 2018 procurement

As hinted above, the perfect dynamic for a risk management approach would be to incorporate elements of risk allocation and risk sharing, not necessarily at the same juncture in the procurement process but during different phases of it, according to its effectiveness and advantages over each other in certain areas. The analytical breakdown on segments of the procurement process and how suitable risk allocation or risk sharing is for each segment will require some degree of give and take designated in the contracts. Personally, the current procurement situation of the Gold Coast Games gesticulates towards more authority to be upheld by the government in order to avoid such major disruptions in the overall prestige like the ones currently being experienced in the run up towards the event. To conjure a risk management mixture that appeases this requirement, an approach that allocates risk and its accountability with the government should be prioritized. 

The inclusion of other parties like private businesses in the overall managerial component is only given room to come in once VFM hurdles are heightened to a degree where other major sporting events such as the World Cup or Seven Nations Rugby tournaments for example are administrated by competent governmental bodies at a managerial level. This volume of operation allows governments to enjoy economies of scale thereby increasing the need for the private firm to put more effort into innovation and quality into its services in order to outperform and henceforth deservingly receive the opportunity to provide its services without the risk of bad output (Bridge et al. 2015). 

Another possible hybrid PPP model can introduce competitive alliances and how budget, which in the case of GCCG is a key issue, can be established amongst numerous PPP consortia rather than dealing with single party terms and conditions.  Depending on the budget here on, more extravagant models of PPP approaches can take shape. Due to insufficient governmental funding in the initial stage, risk allocation can welcome startup capital and its investment can be borne by an alliance. They can revert back to being self-efficient with the government reinvesting the funds as a risk sharing reintroduction during the latter stages of the procurement. (Bridge et al. 2015)

4) Big Question #3

4) Assessment and Justification of procurement versus other Project management dimensions that affect its outcomes

Procurement aspects of mega events are important to lay blueprints for project development but they’re theoretical efficiency doesn’t necessary translate to efficiency in a practical setting.  The black and white of drafting contracting guidelines, planning delivery and finalization will establish a system that levies costs and benefits across all phases of a long term project in relation to external parties. The motive behind procurement is essentially minimizing costs and maximizing benefits so it neglects other project management dimensions like administration and policy making. Creating timelines and budgeting are equally critical areas of project management that will drastically affect its outcomes. 

Case in point, the legacy building platform on which the procurement agenda of the Gold Coast Commonwealth Games 2018 have been formed is solid and systematic on paper but as research point out, inadequacies in budgeting capital partnered with not having any structural schedule has predicted the shortcomings of the project should it continue in this state. As the date of the event has already been fixed, timelines play an even more important role in the overall monitoring of the project to make sure all of the activities required for event preparation are being realized one at a time in a chronologically efficient manner.

 The financial trough that has been highlighted in various media articles and scientific reports about the games portray a picture of irresponsible budgeting.  Cost blowouts have been incurred in the form of funds channeled to make way for accommodation for 6500 athletes, which is way below the requirement of 7,300 athletes that would be participating in the event. This simple task of counting the number of participants and setting aside budget accordingly for their accommodation should be relatively straightforward. It is understandable if the numbers estimated were a couple of digits off, but a staggering 800 falling outside this estimate reflects on the poor budgeting research conducted. (Kane and Eaton, 2014). Credibility is affected here, which in and of itself is also a major constituent of project development. Marketing and reputation building exercises are now adversely affected due to this lack of credibility. 

On the other side of the scale the necessity of procurement dimensions is actually a counterchecking mechanism for such failures throughout the project planning process. Procurement integrates a framework of incentives for employees and other working personnel to direct their motivations towards favorable project outcomes. Key decision making like contract monitoring in the initial operational stages of the project require a steady procurement background. It is the major administrative decisions taken in the beginning of the project via procurement that allow for the creation of project targets and desired outcomes. Without an idea of the cost and quality of the input, expenditure that occurs during the implementation phase becomes more precise. Handling logistics is pivotal in project stock and inventory management and ensuring that all necessary resources have been acquired at the right time in the right location makes procurement a governing factor in the project development cycle. 

Relationship dynamics between supplier and contractor are determined and sustained through the procurement process. The personnel on hand working as part of the supplier’s party should put project objectives first before their own organizational motives. The ideal interaction would to identify commonalities in both organizations so that objectives are shared rather than simply borrowed temporarily. Procurement nurtures an environment for such processes to materialize. 

A more versatile perspective can be applied here in terms of overall project development by prioritizing certain factors over other at different phases of the process. Initial stages require a lot of systematic organizational process for suppliers and other involved parties and resources to function in a productive and consistent in order to reach short term objectives. This phase requires a myriad of diverse and spontaneous decision making which is a key element in procurement logic. Alongside this need for decision making is assessing your financial position and budgeting has to be conducted simultaneously to keep the cash flow in check. How to bring things together to function in tandem is at the heart of procurement. I believe project developers should concentrate on this aspect first before the system takes root and personnel acclimatize to the requirements of daily operational performance. After reaching this level of operations, priorities in the development process can shift to that of deadlines and time frames, evaluative measures should be put in place to ensure that the efficiency of assets employed are maximized.

Despite the significance of procurement primarily in the beginning, other factors eventually have to be considered. Neglecting any single factor could affect the end result.  All things considered we can conclude that procurement might be a vital cog in the machinery of project development but factors of time and budget are equally necessary for a project to realize it desired outcomes. No single aspect is greater than the other; in the end the whole is greater than the sum of its parts 

5) Big Question #4

5) Assessment of Congruence of Theory and Practice and discussing whether The Project Procurement   Discipline can be considered a Project Management body of Scientific Knowledge

Many subject matters and concepts across multiple disciplines have theories that provide impeccable solutions to particular problems in writing but are somewhat unrealistic to put into practice. Most disciplines advance as a subject matter through innovation to bridge that gap between academic fantasy and reality. Logically, theories are well grounded and universally accepted and due to the plethora of perspectives that exist, it is possible to hold and agree to two contradicting theories on the subject matter and apply them as and when we see fit. Limiting ourselves a single idea on a subject greatly reduces the chances of its success as a practical application. This concept of cognitive dissonance gives us alternatives and the greater the alternatives present in theory the closer we are to perfecting a conglomeration of theories that can be readily applied in practice. 

 For instance, being a member in the steering committee of your local class campaign on stray animal awareness, grants you the authority to make decisions to set objectives and identify plus mobilize assets like, fellow students who you can employ to carry out action and strategy plans, like conducting research on existing stray animal populations or to make props or form action groups that implement tactics to boost awareness in a certain targeted locality renowned for stray animal encounters. Without understanding the theories of research methodology and Campaign planning and policy making, this structure isn’t easy to construct and in the rush of planning activity creation of a campaign message might not be sorted out fast enough to have an impact on targeted audiences. Theory allows for a step by step model of how the process should run in practice. It provides a pedestal for the discipline to be applied practically. However, that works only on a fundamental level. I believe that practicality of a theory is affected by the individuals trying to enact that theory. The concepts mentioned in the theory of campaign planning processes may consist of several stages, one of which will include seeking sponsorships and building a rapport with complementary welfare groups to gain more credentials for the campaign. Now on paper, that all seems logically simple but the reality of communications and the nature of its endeavor is never consistent and how you communicate your message and how it appeals to these external parties may change over time. Having to tailor your messages to negotiate with potential sponsors from various ethnic, racial, economic backgrounds will lead to your key message being warped and lost in translation along the way. Therefore in order to consummately exemplify theory we try to focus on constants in logic so that even in the midst of all these external pressures the message remains the same.

This is where the concept of normative and positive theory comes into play. To reinforce ideals on the basis of opinion is following the normative chain of thought, the major flaws in normative thinking is that it just takes statements at face value and ignores the cause and effect of the statement of the occurrence. If failures do arise in the process, a normative standpoint doesn’t look into the reasons of its failure but just labels it as an error and leaves it at that (Faisal and Bridge, 2007). It’s a very black and white way of seeing things and doesn’t encourage anything beyond that when we experience that most theories are profound and even more so when applied practically. 

. Positive theory on the other hands focuses on the verifiable and testable. It’s openness to insight allows the existence of a grey area whereby the failure of a theory might not be because it was just because, but rather because there was a lack of certain elements or factors outside just two designated “should be” or “shouldn’t be” outcomes. 

The Project procurement discipline as in most theories possesses an empirical potential that could have it considered as a Project management body of scientific knowledge however, the novelty of this concept and the lack of innovative research in this area of project management has dampened its claim to be analytically prominent. Until recently the entire branch of project management was considered to be a common knowledge subject, definite and obvious that concepts discussed in the theory were considered merely descriptive rather than scientifically engaging. (Turner, 2006). However the emergence of project procurement in the field of project management are evolving and meshing together different strategy and management concepts with focus on governance to broaden the scope of Project management not only as reductionist, tool oriented study as defines in the PmBoK. (Pasian.B, 2015)

  Bibliography

  • Rahman, A., Bridge, A. J., Rowlinson, S., & Kwok, T (2012). Multinational contracting into Australia: Developing Dunning’s theory and case study design. In: Simon Smith (Eds.), Proceedings of Association of Researchers in Construction Management (28th) Annual Conference (ARCOM) (Vol 2, pp. 913- 923). Edinburgh, Scotland: Dynamic Earth.
  • Loree, D. W., & Guisinger, S. E. (1995). Policy and non-policy determinants of US equity foreign direct investment. Journal of International Business Studies, 281- 299.
  • Dunning, J. H (1988). The eclectic paradigm of international production: a restatement and some possible extensions. Journal of International Business Studies, 19(1), 1-31.
  • Department of Tourism, Major events. Small Business and the Commonwealth Games (2013) Risk Management. Available at: (https://www.dtesb.qld.gov.au/about-us/publications/annual-report/risk-management. Last accessed on: 18th October 2015.
  • Gold Coast 2018 Commonwealth Games Corporation (2014). Annual Report 2013 – 2014.

Pg 10, Pg 24, Governance – Risk Management and Accountability. Available at: http://www.gc2018.com/…/GC2018/…/GOLDOCAnnualReport2013-14Word. Last Accessed on 17th October 2015.

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