A Case Study
Introduction
Fictional CO., Inc. has been in existence for 15 years and has the experience and observes the Automatic Guided Vehicle System (AGVS), which acts as a bridge between efforts of justification and the contractual project. Fictional Co was to work with AGVS to complete a program in plant modernization. The team chose to lead the project where they were to decide on what method to use between Ford Lift AGVS and Unit Load AGVS. Instead of the project team preparing contractual terms when requesting for quotation with an AGVS company, they decided to use the same as they used for System Vendors and Building Constructors, where the duration of the project was to remain in 10 months. Fictional Co. decided to award the contract to the second-lowest -priced vendor who had requested a schedule of 11 months where others were asking for the addition of 2-3 months. After the contract was awarded, the vendor went silent for two months, and the company came to find out that the vendor winner was a subcontractor and had a small-sized operation.
How a lack of control in procurement affected the project
The project delayed to start with a period of two months, and as a result, the completion date delayed in one month. The vendor stated that the delay was not under his control as he had suffered expenses on unplanned work-around and that the quotation did not have overtime and only had on shift. Another operational problem that resulted from uncontrolled procurement was in an unbalanced condition. The system was not able to handle pallets as a lot of materials had been removed from one side.
The second problem was on load overhand. Vehicles that were coming in with the amount that overhang would get stuck as the loads stuck each other. After fixing was done to handle the unbalanced load, the project was completed six months later to the agreed date and had to take half a year for the project to payback. Additionally, it had used additional costs where the teams had to work extra hard than planned and were paid less.
Actions that would have prevented the problem
The project team would have taken the quality of time in the screening of vendors. The vendor that they awarded the contract to did not have the required conditions. The project team would have been keener in familiarizing with the vendors, having technical talks, and answering questions. Having 15 vendors at the pre-bid, it required more time to visit each facility and do a quality screening. The team should have completed the Request for Quotation rather than using the previous one. Thus, they lacked to be specific on system acceptance parameters, which lead to glitches in load types that deferred the final revenue. There was also a short period for vendors to prepare before the pre-bid conference was conducted; thus, the company would have given them enough time. Another way t prevent was that the company should have had estimates on bid response to having a realistic schedule. They should have also evaluated the vendors adequately.
How to correct the problem
Once the team realized that the vendor had delayed starting the project, they should have done regular monitoring of the progress of the project. The project team would have also created a register that identifies the problems to respond to them and track the progress. The team should have reported promptly when they first noted the delay problem. The team would have adjusted on their cost estimates and contracted another contractor to perform the fixing of the issues that arose.
Successful procurement activity
An example of when I feel I successfully carried out a procurement activity was when I used a phased negotiated contract. I began with prequalifying the vendors on a construction project. I then evaluated the budgetary quotation and the company quotation. I then chose the best vendor according to the design and the price. I ensured that I developed the requirements on the construction, picked the vendor that qualified, and gave room to the iterative process. The project was a success as we used precisely the estimated budget and at the estimated time. I used the leverage time to carry out a corrective action that I met the plan of the vendor and mine.