Procurement is the process of identifying and purchasing material supplies and services necessary to keep an organization runs smoothly how the process is conducted to determine the success value of the project. The process of purchasing items varies from one organization to the other, depending on the nature of the business. For example, the private sector’s procurement process might be straight-forward while that in the public sector is complex and challenging. Therefore, it is essential to do planning using experienced project managers. Aspects of procurement include identifying what is necessary to be purchased, who to do the supply and when the supply should be made.

Procurement and contract problem

On several occasions, project managers make mistakes during procurement that can easily compromise the entire project. Such problems might appear to be negligible but will have a significant impact during the project’s progress. The Wi-Fi reach project’s procurement process is experiencing some problems that are critical in determining the success of the project. The project manager of Wi-Fi reach risked the project in the following ways;

Failure to analyze the supplies

Requirement analysis is a very critical step in procurement. The process involves analyzing the supplies that are important to the project. During the analysis, the project manager explores all the necessary equipment, their quantity, and where to obtain them. The analysis is also vital in determining what the organization has and what to add or modify to meet the firm’s objectives. In this case, the project management team did not analyze the required and available equipment. Thus, the team assumed that the supplier clearly understands what is required and what quantities. This assumption contributed to the project’s failure as some key components were not provided, while extra cost went to unnecessary supplies.

Depending on a single source for supplies

Wi-Fi reach is a mega national project that requires a wide range of materials and tools. The project requires equipment ranging from computers, cables, servers, access points, routers, mail servers, etc. For the project to be successful, it is advisable to seek multiple sources to supply these necessities. However, the project management of Wi-Fi reach identified a single source to supply all these needs. This can be a big blow to the project, especially when the supply encounters a problem that forces them to stop the procurement. Therefore, the project manager should identify alternative sources to supply the equipment to enable the timely completion of the project.

Relying on a source that has never been used

A national project like Wi-Fi reach should be handled with much caution since many people are watching it. Therefore, the outsourcing of the supplies should be a very familiar company. The source should be reliable and known for supplying quality products. However, this is not the case with the Wi-Fi reach project as the project manager selected an unfamiliar supplier to supply the equipment. A new supplier can deliver low-quality material at a higher price, thus costing the organization heavily. The use of low-quality devices can render the project to be useless and a waste of resources and time.

Failure to conduct risk management

Risk analysis is a critical step in the procurement process. The process involves analyzing the supplier’s financial status and ensures the supplier meets all the legal obligations. During risk analysis, the team understands the project’s impact on the organization, and the damage resulting from the project’s implementation is not successful. Also, risk management ensures a constant supply of the materials, thus preventing unnecessary suspensions. In the Wi-Fi case study, the team did not conduct risk analysis before launching the project.

Procurement challenges in the public sector

There is a well-defined procurement framework that project managers working in the public sector must follow. The model calls for strong moral principles and not using the traditional procurement approach. These sector experiences several challenges when it comes to the supply chain because of public concerns. Below are some of the common challenges experienced in public procurement.

Realizing Benefits from Data and Analytics

In any commercial project, data and analytics play a crucial role in evaluating where the money is spent, where there are wise investments and possible areas to save money. But, since it is challenging to embed new purchasing techniques in the public sector, convincing everyone that data and analytics are necessary is quite challenging. There are electronic procurement systems that perform data analysis during the procurement process. However, many people, especially those who buy outside the system, may not see an e-procurement system’s economic value. The accuracy of data in the public sector is also crucial. We can only achieve accuracy when everyone uses the system or supply chain operations. Otherwise, the system’s data can be inaccurate, especially when other departments do not use the system to procure materials.

Fully Realizing Benefits of Sustainable Procurement Practices

Although it is possible to convert the procurement system in a public organization to a better one, the system’s benefits might not be visible to everyone. We can only realize the benefits if everyone is on par with the new approach. Otherwise, we are likely to miss some of the benefits the procurement system provides. Most people working with public sectors have their means of procuring equipment and will always prefer any organization to use their approach. As a result, the public sector receives a lot of criticism concerning the supply chain as an alternative approach will be considered illegal.

Getting the Most Out of Suppliers

There are strict procurement compliance and regulation issues in government procurement. Therefore, it is a challenge to find and qualify suppliers. It is possible to get one or more reasonable suppliers who meet the requirements. However, maintaining a smooth supply chain can be problematic, especially when they get into legal issues. During such times, the organization can be affected to the point of closure. This problem makes it difficult for public organizations to establish long-term supplier relationships to avoid future problems.

Balancing Outsourcing with Maintaining High-Quality Internal Capacity

Under certain circumstances, an organization might need to assign a section of its procurement responsibilities to other organizations or teams. When the organization outsources procurement duties to a team with better equipment, it can use the free resources to carry out other responsibilities. The organization can achieve its objectives within time as all relevant processes are handled efficiently. However, outsourcing too much comes with a challenge as the company/organization will rely on the outsiders to carry out the entire process. Outsourcing some tasks may lead to the purchase of inadequate quality equipment that may compromise customers’ quality of services. In the public sector, it is not easy to identify the sections to assign to an outside team and those to retain. And since quality is mandatory in the public sector, identifying a trustworthy company that is cost-benefit is a challenge.

Building Strategies for Effective Engagement with Suppliers

Proper and reliable supplier relationship is essential in granting success to any business firm. However, managing this relationship might be difficult if the organization has not established proper strategies. Governance and compliance challenges in the public sector make it even more difficult. The level of supplier engagement easily compromises the supplier relationship regardless of the procurement strategy implemented. When suppliers fail to deliver the equipment on time, the organization will incur extra expenses in terms of time and cost, trying to consult other vendors. The procurement can be smooth if there is a centralized procurement system. But because of trust issues in the public sector, it is not easy to agree on having a centralized procurement system. Politics also play a significant role in sabotaging the success of public procurement.

Slow evaluation process

In public procurement, no single individual is entitled to making final decisions. Instead, there must be a committee to evaluate the process and validate the supplier. Every member of the committee might have their preferred source, thus disagreeing with the supplier on board. The procurement and tender process usually takes time and extra costs, thus delaying supplies’ timely delivery. This process, therefore, prevents the organization from working within the budget and timeframe.

Type of contract in force between the National Health Authority and MIL

There are different types of contacts that a client can engage in with the contractor. The common forms of contracts are fixed contracts, cost-plus contracts, and material and items contracts. The supplier should examine a suitable contract that does not overstretch them before falling in an agreement with the contractor. In the Wi-Fi Reach project, the National Health Authority (NHA) is in a fixed contract (firm-fixed-price contract (FFP)) with the Medical Inventions Limited (MLI) Company to procure network equipment. This type of contract calls for the supplier to deliver the necessary materials at the required amount within the agreed timeframe and cost. Whenever there is an increase in cost, the supplier will cater for the extra cost. The law expects the source to complete all the operations within the agreement. In this type of contract, the client’s cost does not change even when effort or date to deliver increases.

All details about the quality of the goods or services, duration for delivery, and the total cost of supplying the equipment are inclusive in the contract.

Appropriateness of fixed procurement contracts

These contracts are favorites where there is more than one supplier who meets the qualifications and legal obligations. The suppliers should also have a good performance record to guarantee the timely delivery of the supplies. In the Wi-Fi Reach project, the allocation of the procurement contract was done to a single source. Therefore, it was not appropriate in this project to implement the fixed type of contract.

Besides, a fixed contract is appropriate where the requirements are clearly defined by the project management team, specifying the fine details. Such details enable both the supplier and the organization to estimate the project’s overall cost without much exaggeration. Specifying the requirements ensures no critical component is left outside the contract, resulting in extra costs to the supplier. In the Wi-Fi Reach project, there was no analysis of the requirements of the project. As such, there are high chances of extra costs as new requirements might emerge on the way. Excess new requirements will force the supplier to go for cheaper and low-quality products to remain working within the cost. A fixed total cost contract was, therefore, was not suitable for the project. Instead, the organization would have gone for a fixed-price contract with price adjustment. This contract would allow for cost adjustments when efforts and requirements change.

Fixed procurement contracts are also appropriate where the scope of work that is likely to remain the same. A good work scope relies on adequate information, availability of reliable bidders, and a transparent contract that explains the scope of a fixed procurement contract. The health sector is likely to change frequently as new diseases can emerge over a short period. Some of the changes may require the abrupt addition of new hospitals and other health facilities. For instance, COVID-19 has forced additions of tens or hundreds of health centers in all countries. When using a fixed contact in such an environment, the approach is only useful when there are multiple suppliers. However, this is not the case with the Wi-Fi Reach project, as there is only a single source. Therefore, when there are new demands, the organization is forced to disrupt the initial supply chain to cater to emergencies. In the end, the organization will incur extra costs than the budget as it might be forced to look for a new supplier.

Another appropriation for a fixed procurement contract is short term projects, basically less than three months long. In most third-world countries, the local currency’s value frequently changes within months, resulting in inflation. Inflation causes a rapid increase in the prices of commodities in the market. These price fluctuations can quickly inconvenience the supplier, resulting in the delivery of low-quality products. The necessary products might not be available in the market in some cases. In the end, the delivery of the supplies will be delayed as the supplier will have to wait for the right equipment. Such cases require an adjustment in the cost of the contract to cater to the extremes. The Wi-Fi Reach project is relatively a project for a more extended period as it is scheduled to complete in twelve months. Therefore, the project is likely to experience hiccups because of the extended project period. A fixed contract means that the supplier will submit a high cost of the project to cater for market changes, and this might be costly to the organization. Alternatively, the supply can terminate the contract if it is extremely costly.

Recommendations to effective completion of the Wi-Fi Reach Project

Wi-Fi Reach project is a lifetime project that needs proper planning and implementation. The effectiveness of any project relies on analysis of the procurement requirements. During planning, the project management team needs to write down all the necessities for the project, where to source them and when to acquire them.

Analysis of the supplies

Analysis of the supplies involves identifying all the equipment required to complete the project. In this case, the team must start with analysing the number of workstations and computers that are needed in every hospital and local medical centres (LMC). Through this analysis, the manager will understand the number of computers to procure and the type of network topology to setup in all the centres. The next step is to identify the type of servers to implement; whether on-premise or cloud-based servers. It is important to examine the benefits and challenges of both servers during analysis to understand the best alternative. This analysis also includes the number of servers to purchase.

The Wi-Fi Reach project aims at creating a national information system for the ministry of health. The purpose of the system is to automate operations in the health sector. We can say that Wi-Fi Reach project is an online project and the thus, internet connection is mandatory. The team therefore must determine appropriate devices for establishing an internet connection. Before awarding the procurement contract, the team should evaluate the number of routers, switches, and wireless access points needed for the project. Technicians will help in this analysis and determine the suitable types of the devices.

Identify suppliers

Once the team is through with identification of the necessary supplies, it should then identify several potential sources for the materials. Having multiple options to choose from gives the organization an opportunity to compare prices and quality of the products. Selection of the suppliers should be done on well-known suppliers who have a brand name. The team should analyse each of the suppliers to understand how they operate and their reputation. Wi-Fi reach is a complex public project and thus, the organization should not rely on a single supplier. However, each of the suppliers should be provided by one supplier to maintain the quality. Besides, most computer devices come with compatibility issues. Acquiring related components from the same supplier will help in solving compatibility issues.

Issue procurement contracts

About three or four suppliers from the range of suppliers identified above shall then be selected and awarded contracts to provide the equipment. The contracts will differ from one supplier to the other depending on what they are delivering. The contracts should clearly define in details what the supplier should deliver, the period of the delivery and the cost of the contract. This project is long-term project and therefore I discourage issuing of fixed contracts. Demands in health sector keeps on changing. Therefore, the contracts should be flexible to include new demands and eliminate some of the requirements. It is important to explain all details in the contracts to avoid confusions in future.

Identify the number of technicians and support staff required

An information system requires technicians to run and maintain it frequently. Maintenance include installing software updates, ensuring the internet connections are working, and providing any technical assistance to medical team whenever it’s necessary. Each of the Local Medical centres should have at least one technician while the hospitals should have at least three technicians. For this project, technicians include database administrators, network managers and technical support staff who will perform software installation, troubleshooting and updates.

Training of the staff

Although technology has hit most parts of the world, we cannot assume that there are people who are not well-conversant with computers. We can only realize the benefit of the system when the staffs know how to use it. It is the responsibility of the project manager to identify a team of experts that will train users of this system at all levels. The users need to know what they can do in the system and how to do them. Every employee should be taught their responsibilities and access levels in the system. The training process should be gradual to avoid confusing the learners and help them grasp key aspects of the system. Technical staffs should e the first people to be trained. Later on, the technicians will help in training the medical personnel and other employees in the health sector.

Conclusion

Proper planning is an essential factor in any project. The project manager is responsible for identifying all the requirements and timeframe of the project before allocating contracts to suppliers. Factors such as available budget, duration of the project, time of organization, and history of the suppliers should always be considered before determining the type of contract to issue. Failing to do this can easily compromise the quality of the project and delivery time.

References

Abu Bakar, N., Peszynski, K., Azizan, N., Pandiyan, V., & Sundram, K. (2016). Abridgment of traditional procurement and e-procurement: Definitions, tools and benefits. Journal of Emerging Economies and Islamic Research, 4(1), 1-18.