The Perils of Project Procurement Why Procurement can be a Project Killer

By Meagan Paterson Managing Director Adaptive Frameworks

peaking to people across all business demographics, hearing project horror stories and of projects not

succeeding as planned, I have come to see that poor procurement is a major cause.

So does that mean those working in procurement don't know what they are doing?

Not at all! Rather than being a

collaborator and involved from the planning stage, they are usually called in so late all they can do is react.

So then does that mean the project teams are at fault?

No, I don't think that either... I believe it is a perfect storm

of misunderstanding the roles and procedures of each other; the project team not being across what procurement actually means and what an asset the Procurement Department can be, and procurement not understanding the project lifecycle and when and how they should contribute.

Projects not going to plan and the ensuing suffering is due to many, many issues. Most are discussed fluently - poor communication, lack of planning, unrealistic budget and time frame, personnel not skilled enough.one issue that is seemingly going unnoticed is “Procurement within Projects”.

After speaking to countless people over the last few years, I see very clearly that the lack of early engagement by the project team with procurement leads to an array of project problems.

How and why does this happen?

Organisationally, the procurement function is not seen as the strength and area of expertise that it should. When they are called in too late and only able to react rather than being proactive they are left to take the blame for underperformance by suppliers.

Discussing this topic with numerous procurement professionals across the globe and from different industry sectors the responses are consistent. There is a great amount of frustration with an issue that is seen as unnecessary. These professionals know what their capability is and that by being unable to actively use their skills and expertise proactively results in supply issues, which they are then blamed for.

To highlight this issue, one comment I received explained that as a result they were called in even later on the next project as they were seen as the point of failure. Hence a cycle of mistrust, frustration and reactive decision making continues.

We conducted a Survey last year that had a pretty even split of respondents of professionals from the project, project procurement & procurement environments.

One of the questions was – What areas of frustration

do you experience when dealing with Procurement within Projects?

The responses in order of frustration -

1.Lack of skills & knowledge personally;

2.Supplier’s not responding; 3.Lack of skills & knowledge

organisationally; 4.Lack of understanding of

procurement requirements; 5.Scope not properly defined; 6.Poor communication between

project &teams.

What can be done then to minimise these frustrations?

I do not believe much will change without it being driven from the top down. That is, the executive level championing procurement as a value add business function. Unless this is done, it is unlikely to gain long term traction within any organisation.

There are some quick wins for your organisation by simply putting a greater focus on collaboration between the project team and procurement. The project department must have a robust project framework to follow and a commitment to do so. I go into many Organisations that say they have a framework - some do, some kind of... unfortunately not many are actually following it, leading to additional problems within the project lifecycle. Staff training and monitoring ensures they are performing within it. This will generate project wide, and subsequently organisation wide benefits.

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Fewer than a third of all projects were successfully com-pleted on time and on budget over the past year. - Standish Group 2015

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Project Mandate

Project Start Up

Early High Level

Planning

Project Initiation

Detailed Planning

Stage

Project Delivery Stages

Product Delivery

Project Closure

Finalise &

Report

Project Lifecycle Where are YOU as

Procurement Involved?

The key is to have the framework include procurement as early as feasible, making them part of the team. Encourage collaboration and communication. Setting KPIs that have the project as a whole working towards common goals, so that they need each other to achieve them.

Working with stakeholders is probably the most challenging

part of the job as these are usually the technical experts and

understanding the language takes time and patience.

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One question we ask Procurement Mangers:

Where do you find your department involved currently within the Project Lifecycle?

During pre-planning - the high level stage, during the detailed planning stage or are you brought in once the project is in the delivery stages?

The earlier you are involved, the greater the chance of a successful project!

If you understand early on the parameters and benefits of the project to the organisation, and what the project is delivering, you have time to contribute from your perspective. You know who is in the market, you know the supplier base (or can be much more effective at researching) you can give input from a perspective of strength and expertise. You can also advise on budget constraints such as time and costs.

Most beneficially if you can engage at this stage you can be part of working out the scope, which in turn means going to market is much simpler. You have a full understanding of project requirements, hence you can

build weighted criteria into the RFT/RFQ not just go out on price.

By giving the supplier base the best set of specifications with all the criteria that is critical to the project, then those suppliers that fulfill that, can then be compared on price. That way you know you are getting the “Best Supplier Fit @ Best Whole Cost” and enhancing the ability for the project to succeed.

I have used this concept of developing the scope with procurement with great results. Having a cross functional group from an organisaiton (both involved and not involved in the project) contributing to producing a Product Breakdown Structure (PBS) results in greater Scope

certainty and less of the dreaded scope creep!

The PBS is a technique taught within Project Management that I teach in Prince2® “The plan is broken down into its major products, which are then further broken down until an appropriate level of detail for the plan is reached. A lower-level product can be a component of only one higher-level product. The resultant hierarchy of products is the PBS.” (Source : Managing Successful Projects with Prince2® ; 2009 edition; AXELOS)

As a simple illustration, let’s look at a project to “Deliver a Christmas Lunch,” from the perspective of procurement. What will need to Source and for when?

@inprocurement In-procurement | August 2016 | 19

Christmas Lunch

Meat Vegetables Condiments

Turkey

Chicken

Ham

Lamb

White Sauce

Apple Sauce

Mustard

Gravy Chicken

Ham

Lamb

What your Project is delivering

Products you need to deliver all of the products to

successfully deliver the project

Collective Groups NOT deliverables, use

for brainstorming

Here is our Product Breakdown Structure (PBS)-

Having worked across multiple Industries, in Developed and Developing Nations, with Major Resource Companies, Government Departments, Corporates, Multinationals down to Small businesses; what I am writing on is a Global Issue, it is not isolated to any one business demographic.

My background includes being a Supplier - Manufactured Products, Training & Consulting. I have worked extensively as a Procurement & Project Manager Trainer and Consultant, so I have experienced this from all perspectives.

Each product identified above then has an associated product description created. Hence if this is done thoroughly & collectively with key stakeholders, then the procurement process becomes a whole lot simpler.

By drilling down and knowing what products need to be delivered, we can manage that to the necessary schedule and budget.

Keys for a Successful Project Procurement Environment – Understand the Project

Framework of your Organisation

Promote communication & Collaboration

ffer to Provide expertise guidance during the Planning Stage (until it is a formality)

Educate within your own department how Projects work and how Procurement can add value

Educate / Promote within the wider Organisation how Procurement can increase Project Success.

By drilling down and knowing what

products need to be delivered, we can

manage that to the necessary schedule

and budget.

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Product Description (Chicken) -

Specification 2KG Organic Origin - Australia

Quantity 300

Delivery Schedule December 10, 2016

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