A project based approach to procurement

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Organisational Structure and Process Structure

Organisational Structure - Project management methodologies are built upon structures that review and report progress, provide direction and represent the business. By establishing an organisational structure, with senior management representation and a governance board effective management of the procurement activity in line with the corporate expectations is enabled.  Furthermore this provides a clear way for assessing progress, addressing priorities and is a tool for suitable decision making with suitably empowered individuals that represent the business and user community.  It also provides the mechanism by which priorities can be identified and acted upon.  Providing a management structure that meets regularly greatly assists in reviewing and evaluating the key risks and issues; this is especially important when it is a specialist or highly regulated endeavour.  By having an effective management structure it is possible to identify stakeholders from which the right level of engagement can be employed.  By ensuring suitable representation from the business this is the most effective way for ensuring that subject matter expertise is engaged.

Process Structure – wrapping the activity in a governance structure is good practice, adopting a process structure is also extremely beneficial.  Adopting a process structure or project methodology, whether an accepted approach i.e. Prince2, APM or a tailored approach to suit the company is the most effective way to guide the procurement approach through to successful completion.  The use of checkpoints or approval gates makes sure that the activity is running to time, cost and performance but also affords the opportunity to formally decide and record any business decisions to extend, delay, accelerate or close the activity.

Do – Ensure that an effective management structure, or project board, is created to provide the right level of direction and guidance, with the right composition and representation.

Do – Ensure that the management structure, or project board, is suitably empowered.

Do – Consider utilising specialist advice at appropriate points to consult or advise on certain matters.

Do – Use an agreed process structure; the type of procurement will dictate the tautness of the process structure.

Don’t – Ignore the importance of having a governance structure that, if appropriate, has suitable senior management representation.

Don’t – Assume that the endeavour will govern itself and that the person tasked with managing the activity is suitably empowered to make all decisions.

Don’t – Ignore the risks and issues.  Risks and issues need to be managed proactively; failure to effectively manage the risks and issues will not only impact delivery but also impact the quality of what is delivered.

Don’t – Pay lip service to the stakeholders.  A failure to understand the influencers and deciders/approvers has the potential to hinder progress.

Plan and execute the approach that is fit for the situation

Planning – Of course execution and delivery of the procurement activity is important, but this can only be done if sufficient planning has been conducted to ensure smooth and efficient execution and delivery. Time spent planning is essential and must be done prior to starting the activity; it is much harder to unpick something or change the detail in the specification once the activity has started. It should never be forgotten that some sort of approvals or “sign off” will need to be completed, either from the internal organisation or sometimes by regulatory bodies. Often there is a conspiracy of optimism that drives people to believe that delivery can be achieved quicker than is actually required.  It is always easier to bring events forward rather than delay them and progress is always more favourably received than delay.

The planning activity should culminate in:

 - An agreed business case that will become the reference point for the engagement. The business case should be the key document that assists in assessing progress and directing activities.

 - An agreed plan that identifies time, resources and milestones.  The agreed plan should be ratified by the Project Board or management.

 - An agreed stakeholder plan that identifies the key stakeholders, their impact on the activity and a suggested periodicity and method for engaging them.

 - When the context dictates the planning activity will help identify a testing regime to be adopted throughout the execution phase.

Execute the plan – Now that a coherent plan has been developed and agreed it is time to execute the plan.  Executing the agreed plan will prove the strategic approach that originally led to the activity has achieved the business requirements as outlined in the business case.

 

Do – 6 Ps;  Prior Planning and Preparation Prevents Poor Performance.

Do – Use the management structure to ratify the plan and engagement strategy.  This will help ensure that the endeavour has been suitably planned and is at the right level of maturity before commencing execution.

Don’t – Rush into the execution phase without completing sufficient planning.

Don’t – Deviate from the plan without the agreement of the project board/ organisation structure.

 

Suitable resources

Resources can be defined into three distinct categories: People, Finance and Tools.  When using the expression “suitable resources” it should be stated that “suitable” refers to both quality and quantity.  Recognising that nothing can get delivered without people it is perhaps apt to start with that category.  Providing enough suitably qualified and experienced staff to undertake and manage the project or procurement activity is a key consideration but also ensuring that those in scrutiny, management or oversight roles have sufficient time in undertaking the requisite due diligence should not be overlooked.

Recognising that all procurement activities and projects need dedicated and sufficient funding, both to establish the activity but also to finance any supporting activities that may be required in the line of completing the activity.  The supporting activities that can require specific elements of funding could include, but certainly not limited to, supplier engagement sessions, meet the buyer days, communication and publicity material, cost modelling, legal advice and insurance.  It is important that when allocating suitable financial resource the need to address contingency, a key element of project management is addressed.

Although it was in relation to war Sir Winston Churchill said “Give us the tools and we will finish the job” and whilst there is no comparison between a global war and procurement and project management there is a need to be equipped with suitable tools.  Devising and controlling a workable plan, document control and maintaining an auditable procurement record are all essential in running an effective procurement function.  These activities need suitable tools, the extent and type of tools will be driven by the complexity of the activity and the specific procurement strategy chosen.

Do – Ensure that suitably qualified, skilled and experienced professionals are used.

Do – Always consider how knowledge transfer can be achieved, so as to develop the human capital within the organisation.

Don’t – Underestimate the financial support that will be required.

Don’t – Believe that complex procurement can be managed solely by personnel without specialist IT and infrastructure support.

Project closing, benefits realisation and learning from experience.

All the best organisations learn from experience and embody those lessons in their approach for future activities.  In order to learn from experience there is a need to close down in good order ensuring that:
 - Lessons have been captured. This will require getting feedback from the stakeholder community and capturing both the positive and negative experiences.
 - Filing the project documents.  This becomes important for those who have to live the outcome of the project.  In procurement terms this invariably means those people who will contract manage the agreement.  An important concept to remember when filing documents is to ask the question “If I was approaching this fresh would I understand, from the documents available, what happened, why certain decisions were made and can I run the legacy of the activity?”

 - Handing over the files provides to a suitable person in the business.  There’s no point in gathering and collating the information if the information can never be found to review and learn from.