ABSTRACT

Procurement is a major part of the process of project implementation. It determines who will actually perform much of the work required by the project, and under what conditions. It is an important element of the project manager’s responsibilities. In the past, the term ‘procurement’ was applied specifically to the purchase of goods and equipment, but its use has now been widened to the obtaining of goods, works or services from others in pursuit of the project objectives. Goods may mean anything from the purchase of nuts and bolts to the supply of a complete capital plant such as a processing facility; works covers the whole field of civil or infrastructure development such as buildings, roads and utilities. Services most commonly means the provision of consulting services but could also cover, for instance, accountancy or inspection services. Procurement strategy and practice influences the nature of the relationship between the project and its environment by determining the different responsibilities of the various parties involved and the extent of the project owner’s direct dealings in the environment (for example, in arranging the supply of materials or in being responsible for acquiring and utilizing new technology). It is worth emphasizing at this point that there are two basic options available for obtaining goods and works, and undertaking services. Either this is done in-house by the agency who will eventually own the project, or it is done by another party which enters into some form of contract with the owner to perform the work. The first alternative, variously known as ‘force account’ or ‘direct labour’, is commonly used for activities which cannot be measured in advance or which must be co-ordinated with ongoing activities (such as maintenance), for work requiring special expertise or which has social objectives such as reducing unemployment, or where an agency is attempting to develop in-house capability. However, there are dangers in in-house work, including, among others, vague definition of work requirements, political interference, overstaffing and lack of financial discipline; at the present time there is a trend away from carrying out activities in this way if it is possible to obtain them from others under contract. This chapter examines the process of procurement under contract.