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What is Procurement ?

"Procurement is the process by which the resources (goods and services) required by a project are acquired. It includes the development of the procurement strategy, preparation of contracts, selection and acquisition of suppliers, and management of the contracts."

APM Body of Knowledge 5th edition (Section 5.4)

Why Contracts & Procurement?
Good contracts and good procurement are project management fundamentals when a project is being delivered by two or more parties. Without these in place, you may have the wrong partner, with parties unsure of their rights and obligations, and motivated to perform to different objectives. Consequently, the chances of a successful project are diminished.

On the other hand, good contracts and procurement can help drive the project towards success through selection of the right parties, under the right contract strategy which aligns the parties’ motivations under clear contract terms.

The Contracts & Procurement SIG
The Contracts & Procurement Specific Interest Group (C&P SIG):

• Exists to promote and disseminate knowledge, understanding and best practice of contracts and procurement in a project environment.
• Aims is to become a lively and constructive debating forum which takes existing best practice and helps make it better.
• Wants to be disseminating this knowledge, understanding and better than best practice through a variety of accessible means.
• Has a long term aspiration to become recognised as an international forum at the leading edge of excellence in contracts & procurement for projects.

What is procurement? Why a contract?
Procurement at its simplest is how you go about obtaining the goods and services you want from external organisations. It breaks down into two main activities:

• Strategic decisions in terms of make or buy; work breakdown structure and which parts of the project are allocated to what type of organisations; allocation of principle risks; how these organisations are paid and incentivised to perform; the degree of co-operation required between participating organisations and how they are selected etc.
• The selection procedure itself to select the ‘best fit’ organisations for their part of the project.

Having chosen the ‘best fit’ organisation, a contract then needs to put in place which reflects these strategic decisions and above all, accurately and sufficiently describes with clarity what it is you want that organisation to deliver, by when and for how much. It also needs to describe how change, which inevitably comes to varying degrees with a project, will be assessed and implemented. This contract then needs to be managed.

From a pure project manager's perspective, ultimately you can only manage to the limits of the contract which is in place. Consequently, you need to know what is the contract and ideally have had input into them before they are placed.

Why are Contracts & Procurement important?
In an era of technology and complexity, few organisations deliver projects, let alone major ones, with no external help. Where the goods or services are predefined or simple, the contract and procurement process is relatively easy. Where you are procuring complex projects, with evolving needs and which may involve tangible and intangible deliverables it becomes much more complicated.

On major projects, research has shown that good procurement decisions can have just as much effect on delivering projects to time, cost and functionality as technical decisions.

What has the Contract & Procurement SIG done in the past?
The SIG was formed in 1993 and since then has held regular presentation and meetings; published a guide on Contract Strategy for Successful Project Management and contributed to APMs Standard Terms for the Appointment of a Project Manager as well as contributing to updates of the APM Body of Knowledge.

Recent & planned activities
Over the last year (from end October 2008) we have successfully re-invigorated the SIG, having two annual conferences and four other events, two organised directly by ourselves and two in consultation with the regional branches of APM. For the output from our last conference titled ‘Innovative Supplier Selection Methods’, please click on this link.

At the time of writing, we are planning two more :

• On November 17th 2008, ‘Managing Communications under the NEC3 Engineering & Construction Contract.’ Go to http://www.apm.org.uk/ContractProcurement/CPEvents.asp
• In March 2009, a day’s conference with the South West and Wales region. Details are yet to be finalised, but the agenda is taking place.

In addition, next year we should finish off an update of the Contracts & Procurement Guide for publication by APM.

Future Activities.
We want to do more events. So

• If you have been involved in a recent project, which has a Contracts & Procurement theme, or have just been doing something which you think others would be interested in, then please tell us and we can arrange a venue for an evening talk. It will probably be arranged in collaboration with a regional branch.
• We want to run themed series of events, starting with basic training and knowledge (say a ½ day event); followed by some case studies (say 1 ½ hour evening events; and then a best practice forum to develop our body of knowledge (say a ½ day facilitated session). The outputs of this can be placed on our website for download as a White Paper, included in future APM publications e.g. the updated guide, APM's Body of Knowledge etc. The subjects of immediate interest are : 
• Capturing project requirements and then building them into the procurement methods & route.
• How risk is evaluated and taken into account in the procurement method & route and contract.
• Contracting strategies
• EU procurement law.
• Performance management of suppliers.
• Negotiation skills.

If you can train or teach on these subjects or have a good case study, then please contact the chair (see email address below).

If you want to be notified of these events, then register on the contact us page or email david.west@apm.org.uk and he will put you on our circulation list.

Who are we?
The SIG is chaired Dr Jon Broome. Jon has been a member of the SIG for ten years and is an acknowledged expert on the NEC family of contracts and on collaborative procurement, having had a book published on each of these topics and consulted and trained on them internationally. He has also been involved in major procurement initiatives for the UK Highways Agency (the Capability Assessment Toolkit) and Ministry of Defence.

Gerald Orman is the secretary. After a career at the hard end managing engineering projects, he is now an independent contracts consultant and risk manager. He runs the Contracts Expert website which allows the user to compare the provisions of different forms of contract.

The treasurer, Dr Steve Simister, is the ex-chair and has been involved in the SIG since its formation. Steve has published extensively in both procurement and more general project management and specialises in public sector procurement through Public Finance Initiatives (PFI) and Public Private Partnerships.

Other members of the committee are Rudi Wolf (IT) and Anne Holden (speaker finder) and Annie Harrian (events co-ordinator).

For further information, please contact Jon Broome, the chair on jon@leadingedgecc.co.uk or on 07970428929.”

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