Structured procurement process and specific needs
Procurement can be described as a process of selecting the vendors and establishing payment terms with the vendors. Procurement is mainly concerned with acquiring of a particular good or services that is vital for a project or an organization as a whole (Burke, 2013). A structured procurement process has certain specific needs which include negotiation, recognition and maintenance. The procurement context of new Royal Adelaide Hospital is discussed in the report (Baird, 2013). This was one of the largest social infrastructure projects that are undertaken by the state. A private procurement arrangement was followed for the execution of the project. A 35 years project contract was entered between SA health and the state. The main aim of the project was to provide 800 beds and 40 technical suites. The new Royal Adelaide Hospital project, in terms of its scale, complexity, cost and resources can be termed as a generational project. Establishment and maintenance of an effective management with robust is crucial for the successful project delivery of the complex project. Efficient management and proper decision making in a system is essential along with the regular monitoring and review of the project. The current status of the project is complete and it is ready for the patients to avail the services of the new hospital. The reviewing of the arrangements of the procurement context in this particular project is one of the significant reasons behind the success of this project. The proper and effective monitoring process helped the delivery of the project with the intended benefits and the requirements of the project. The project has seen to provide a specific focus in the governance of the project, organization structure and assurance processes. The risk management processes of the project ensured elimination of the risks present in the project. The project has a number of other important arrangement and initiatives that had a positive impact on the project. The construction budget set for the project is $2.3 billion and this budget comprised of the nominal construction cost along with the cost by Project Co and state funded works. The approved budget for the project as on 30 June 2015 was 140.1 million without considering the capital works and the contingencies cost.
The new Royal Adelaide Hospital project was well managed and could be completed more or less within the set schedule of the project. However, there were a number of complexities in the project that resulted in certain project delays and cost revision. Regular project monitoring and effective project governance could unveil the key issues and the challenges associated with the project (Hornstein, 2015). There was a need for improving the budgetary and financial condition of the project which can be considered as one of the key issues in the project (Edwards & Bowen, 2013). From the context of procurement, there was a need for modifications in timing and the scope of the project which were not agreed with the project Co and therefore it was at an extreme risk. The new Royal Adelaide Hospital project was quite complex and the presence of a significant complexities in the project resulted in the certain key challenges in the project. It has been observed that there was lack of clear communication and decision lines that resulted in certain project issues. The risk associated with the project included delay in the project due to significant budget revision, cost pressures and failure to meet the PPP contractual requirements with the project (Masterman & Masterman, 2013). Along with this, the inadequate management of the claims made against the state had resulted in increase in the complexities of the project. However, the appropriate project governance and an efficient leader added to the successful completion of the project.
Private procurement arrangement
The scope of the new Royal Adelaide Hospital project was identified at the beginning of the project that helped in successful execution of the project. However, there were certain key issues and the risks that were identified in due course of the project (Bowers & Khorakian, 2014). Project delay is one of the significant risks that were associated with the project and there were a number of factors that resulted in the occurrence of this risk (Hornstein, 2015). The new Royal Adelaide Hospital project was inherently a project of high risk in terms of its scale, resource requirements and complexities. Furthermore, the adoption of the PPP model of procurement was the main source of risk transfer in the project (Walker, 2015). The delay in the project was one of the significant effects of the complexities and the risks associated with the designing and the construction of the hospital facility. Since PPP procurement was followed in the project, there were significant contractual obligations resulting in the increase of the project risks (Baily, 2017). The contractual obligations required the state to accomplish a number of tasks and contractual undertaking within specific frames. However, the state was successful in integrating and coordinating the different services and the processes associated with the project.
Apart from the risk of project delay, the project was exposed to cost pressures. The project had undergone a budget revision for a number of times that resulted in the significant delay in the project (Theodorakopoulos, Ram & Kakabadse, 2015). The inadequate management of claims that were made against the state resulted in the significant risks in the project.
The project has faced the challenge and risk of industrial dispute as well. Insufficient training of the staffs resulted in the improper execution of the different project processes adding fuel to the existing industrial dispute.
One of the significant reasons for the occurrence of the identified risk is the inadequate delivery of the intended benefits and the outcomes of the project (Mahendra, Pitroda & Bhavsar, 2013). Misalignment with the changes of the healthcare policy of the state resulted in such risks in the project. The dependencies of the project on a number of enterprise wide systems that are being implemented or integrated resulted in the increase in the complexities of the project.
As a mitigation option to the identified risks in the project, the new RAH program team was assigned with the responsibilities of delivering the project within the time. The RAH program team formed a process of risk management for the project based on the Risk Management framework that considerably helped in addressing the identified risks in the project. The risk management process thus executed by the new RAH program team helped in identifying the areas of the project that needed immediate attention. One of the main reasons of the project being subjected to a number of risks was its complexities along with the failure of meeting the PPP contractual requirements. The complexity of the project could not be reduced due to obvious reasons and therefore, the other factors that added to the project risks were to be mitigated.
Complexity of the new Royal Adelaide Hospital project
As a mitigation approach to the identified risks in the project, it was essential for the project to set up a proper project monitoring and governance framework. The role of an effective project governance is to ensure that the respinsibilities of the team members in the project is performed as expected. One of the reasons of the presence of risks in the project was failure to meet the contractual requirements of the project. Therefore, there was certainly a requirement to the changes in the procurement briefs of the project (Phillips, 2013). The project has seen a number of revisions in the procurement context throughout the project life cycle according to the requirements of the project. The identified dependencies in the project include increase in project transparencies, efficient and effective use of resources and efficient management of the contract. Monitoring of the project helps in management of the dependencies in the project. The project was dependent on the project plan and the identified scope of the project. There as a need for the project to develop strategic acquisition plan. This plan was essential to ensure an effective approach to the procurement of ICT services and therefore adds to the dependencies in the project.
This section of the report will provide an idea of the key findings of the project. There were a number of risks and challenges associated with the project. In the year 2014-2015, the delay risks were identified in the project. The project was in need to implement a strategic acquisition plan that ensuring the consistent approach to the procurement of the ICT services. This helped in successful project completion although there were a number of areas where the management arrangement of contract for the new RAK ICT procurement needed improvements (Mignone et al., 2016). The project significantly focused on and followed the PPP relationship associated. However, the assurance framework needed improvement in order to provide the governance committee with the independent assurance on the progress of the project and the programs achieved. Furthermore, and updated business case was not completed by SA health which was required to develop a formal and robust process to monitor the progress of the project against the business plan made for the project. While evaluating the risk management process, it was found out that the risk information that was provided by the committee in due course of the project needed a lot of improvements. The improvements were necessary to get an understanding of the consequences, status and the nature of strategic risks that were associated with the project. Furthermore there was a need of process improvements for approving the key changes to the risks information and the changes were needed to be highlighted to the committee. This would have ensured a consistency in the information that is recorded in the risk register.
Project risks and challenges
One of the key findings of the audit report was that there was a need to implement a strategic acquisition plan. A strategic acquisition plan could have ensured a more consistent and effective approach of procuring the ICT services with an aim of enhancing the transparency and effectiveness of the resources (Baird, 2013). It has been found out that the budget has undergone revision for quite a number of times. The project further faced a number of key challenges and issues that were associated with the development of detailed operational planning and completing the service delivery plans. The feature of the RAH hospital project include providing 800 beds, with 700 multi day beds and 100 same day beds. The project aimed at delivering standardized single impatient rooms with individual ensuites. The project makes use of leading technology to ensure that the project is complete within the set schedule.
The issues identified in the project include project delays, failure to implement the PPP contractual requirements and cost pressure (Baird, 2013). Insufficient training of the staffs was found to be a major problem for the successful project implementation. According to the Auditor General’s annual report for the year, there was a presence of contractual risk in the new RAH project.
The project was being delivered substantially through a PPP arrangement. The project and procurement managers have an important role in successful project delivery. The program manager is responsible for planning and governing a project in order to ensure a successful project delivery. It is the responsibility of the procurement manager to make sure that the project owner obtains a quality product (Baird, 2013). The procurement manager plays an integral role in ensuring that the organization or the project owner sticks to the budget. It has been observed that SA health has engaged a completely independent consultant in undertaking a number of governance reviews for ensuring that the project meets its objectives.
The assignment helped me in understanding the concept of procurement management. I have understood the project manger’s importance, the importance of program manager and the procurement manager in successful completion of a project. It is the responsibility of the procurement manager to ensure that the project does not go over budget. The project and the program manager ensure that the project is implemented in a controlled environment. It is necessary to enforce project governance in the execution phase of the project as it ensures that the project will be completed within the scheduled time. The knowledge gained from the assessment tasks has helped me in understanding the need of project management. One of the key aspects for successful project implementation is development of a project plan which should be followed throughout the implementation phase of the project. It is necessary to gain idea about the key concepts of project management as it will help me in my professional carrier as well. While working on this report, I have understood the importance of identifying the key issues and challenges that a project might face since it helps in eliminating the risks associated with the project. The learning resources provided throughout this course have helped me in gaining knowledge about the project and procurement management.
Mitigation options for the identified risks
In complex projects, it is essential to address certain typical procurement and the financial risks that the project might face. This includes the risk of resource non availability and potential failure to the identified procurement process of the project. There are certain financial risks that might still be associated with the new RAH project. This might be a result of improper scope evaluation and improper scheduling. It is necessary to understand and have a knowledge about the major requirements of the project in order to achieve a successful completion of the contract. A project manager should ensure that a realistic schedule of the project has been set and a procurement manager ensures that the project that is being conducted is true to its value.
A performance based contracting could have also been used in the new RAH project. This is because it is a result oriented contracting method that focuses on the outcomes and the quality of a project. Therefore, a performance based contracting is very different from a method based contracting that has been used traditionally. Although the new RAH project had a successful completion, the use of a performance based contract might have helped in delivering a quality product.
A project management team plays a significant role in successful delivery of the project. It is essential to have an effective team work in order to ensure successful project delivery. The effectiveness of each team member and active team participation in the project is important for successful delivery of the project.
References
Baily, P. (2017). Procurement. In Contracting for Project Management (pp. 105-116). Routledge.
Baird, A. H. (2013, January). The new Royal Adelaide Hospital: the age of the digital hospital dawns in South Australia. In Proceedings of the Sixth Australasian Workshop on Health Informatics and Knowledge Management-Volume 142 (pp. 3-6). Australian Computer Society, Inc..
Bowers, J., & Khorakian, A. (2014). Integrating risk management in the innovation project. European Journal of innovation management, 17(1), 25-40.
Burke, R. (2013). Project management: planning and control techniques. New Jersey, USA.
Edwards, P., & Bowen, P. (2013). Risk management in project organisations. Routledge.
Hornstein, H. A. (2015). The integration of project management and organizational change management is now a necessity. International Journal of Project Management, 33(2), 291-298.
Mahendra, P. A., Pitroda, J. R., & Bhavsar, J. J. (2013). A study of risk management techniques for construction projects in developing countries. International Journal of Innovative Technology and Exploring Engineering, 3(5), 139-142.
Masterman, J., & Masterman, J. W. (2013). An introduction to building procurement systems. Routledge.
Mignone, G., Hosseini, M. R., Chileshe, N., & Arashpour, M. (2016). Enhancing collaboration in BIM-based construction networks through organisational discontinuity theory: a case study of the new Royal Adelaide Hospital. Architectural Engineering and Design Management, 12(5), 333-352.
Phillips, J. (2013). PMP, Project Management Professional (Certification Study Guides). McGraw-Hill Osborne Media.
Theodorakopoulos, N., Ram, M., & Kakabadse, N. (2015). Procedural justice in procurement management and inclusive interorganizational relations: An institutional perspective. British Journal of Management, 26(2), 237-254.
Walker, A. (2015). Project management in construction. John Wiley & Sons.
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