Procurement in Mega Projects

Procurement in Mega Projects

Introduction

Megaprojects are complex ventures that cost billions of dollars, involve many stakeholders, and in most cases, take an extended life circle to be completed. The success in the completion of mega projects is affected by several factors that hinder faster and quality completion of the project. In most cases, the mega projects take more than the expected completion time frame and fail to achieve the expected goals of the entire project. The mega project could be in infrastructure, recreation like the construction of a stadium, technology, energy, mega-dams, among many other mega projects. The reasons behind the failure of megaprojects involve an issue of budget control, the involvement of many stakeholders, which creates conflicts, the cooperation of innovative ideas and technology in use. Also, the procurement process in the mega project significantly affects the success of the project. As part of the implementation of successful projects, t procurement process of the materials used in the mega projects needs to effective, efficient, and reliable to minimize project development delays. However, the efficiency of the procurement process is affected by various barriers that exist within complex mega-projects, obstructing the project. Omani Investment Fund, which is a company that provided procurement services in mega projects, needs to understand the challenges that to understand a problem that contributes to the poor performance of megaprojects and the barriers to the effective and efficient procurement process. These insights will be crucial to helping the Omani Investment Fund to implement critical success factors for a streamlined procurement process.

Critical drivers of mega projects worldwide.

Globalization has dramatically triggered investment of governments and the private sector into megaprojects with the rate of at which megaprojects becoming more regular compared to the previous decades. When we talk of the critical drivers of megaprojects, we refer to the issue and approaches that make a megaproject more success or the megaprojects a significant failure. The success of megaprojects is based on dimensions of risk allocation, competence in management, political factors, and legal system impacts (Mišić et al., 2015). Megaprojects are always unique and require unique management approach in their control. The drivers of the mega projects determine the outcome and results of a mega project that happens.

In examining the critical drivers of megaprojects, the issue of data problem is stressed as a significant determinant of the success of megaprojects. The megaprojects take along phases for them to be completed. In these cases, they are affected by the ever-changing technological factors that happen. The success megaproject is examined based on whether the project is carried out within the expected time and meets the goals of the project  (Mišić et al., 2015). The pre occurring megaprojects find it challenging to fit into new project pressures of new data and to transforms the expected results within the organization. Megaprojects shape specific goals before starting of a megaproject. These goals aim to stabilize the progression of the megaprojects and act as the guiding principle in project management. Megaproject vision keeps all the stakeholders on the same page towards achieving a common goal.

Also, the nature of stakeholders involved in a megaproject determines the success of the mega project. Most of the mega projects are much reliant on having a robust team that works together at minimal conflicts of ideas and goals. In most cases, if the project involves many stakeholders, the megaproject is likely to take more time before it is completed. It is essential to have stakeholders within a project who share a common goal and can solve conflicts efficiently (Mišić et al., 2015). Megaproject management is a complex process. In most of the mega projects that fail, the stakeholders find it difficult to reach a consensus due to diversity of ideas and diverse interests and expectations. Megaproject projects take experience conflict between the stakeholders, usually take long periods for them to be completed compared to mega-projects that do not experience disputes. However, since megaprojects affect the lives of millions of people in diverse ways, limiting membership is also perceived as undermining the legitimacy of group opines, which may later require changes at a late stage.

The efficient integration of data and a robust team create a higher probability of completing a mega project on time and attain the expected outcomes on the project (Mišić et al., 2015). In some of the most performing megaprojects, the underlying theme is always creating a consensus between different stakeholders. Holding of regular meeting ensure al the megaproject teams are working on the same direction, and minimal conflict issue is resolved on time.

Analysis of barriers in the procurement of megaprojects worldwide and particularly in Oman – [30 Marks]

For the successful completion megaprojects, the procurement process is a very critical part that exists within mega projects. It significantly affects the efficiency of availing of the needed material for a megaproject. Procurement can be defined as the process through which the mega-project acquires various goods and services that are needs in the construction process. Based on previous pieces of literature, 90% of megaprojects are delayed to issues about budgetary approval and delayed procurement process that limiting the achievement of the intended construction goals (Brooks et al., 2016). For management to prevent many uncertainties that exist within the construction of megaprojects, it is critical to design a budgetary framework that allows a faster and quality procurement process towards the goals of the projects. The overcoming of barrier that affects the construction process of a mega project help to determine the preparedness of the project managers towards the achievement of the construction goals.

A mega project construction projects involve the different department in the management of the project. Procurement departments’ is the most change and to a great extent, affects the success of the overall megaproject. The procurement department established a connection with others to depart another stakeholder within the construction process that determines the success of the organization (Basak et al., 2019). The reliability of the suppliers is a significant barrier that affects the procurement process. Most of the procurement department has to identify suppliers who can deliver quality products at the required time. Supplier performance is a significant obstacle to the fatter and timely completion of megaprojects. The suppliers must understand the quality and complexity of the mega-project before even biding their tenders.

Megaprojects require deep utilization of data of accurate data in the procurement process. The dynamic of social construction approaches and data availability is a significant impact on the procurement sector of megaprojects. In most cases, the data is quite critical in a situation where it has to be communicated across various stakeholders (Brahm et al., 2015). Availability of data help in creating of clearer and accountable procurement process. It has a tremendous effect on the proper utilization of the mega-project resources and budget allocations. The presence of expertise is critical to the procurement process. Lack of expertise by the procurement term can cause the failure of the project. The procurement teams are responsible for ensuring that the delivery of goods is made on time, and the gods meet the expected standards. Megaprojects are centralized to having a highly qualified procurement staff. Trends in supply chain management are affected continuously by increased research and awareness. Ratio allegations of the supplier reduce the cost for the supply of goods and minimize other transaction costs. The primary responsibilities of the procurement teams involve operating within the budget outline constraints and achieving a measurable saving in the construction of the mega projects. They are also responsible for maintaining the continuity inflow of goods and services that are needed for the completion of the projects. Some of the goals like maximizing of saving acct as a barrier to the achievement of the desired plan and set goals

The involvement of many parties in the procurement process is a significant barrier to the timely and efficient procurement process.

In most cases, approval of the procurement budget is a substantial barrier to the success of a megaproject. When several parties are involved in the budgeting, there is a likelihood of increased delay in the processing of the budget, which affects the entire mega project. Also, the mega projects procurement process involves many parties who want to be involved in budgeting. Also, each country has a federal law that outlines the procurement process in a megaproject. Theses rule cover both private and public sectors.

In most cases, the procurement process outlined by the law can be long and cumbersome, causing procurement issues (Ling et al., 2014). Also, the involvement of various stakeholders makes it more challenging to reach a budgetary consensus. It also takes more time to have consensus, which explains why most of the megaprojects in the world are never completed on time.

The procurement sees each stage of project construction independently. The steps involve project stages and project building process. Through al these procedures, procurement process play is a central role towards completing the project. Construction procurements are always quite problematic to the success of the firms. A quotation that is made in managing the megaprojects is quite challenging and aims to create an aggregate advantage towards the total project cost (Edler et al., 2015). The demand pf the mega-project disqualifies the credibility that is attached to the smaller projects. Before the start of the procurement partnership with the supplier, the PQQ provides critical information towards choosing the partnership in the program. The procurement process must be well informed. In documentation barriers, the PQQ question plays an essential role in choosing suppliers (Brahm et al., 2015). However, they are enough to provide satisfying information for the procurement team to select a supplier. The procurement team should make up a contrail agreement with various people before choosing the supplier. The main aim of the process is to smoothen the supply issue before the start of the project.

Financing is also another significant barrier to mega projects and, more so, the mega projects that are funded by the government. Also, the private sector funded mega-project does did not perform much better regarding the issue of procurement due to financing problems. Deliberated the funding of megaprojects aims to save the amount of cost incurred in the entire process of constructing the Megaproject. In respect to financing projects, the procurement process is shaped by who is financing the project and what steps are taken to the approval of the procurement budgets (Loosemore, 2016). Also, the financer determines what financial risks are taken in the projects. Given the extensive budgeted amount in completion of the mega projects, the procurement teams are responsible for making the broad generalization, which extremely difficult as it is affected by natural and social structural dynamic factors like Weathers and technology. Also, the funding mechanism has grown quite dynamic affecting procurement process effectiveness.

An outline Critical Success Factors (CSFs) in the Procurement process for megaprojects – [35 Marks]

The critical success factors is a term that is used to refer to various approaches that need to be implemented in running of mega projects for the mega projects to achieve its set goals and expectation of the society. Before considering the critical success factors that would foster a faster and more efficient procurement process, we must consider the barriers to procurement in mega projects. The procurement process for megaprojects is characterized by complexity and delays that affect the delivery of the construction process. Due to the presence of different stakeholders who share conflicting opening making mega projects hard to succeed. There are diverse purchase and supply approaches that are used in transforming the societal issue in regards to various measures. The impact of critical success factors for the procurement process is based on the dimension of increasing efficiency and increasing the reliability of the procurement process. The procurement strategies that are used in mega projects must always be in alignment t with the legal requirement and the goals of the mega project. Based on the mega project procurement barriers that face megaprojects, as previously discussed, the following critical success factor aims to enhance efficiency in the procurement process within such mega projects.

The first critical success factors are making a good procurement structure and managing the role of different teams towards the procurement process. Given the complex nature of the procurement process within a mega project, establishing a functional procurement team can be a turning point towards the achievement of the goals of the mega project. The procurement office should provide a piece of detailed information on the environmental regulation of different teams in the mega project process. One of the main components of the procurement office is its role in the underpinning of various strategic approaches in running the construction (Osei-Kyei et al., 2015). The success of the procurement process is based on communication between the supplier, contractors, and the entire procurement process. Each party needs to be treated as part of the whole process. The procurement office, therefore, must define the role of various stakeholders. The procurement office also needs to communicate effectively, starting with the initial staggers stages of the construction procedures. Effective integration between the different teams is key to the success of the project. Conveyance of deferent information regards various dynamic factors that happen n in the project management process is critical to the success of the projects.

The overall success of the mega-project requires proper planning and implementation of effective policies. The plan is a critical success factor that ensures the mega-project adheres to the set timeline of the project. Under preparation, it is essential to approve various strategies, policies, and plans formally. These policies need to be approved within the set megaproject construction plan. The procurement plan set the standard that needs to achieved through systems,  creating the regulatory framework for all the stakeholder, procurement strategies, and the guides procurement crisis in mega projects (Kay, 2009). In the shaping of the procurement issue that exists within the mega projects, research, and monitoring of the progress of the mega project and other external forces is critical.

Megaproject funding is another critical factor in the completion of the project. In most cases, the mega projects procurement process is affected by the overall funding process of the project. The federal government funds most of the mega projects. Funding should be a consistent activity through megaproject management. Timely and consistent financing ensures that the procurement proves place on time. Consistency in the funding is greatly affected by the integrity of the project manager (Kay, 2009). Cases of corruption significantly affect the consistency in the financing of the project. The procurement process within the mega project should be characterized by accountability, transparency, and inclusiveness of all the stakeholders involved.

Procurement risks act as a significant barrier to an effective prominent procedure within mega projects. In review, these challenges are critical to identifying a success factor that could lead to increased efficiency in the procurement process. Understanding and effectively managing the procurement risks from the early stages of the mega projects is another critical success factor. The procurement process can be endangered by several operations which include;

• authorities interference,
• unclear contract relationships
• supplier assumptions,
• Lack of integration between the suppliers and megaproject owners.
• Financial insecurities

These challenges have significantly affected the procurement process. In discussing mega projects, they are likely to be affected by the dynamic level of technology that changes from time to time (Kay, 2009). The procurement process is expected to be prone to various changes in project goals and technological advancement. The procurement process involves giving of tenders and contracts to multiple bidders within the projects. However, awarding tenders to contractors that have been involved in the early phases of the megaprojects increases the efficiency of the mega projects as they have a deep understanding of the project basses. One of the most significant risks in contract relationships involves pre-competitive relationships in the procurement process. As part of the regular order, the potential bidder has to be first informed before the start of the bidding process for them to be aware of the qualifications (Wondimu et al., 2016). As part of the ethical practice, there should be no contact between the potential bidders and the contracting personnel. In mega projects, it is always challenging to avoid such connections. In the understanding of the bidding and contract processes, the procurements of megaprojects should craft a legal entity of legal engagement with contractors are made.

Integration among various teams that are involved in the projects is another critical success factor. The procurement decision needs a consensus on the different issues that involve multiple stakeholders. For the projects to remain continuous and to be completed timely, megaproject managers, funders, owners, contractors, and the procurement departments have to work together and on time. If the funding is made on time and the project owner gives their desired goal on time, the project procurement can make faster decisions that are more accurate to address the desired goals (Wondimu et al., 2016). The strategy of achieving a partnership between procurement and other departments is based on the transparency of the procurement process and strategic partnerships.

An outline proposal of an innovative procurement ecosystem of mega projects in Oman in pursuance of superior Value for Money (VfM)

Value for Money (VfM) is a term m theta is used in mega projects to refer to maximizing benefits from the available inputs within a megaproject. Megaprojects are usually complex and unpredictable in many ways. One of the critical trends in mega projects in pursue values for money is the partnership between private and the public sectors bussed on gaining more control over mega-project design, financing, procurement, and maintenance (Zawawi et al., 2014). In public-private partnerships, VfM is achieved through the risk allocation of some of the procurement risks, and the government allocates various procurement functions to the private sector. In respect to the procurement process, while considering the VfM, managers of megaprojects target to partners with best contraction firms or professionals in the delivery of the mega-project goals (Amann, 2015). An innovative procurement ecosystem ensures that megaprojects are less costly and more efficient in realizing the set goals. Also, an innovative procurement ecosystem modernizes the procurement process and addresses needs that may arise during the megaproject construction.

The outline proposal of an innovative procurement ecosystem for megaprojects must constitute various fundamental factors. First, the proposal must include procurement policy goals. The policy goal of the procurement plan must demonstrate that innovation is a crucial driver for achieving mega project sustainable goals and citing down the costs of procurement. Innovation is treated as a breakthrough in achieving the policy goals in megaprojects. The innovative proposal also addresses on transforming of procurement ambitions into commitments. A procurement plan is based on an action that is dictated by the budgets, resources, timeline, and desired results. An innovative procurement ecosystem promotes integrations of all the committed parties.

In a procurement plan, there are constraint factors that cannot be improvised or changed in any way. These factors involve the need for resources and the competency of various stakeholders. An innovative procurement focuses on building up the capacity of multiple teams that included. To deliver VfM, professionalism, and motivated workforces are critical innovative breakthroughs. The innovative procurement proposal outlines taps into essential areas of basic skills, knowledge, and innovative based skills. The proposal also outlines the need for a cooperative procurement process with the Central Purchasing Bodies (CPBS) (Prada, 2016). Finally, reducing administrative burden and adjusting the selection criteria for contractors is also a significant component of the innovative procurement ecosystem. Innovative procurement system addresses how to maintain perforce of the contractor and evaluation of their performance. To attract innovations, Oman should also develop data interface software. Open data and data interfaces ensure innovation partnership towards the implementation of the megaproject at more optimal prices, timely and inefficient way.

Conclusion and recommendations

The thesis statement of this report concerning the issue of procurement in megaprojects has been evaluated critically from different perspectives concerning the barriers of effective procurement and success factors towards an efficient procurement ecosystem. Procurement very critical part that determines the success and failure of megaprojects. The legal and political factors determine the success of a megaproject. Risk aspects also have a significant impact on the success of the megaprojects. In ensuring effective management of the procurement risk aspect, governments partner with private sectors as a way of sharing most of the risk that happens in mega projects. The project manager also has a significant in designing an innovative procurement plan that helps in achieving the mission of the mega project. On critical success factors, this paper has shown that procurement goals can be achieved under an open system within mega projects. It is, therefore, of great importance for a mega project manager to embrace an innovative way to improve the interaction between various stakeholders in getting a consensus on various procurement matters. Innovation will also ensure effective risk allocation internal megaproject maintenance mechanism.

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