Business and Management

Business and Management

Discussion 1- A case study on oil projects

In the business world, the term procurement refers to the process of coming up and agreeing to terms on the supply, acquisition as well as other activities involved in goods and services exchange between two or more business entities. Procurement is an essential aspect of business as it provides a framework along which business transactions are conducted across, thereby facilitating efficient, useful undertaking of business operations (Marschan-Piekkari, & Welch, 2011). The lack of proper procurement strategies is likely to result in a business failure, given that the unaddressed areas of operation may jeopardize the whole process. The case study below on oil projects is an instance of how the lack of a proper procurement procedure could affect the effectiveness of a given action.

Engineering projects are prone to delays or challenges in adhering to a strict work schedule due to elements such as weather or unprecedented field events.  As a result, these mishaps result in cost overrunning expenses, which may result in budget overruns, which may be detrimental to a given project, especially in the event of a budget tight schedule.  This was the case in the oil and gas piping project that was undertaken by the critical chain management procurement group (Chima, 2007).  During the day scheduled for the drilling of an established oil reserve, the company came across a significant project implementation hitch whereby there were no reserve dredging pipes despite the urgent necessity for this pipework. After going through the project plan and procurement, it was identified that there was no procurement work covering the supply of any extra pipework that may be required.

As a result, there was a delay in the scheduled project completion time, thereby leading to the incurrence of additional costs.

There are various measures that a given project implementation process should take into account to ensure that the project implementation phase is a thorough review of the project schedule that ensures there is full accountability for any of the requirements of the project and the necessary materials are obtained in advance prior to the project goals implementation. For the gas and oil company, for instance, a review of the project implementation final proposal could have helped to identify such likely mishaps and addressed them prior to the project implementation period. This is the duty of the project manager in following through the process to ensure that the project implementation phase is ready to be put in motion.

To correct the problems that arose in the project implementation process, I would first place an order through the project material supplier to deliver the required materials in the shortest time possible. By doing so, this could help to reduce the stalling time of the project and put the operation back in motion in the shortest time duration possible (Carrillo, 2004). Also, I would ensure that there is a critical review of the final project implementation schedule to ensure that there are no more such similar errors that could put the project to a stop again.

In high school, I was among the leaders for the school’s scouts association, and we happened to plan for a camping trip. To ensure equality and uniformity in the camping exercise, it was decided that the food to be consumed during the expedition would be catered for by the management.  As a result, as a leader in the organization, I was required to draw up reasonable meal courses as well as come up with a budget as well as the store outlets from which we could obtain the meals. Although the task was quite demanding and challenging, I managed to acquire all the required food material as well as deliveries, and upon the final sum calculation, I was able to make a saving on the estimated budget. This way, I think the procurement exercise was successful.

Discussion 2- bidding process and vendor selection

The bidding process involves the selection of the best-suited vendor to supply your business with the various requirements for business operation. There are two major approaches that are used in the vendor selection process i.e., direct selection and vendors tendering for range. There are also various bidding processes that may vary depending on the kind of business activity to be executed. These include; RFQ, RFP as well as the invitation for bid. All the above criteria are used to ensure that a given entity selects the best-suited vendor for its supply requirements (Simon & Melese, 2011). The project bid proposal was for a buy analysis where the selected vendor chose to obtain the required materials from a different supplier, conduct the value addition process, and then deliver the finished product to the procurer.  The procurement exercise involved the purchase of steel pipes for an engineering project. However, given that the selected vendor was not in possession of the required pipe types, an agreement to purchase the tubes from a different supplier was agreed upon. On the other hand, the selected vendor was tasked with the value addition process, where he was required to conduct value addition activities such as bending and cutting the pipes to the required length as well as threading.

An RFP (request for proposal) type of bidding process was used in the vendor’s selection criteria. The RFP approach was chosen as it helped the procurer to choose the best-selected vendor for the exercise. A chronological analysis of the submitted proposal was conducted and the most suitable vendor selected.  Unlike other selection processes, the RFP approach is a more direct system that allows for the procurer to assess the capability of the proposed vendors to deliver as per the project’s requirements. The RFP method has also been chosen to be relatively simplistic in its applicability as only a concise analysis of the proposals is required (Falagario, Sciancalepore, Costantino & Pietroforte, 2012).

There were various elements in the bidding process that were all aimed at facilitating the implementation of the project. Among some of the included components were; timeline schedules, charts, drawings of the required materials, price breakdowns, including other elements. In the bidding process, among the most important aspects include; timeline schedules as well a cost and expenditures breakdown analysis (Wen, Chang & Huang, 2006). These are the most fundamental aspects of a business procurement activity as it determines whether the project will be completed within the specified deadline in the project proposal document or not. Similarly, the time breakdown helps in making other essential arrangements; for instance, the workforce required to adhere to the specified deadline. On the other hand, the analysis of the expenditure is often associated with the budgetary aspects of the project and is used to determine the equitable distribution of the available resources in the project work. An expense breakdown is also used to determine the applicability of the outlined budget with respect to the prevailing market conditions.

The bidding process used was successful as the company selected was in a position o supply the required materials with relative ease. The pipes were also cut to precision, thereby indicating that the value addition process was a success. However, there were few minor hitches that were observed with respect to the bidding process. Among the RFP’s submitted, there were companies that shared names with other major institutions as a franchise. This, therefore, made the process relatively tricky in coming up with the best-suited vendor. This was, therefore, an essential learning opportunity where the necessity to thoroughly vet the RFP’s was identified to prevent the occurrence of any cases of miss election of entities.

To improve the bidding process for my case study, I would implement measures such as the selection of a vetting committee that could undertake the RFP review exercise to ensure that there is the selection of the best-suited vendor.

 

 

References

Carrillo, P. (2004). Managing knowledge: lessons from the oil and gas sector. Construction management and economics, 22(6), 631-642.

Chima, C. M. (2007). Supply-chain management issues in the oil and gas industry. Journal of Business & Economics Research (JBER), 5(6).

-cross efficiency approach in public procurement tenders. European Journal of Operational Research, 218(2), 523-529.

Falagario, M., Sciancalepore, F., Costantino, N., & Pietroforte, R. (2012). Using an RFP Wang, W. K., Wen, W., Chang, W. B., & Huang, H. C. (2006, October). A knowledge-based decision support system for government vendor selection and bidding. In the 9th Joint International Conference on Information Sciences (JCIS-06). Atlantis Press.

Marchan-Piekkari, R., & Welch, C. (Eds.). (2011). Rethinking the case study in international business and management research. Edward Elgar Publishing.

Simon, J., & Melese, F. (2011). A multiattribute sealed-bid procurement auction with multiple budgets for government vendor selection. Decision Analysis, 8(3), 170-179.