Procurement Routes/Sustainability/Project Management - Research Proposal Example

1) delivers the strategy for procurement, including the contract strategy that best meets the client’s needs. Design, construction, operation and maintenance are considered as a whole ensuring that the delivery team works together as an integrated project team. Contract strategy determines the degree of integration of design, construction and ongoing maintenance. Also, it serves to support project objectives in terms of risk allocation, delivery, incentivisation, etc. Factors influencing procurement strategy include the project objectives; constraints such as budget and funding; cultural factors such as considerations about the workplace; risks such as late completion, use of materials, etc.

; client’s capabilities to manage a project; and the length of operational service required from the facility (Office of Government of Commerce, 2007). Optimal contracts entail cost sharing and payments that are a convex function of realized cost in the classical model of procurement under conditions of asymmetric information. Contrastingly, pure cost-reimbursement contracts are in common practice (Chu & Sappington, 2009). Laffont and Triole did pioneering work to identify optimal procurement contract where supplier could inflate production cost without detection.

An alternative contract could outperform the contract, when the buyer has the ability to limit cost inflation (Chu & Sappington, 2007). This allows the supplier to reduce production costs when costs are higher initially. Evaluation is necessary to determine how well the procurement would deliver value for money. The criteria for evaluation (see Table 1) should be selected carefully so that they relate to aspects that determine value in whole-life cost terms. Each criterion is given a percentage weighting so that the total weightings add up to 100%.

This mechanism provides a means for reaching decision about the procurement route that would deliver the greatest value for money (Office of Government of