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In light of the recent time being, the term procurement holds an area of high volume priority in the periphery of project management and construction. In view of this aspect, the very notion of procurement resembles the significant procedure of seeking and accepting terms and accumulating services, works, and goods through external sources, frequently through a competitive and tendering bidding process. Managing the procedures of procurement in the circumferences of project management chiefly includes making buying decisions, underneath the conditions concerning scarcity.
Considering these effective aspects of the procurement methods, procedures, and their management, this significant assessment chiefly concentrates on composing an accurate report on proposals concerning the procurement related to a hypothetical project. Through highlighting the essential sides of procurement, the significance of procurement in commercial management and construction project management. The given case scenarios have been thoroughly analysed, several important factors have been explored, and the procurement procedures have been applied to identify the essential requirements for the fulfilment of the business or project. In this concern, the background of the project has been outlined in an appropriate manner, to recognise the key elements and factors of the business or project. In addition, certain recommendations for procuring required contracts have been taken into consideration.
Background
As per the case scenario concerning construction management, various significant information and data have been accumulated and evaluated that indicate the effective utilisation of procurement in the periphery of construction project management. The case scenario reflects the present condition related to the construction management of the organisation Formula-E. The case scenario reflects the significant exploration of the easy and extensively extractable deposits concerning the minerals necessary to form batteries (Næss, 2020). These batteries are greatly utilised for thin-film photovoltaics and electric vehicles. Through the acute usage of these batteries composed of the explored minerals, the government of Usquam, in recent times, has observed a sustainable volume of economic growth.
The Usquam government for ensuring the wealth benefits for the present and their future generations through long-term and responsible management has taken some effective initiatives. These significant initiatives are considered through investing their incomes through paying the taxes for organisations included in the substantial independent wealth fund and licensing related to the extraction. Hence, in relevance with the scenario the 'Independent AutoSports Consultancy' Trotters is appointed for offering assistance to funds with their procurement. This involves the completion of contracts that are deeply rooted with the projects that plan to develop a test circuit and racing facility for electric vehicles (Bjerke and Naess, 2021). These acute initiatives have two-way outcomes, where one leads towards displaying the highest benchmark to the manufacturing industry of Usquam electric vehicles. Another outcome leads towards sustainably regenerating an economically underprivileged area within the country. As a responsible consultancy firm, Trotters as an 'Independent AutoSports Consultancy' are required to recognise some significant approaches for advising the funds related to their procurement and construction project management.
Application of sustainable development principles for procurement services and work contracts
The three pillars of sustainable development are environment, society, and economy. Sustainable procurement indicates the sustainable management of these three pillars (Aila. and Ototo, 2018). The economic pillar focuses on the sustainable economic development in a country or a society, development and increase of SMEs, increasing value for money, regeneration of economy and reduction of poverty. The pillar of the environment focuses on reduction of CO2 and greenhouse gases, management of water, use of renewable energy, pollution management policies, and waste management policies. The social environment focuses on the management of human rights, security of foods and availability of clean drinking water.
Figure 1: Three pillars of Sustainability
(Source: guidance sustainable procurement 239)
Principles of sustainable development
Human right policies
This principle deals with the stakeholder’s ad the suppliers involved with the project development. Managing human rights policies can help in maintaining the project associations appropriately. The involvement of the “Universal Declaration of Human rights” is required to be implemented in the projects for managing the powers of the stakeholders and suppliers. As recommended by Ogunsanya et al. (2019), the application of these policies in creating racing and test circuits for electric vehicles can be helpful as there is a requirement for large raw materials from the suppliers. Suppliers may delay in providing the resources on time, which can affect the business processes. However, the human rights policies can help in avoiding the projects with the equipment used for violation in the transfer of armaments or instruments of torture.
Equality and diversity
Maintenance of equality and diversity in the projects can help in managing creativity in the projects. This can help in increasing relations with the employees who are working for the procurement of the project (Caranta and Cravero, 2019). The application of the Anti-discrimination law of the country can help in managing equality in project development. This can help in managing the manufacturing project with proper contracts. Moreover, sustainability in projects can be encouraged by working together. This can help in maintaining the business strategies by which the business processes can be managed properly.
Health and safety principles
The development of health and safety principles in the projects for the employees can help in embracing the standards of the projects. This principle can motivate the project professionals to manage their work as they get proper safety while manufacturing the project products. Montalbán-Domingo et al. (2019) have commented that this develops trust-building relationships with the project professionals. Moreover, a healthy and safe working environment provides positivity in the project development process by which long-term sustainability can be managed appropriately.
Enhancing the social and political opportunities
The development of a project requires supports from the society where the project is being developed. Support from the communities is required for managing the peaceful manufacturing of the projects. It has been seen that potential disputes can affect the development of the projects. However, developing good relationships with political leaders in the place can help in generating political opportunities. This can improve the quality and long-term orientation of the project in the country.
Confidentiality and intellectual property
Managing confidentiality of the project details can help in developing competition in the market this can help in increasing the value of the project in the market. The involvement of proper data protection laws in the project can help in managing the confidentiality of the project. This can be applied with contracts with stakeholders, employees and suppliers for protecting the data (Raouf and Al-Ghamdi, 2019). Involvement of the important information in the project is required to be managed by the development of proper protection policies. Moreover, innovations involved in the projects are required to be kept confidential so that competitors in the market cannot adopt the technology easily.
Application of proper local laws in the manufacturing process
Application of the local laws in the project development can help in improving the standards of the project to the community and Government. As PPP, funding approach will be suitable for this project. Therefore, following local laws can help in increasing the procurement of the projects in a better manner. As per the views of Reynolds et al. (2018), involvement of disciplinary practices in the organisation can help in managing manufacturing in an appropriate manner; this also helps in treating the employees and staff with proper dignity in the procurement of the project development.
Approach for managing the fund of the project
The project for creating racing and test circuits for electric vehicles in Usquam requires proper funding to the project so that the procurement processes are managed appropriately. Different approaches such as loans, public-private partnerships (PPP), and private finance initiatives can be involved in managing the fund for procurement of the project. As suggested by Pham and Shen (2017), these approaches can help in increasing the sustainable processes by which long-term strategies can be adopted for developing the future state of the project. Application of funding approaches in a project provides a structured process for managing the planning, controlling and transition of the current state of the project. Loans from financial organisations can help in managing the capital expenditure of the projects so the project can get started with appropriate resources. Trotters’ Independent AutoSports Consultancy for procurement of the project is required to estimate the requirements of the capitals by which business development can be managed appropriately. As recommended by Khudhaire and Naji (2021), project finances are dependent on the cash flow of the projects. For procurement of the project, the loam structure is required to be changed by which business developments can be manned properly. Funding of a project with a loan requires estimation for completing it in the initial stage.
On the other hand, cash flows in projects can be managed with the help of the government in the projects. This funding process is known as the PPP process by which financial risks in the projects can be managed appropriately. Involvement of the PPP in financing a project increases the chances of completing the project sneer and increase long-term orientation possibilities. As per the views of Owolabi et al. (2020), this funding process provides concessions ion tax bearing. Moreover, the manufacturing of the racing and test circuits for electric vehicles can get protection from liability or partial ownership rights in the business processes. As suggested by Cedrick and Long (2017), PPP helps in managing self-dealing processes in the project by which the development of the projects can e managed appropriately. In these types of projects, contracts are required to be followed by which both parties are required to maintain some regulations by which business can be increased appropriately. This type of funding, budget is sanctioned by the government organisations by reviewing the bills and other resources involved n the projects. The Government manages the control of the project until it gets end. Moreover, the sustainability of this funding is reliable for managing the project opportunities correctly.
Another process is the Private finance initiative method; this funding process is generated by the involvement of private financial organisations to provide funding for the projects. In this approach, there is a requirement of maintaining an agreement so that the operations are managed accurately. Involvement in this method requires a part of the profit from the project to the private financier, which helps in improving the procurement of the project. However, as recommended by Sergi et al. (2019), in this type, there is a risk factor of not providing full funding for the project, which can affect negatively on the projects. The advantage of this funding approach provides payment to the contractors for the completion of the projects on time. For its particular project the use of the PPP funding approach will be appropriate. As per the case, it has been observed that the government of Usquam invests in large projects for developing the country. Therefore, the application of this approach will ensure responsible and long-term management of the projects with both current and future generations. PPP will also help in minimising the tax policies by which the technological development of electric vehicles can be managed properly for environmental sustainability.
Carrying out services and works procurement
The involvement of these principles can help in managing the project opportunities for managing long-term sustainability in the procurement services of the projects. Employment and social legislations contract is important for, managing the risks that can be involved while the procurement processes of the projects. Building a sustainable platform for managing the operations of the projects is important, by which the economic decisions can be managed appropriately. According to Montalbán-Domingo et al. (2020), for the creation of racing and test circuits for electric vehicles, it has been found that a sustainable source of supply is required for the manufacturing process. Therefore, contracts are required to e involved among the organisation for maintaining project procurement. Green management for the development of the project can increase sustainability by developing the business strategies in the organisation. This also increases the reputation and managing the risks that are involved in the project.
Sustainable procurement in construction
In order to make the construction industry and its business processes sustainable, value toolkit is a framework developed for especially the construction industry. In the traditional business processes, there was no effective value management strategy. This value toolkit helps in the management of business processes as the decision-making processes are modified according to the needs and requirements of the society, environment, and economic section of a county. The value toolkit includes definition of values, assessment of risk, evaluation of clients’ needs and requirements, and finally measurement with evaluation.
Figure 2: Different phases of value toolkit for sustainable procurement in construction
(Source: Constructioninnovationhub.org.uk, 2021)
The sustainable procurement of construction highlights that in the coming 40 years, the population will be increased. This will require effective management of land to develop housing, scholl buildings, office infrastructure (Ciria, 2021). Hence, it is necessary to realise clients’ ambitions as well as mitigate the reputational risks through a more effective management of the supply chain.
Figure 3: Different steps in procurement system
(Source: Checklist)
Sustainable procurement primarily focuses on three levels of development; that are social, economic and the environment. In the case of the clients’ demands, they require initial planning as well as good designing of construction. Moreover, they require an all over maintenance facility for the construction (Montalbán-Domingo et al. 2019). In other words, “construction management at risk” or CMR are prime recruitment of the clients for safety. In order to deliver a successful construction project, using industry 4.0 tools are quite effective for Trotters (Das et al. 2020). Carillion, the second largest UK construction company, also uses advanced tools of this industrial revolution.
In the second stage of decision-making, Analytic hierarchy processes or AHP processes are helpful to make multi criteria-based decisions. In case of packaging, life-cycle cost or LCC, social benefits of that delivered project are necessary approaches for packaging. Here, bidders will anticipate the arrangement of equipment and their costs in technical bids (Waris et al. 2019). In the purchasing model, purchase price, manufacturer, use of sustainable earthmoving equipment is effective. With effective decisions, the clients will be delivered a product that will be socially, economically, and environmentally advantageous for them. Hence, a clear and transparent contract is needed between the owner of the construction company and its clients. That contract needs to cover the sustainable features as well as risk management opportunities.
In the third stage of soliciting tendering offers, tendering support is required for conducting procurement. This will incorporate sustainability in the design features, commitment of suppliers, and safe operations for Trotters. Hence, the common objectives of a sustainable construction project will be delivered with the help of technological advantages (Ershadi et al. 2021). As a result, tender processes for packages will be fair and proper, which will lead to a fraud-free and corruption-less tender process.
Tender evaluation process is related to the green public procurement or GPP processes. This helps public authority and manages the criteria for construction, management of the office buildings, and design. The way renovation and innovation are managed, is focused on the four stages of sustainable procurement; and this resulted in the delivery of LCC services. The four stages, that are “criteria review”, “fulfilment of GPP criteria”, “BSA criteria fulfilment by GPP”, and “result”, develop a tender evaluation model (Braulio-Gonzalo and Bovea, 2020). This model uses innovative tools, analyses as well as mitigates the gaps, and finally evaluates the result with BSA tool and GPP weighting proposal. Among different sustainable criteria, use of energy, reduction of CO2, use of building and management of the climate zone is required. Proportional reduction will be compared to the legal requirements, resulting in the fulfilment of the GPP criteria. Trotters need to follow this model so that it can serve clients effectively.
Figure 4: Tendering model for procurement
(Source: Braulio-Gonzalo and Bovea, 2020)
The case scenario offers the Trotters an area with the construction project and commercial management, where it is highly crucial to enable sustainable development through playing a significant role as a catalyst. The case scenario has enabled the consultancy firm Trotters with various core factors that resemble the world and services involved within the project concerning the development of procurement. Firstly, it is important for the 'Independent AutoSports Consultancy' to highlight some workable and appropriate approaches which will assist the find in this concern. Secondly, the approach involves the appropriate application of the sustainable development principles towards the procurement concerning the work contracts and services for the project (França et al. 2017). For the enhancement and significant development of the procurement within any specific project, there are some specific approaches. These approaches involve the procedures of planning, selecting, administering as well as closing procurements.
As it has been previously identified that procurement is an essential act of acquiring services, supplies, and goods, hence, the development of procurement projects requires approaches like acquiring all services and materials essential for the completion of the construction project management. The aspects of project procurement management surround the procedures utilised for ensuring the success of project procurement (Wojewnik-Filipkowska and W?grzyn, 2019). As consultancy management, it is essential for the Trotters to underpin the responsibilities and approaches that they are going to consider. These responsibilities and approaches involve project initiation, proper planning of procurement, maintaining the communication of progress. Through adhering to an acute analysis of the necessary work and service process involved in procurement management several insights have been acquired. The analysis has illuminated the significant factors and methods like design and builds methods, traditional methods, management contracting, and joint ventures, which are followed as the procurement methods in construction projects.
There are certain significant procurement activities that require to be addressed for the successful accomplishment of the procurement construction projects. These activities resemble the procurement phase in the project management phase where the outcomes concerning the brief engineering efforts are being leveraged for accumulating bids for material, construction services equipment. Along with that, commercially and technically evaluating the bids and negotiating construction contracts, and issuing purchase orders. There are certain approaches to procurement that are involved in the success of the project management and these approaches are reflected through some important and complex stages. These stages include recognition needs, purchase requisition, requisition review, solicitation process, contract, and evaluation, order management, disputes and invoice approvals, and keeping records (Hossain, 2019). However, there are certain principles concerning sustainable development towards the procurement related to the project. There are foundational components concerning sustainable procurement and these elements are deemed as social opportunities, economic facilities, political freedoms, protective securities, as well as transparency guarantees. The organisation Formula-E requires some beneficiary procurement process for the sustainable development of their project. These processes involve securing all of the services, goods, and materials that are highly essential and required for accomplishing their construction project for the development of test-circuit and racing facilities. These approaches and principles will be followed by the Formula-E organisation which will assist them in reducing the heath, energy, and environmental costs and enable sustainable development towards their procurement services.
World Bank on procurement
The worldbank guides all industries to maintain sustainability practices in their business processes. According to the guidelines of this organisation, conservation of energy, management of waste, management of pollution, preservation of water are necessary. Moreover, this also guides to look after the health and safety concerns in different industries, such asd construction industry and that of healthcare sections (Worldbank, 2021). For the construction industry, this guides for the management of occupational safety concerns, with the management of physical injury, chemical injury, and use of PPE kits.
Requirements of funds based on the procurement of the project
The effective management of procurement processes requires potential funds for the completion of construction and commercial project management. In the current global scenario, the funds play a key role in managing, directing as well as accomplishing the procurement-related projects in an appropriate manner. In the provided case scenario, the fund acts as another important element for the completion of the contract project through the proper management of procurement procedures. The acute evaluation of the case scenarios highlights the fact that funds as an absolute necessity in construction and commercial projects (Venter, 2020). Similarly, for the Formula-E company, the initiation of the racing and test circuit facility for the electric vehicles the significance of the fund has been highlighted throughout the scenario. To be precise, the procurement funds are deemed as appropriations concerning procurement that is utilised for financing the investment items that are related to the non-construction items.
This involves equipment items that are not subjected to assets control and centralised item management, whose cost of the system unit exceeds or meets the expense threshold. On undertaking a thorough analysis of the case scenario, it has been noted down that depending on the procurement of the project the requirement of the fund is reflected (Mwelu et al. 2021). In the effective maintenance of the procurement process and methods related to construction management, the fund acts as a key financial resource that completes the projects. The requirement of funds has been deemed as highly essential due to the fact that the fund enables long-term and responsible management of both procurement prices and project management. The investment of funds as per the procurement and projector requirement can also enhance the wealth benefits for the organisations like Formula-E through ensuring the accomplishment of their projects.
The projects that are chiefly related to the constructions include multiple stakeholders, hence there are multiple sources of a fund that remain involved and for this sanction is important. However, it has also been identified that the supply chain management of the organisation Formula-E is considered highly effective, and proper maintenance of the fundings has brought them to this progressive stage, which assists them in achieving the accomplishment of their projects, which are mainly construction-related (Fiaformulae, 2020). The requirement of funds in the procurement related to the services and the works associated with the construction project are essential due to some appropriate reasons. These reasons can be defined as material expenses, wages for workers, funds related to permission and licensing for the construction, stakeholders costs, supply chain management expenses, resource expenditures, and management costs. These expenses are managed through and for these core reasons fund is deemed as a highly essential requirement for the effective management of the procurement processes concerning the construction project. There are certain cost performance indicators that ensure the requirements for the funds in a construction project and these indicators are known as project size falling under the category of project characteristics and design change under the change category (Habibi, Kermanshachi and Safapour, 2018). Hence, these are some of the significant factors that are responsible for the requirement for the funds based on the procurement methods related to a construction project.
In consideration of the relevant and suitable aspects and application of procurement in commercial and construction project management, managing funds is highly crucial. Through undertaking some acute evaluation it has been observed that there are different procedures for working of proposals in managing project funds. According to the deep analysis of the case scenario, it is noteworthy to reflect that the successiveness of construction projects chiefly relies on effectively carrying out the works and services in a way, which meets the fund requirements. Meeting the fund requirement in such a manner tends to fulfil the man behind conducting the procurement process (Aleksandrov, Bourmistrov, and Grossi, 2018). Through acutely evaluating the case scenario it has been noticed that there are two significant elements within the project that are required to be addressed through highlighting the process of working on the proposals. The proposal is highly accurate for fund management and the proposal includes necessary details, factors, and the estimated volume of amount concerning the proposed project (Aziz and Shah, 2021). This proposal contains a general overview, long-term prognosis, and exact budget.
In this concern, the proposal for the company Formula-E for managing funds is required to highlight two significant elements along with the project details.
Firstly, as the company requires a racing facility for their organisation, in the proposal it is required to highlight the requirement for the construction and design regarding a grandstand for the spectator. The proposal requires highlighting the requirements for the facilities for the broadcasting centre and pit lanes. The estimated work value for this requirement is also essential to highlight in the proposal that is around £354m. This reflects the essentiality of proposals reflecting and managing the necessary budget for the projects like construction (Aleksandrov, Bourmistrov, and Grossi, 2018). Another useful requirement that needs to be reflected in the proposal is the construction and design of the landscape garden at the three major exit and entry points around the circuit. The overall work value for this construction and design will cost approximately £850,000.
However, the preparation of requests for the proposals is deemed highly essential in the procurement plan as well. The proposal is although accountable for the price and expenses, but concentrates on meeting the project schedule, requirements, and quality. The process for working on the proposal involves enlisting the prices and analysing the technical approach selected by the bidder. As per the procurement management, the proposal must involve people with a high volume of expertise, to comprehend the technical aspects concerning proposal options and proposal value. In addition, it is important to reflect that within complex projects proposals the administrative part is analysed by a specific team. As well as, proposals technical aspects are analysed by another effective team, for determining the best proposal for the project.
Recommendations
Through considering an effective analysis of procurement management and its high volume effectiveness in the construction and commercial projects management, some appropriate measurements have been identified. These measurements can support the sustainable development of procurement.
Recognising the regulations related to the supply chain management affecting the organisation
Developing and analysis suppliers in opposition to the code of conduct
Effective utilisation of assessment information
Developing a more profound audit process sn supplier review
The ensuring of the services and products organisation acquired are as highly sustainable as possible
The practices of adhering to sustainable approaches towards the procurement process in the construction projects (Fiaformulae, 2020)
Maintaining the steps adhered to by the companies like Formula-E towards achieving environmental sustainability is also essential.
Improvement of sustainability through enhanced collaboration and enhance the utilisation of sustainable resources (Juta, 2021)
It must be ensured that while handling the procurement management, adoption of proper decision and procurement strategies that support the economic, social, and environmental factors can also enable sustainable development to the procurement process in the periphery construction.
The sheer maintenance of sustainable procurement policies and practices can also ensure sustainable construction through sustainable management of the procurement.
Conclusion
Based on the overall analysis concerning procurement management and its effective implementation in construction and commercial projects, there are various promising pieces of information that have been accumulated. In light of the significant context and key learning’s, the background of the project and the organisational overview has been illustrated thoroughly. It is noteworthy to state that the significant approaches for the sheer management of the funds in the projects have been outlined. These analyses have assisted in developing a sound understanding regarding the fund management approaches in procurement management. Therefore, advancing further with the report, the implementation of sustainable development principles for the work contracts and the procurement services has been portrayed in an effective manner. Later on, the important works and services involved in the construction and commercial projects for the sheer development of the procurement have been evaluated thoroughly. Along with that, the procedures of working on the proposal in managing the project funds have been assessed properly. The two core elements in regard to the company Formula-E have been thoroughly portrayed. In this course, there are certain critical issues related to procurement and its management has been highlighted. In view of these critical issues, some effective recommendations have been illustrated in an effective manner. Through the acute representation of the Recommendations, the means to enhance sustainable procurement has been portrayed thoroughly.
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