BSB51415 Diploma of Project Management

BSBPMG518 Manage Project Procurement

Question

1. What is the role of the project manager in determining the procurements needs of the project?

The project manager is involved with procurement, same as any other aspect they control in the project manag
process. However, this is a process they might not own with the same authority as other parts of the project.

While the project manager does have the authority to make agreements with contractors on behalf of the comp
project manager is often not the person who administers that contract once in place. Regardless, it’s important
project manager is in the loop.

It would be nice if every task required the same resources, but that’s not going to happen. Sometimes addition
is needed; other projects require additional goods and services from outside vendors to complete the job.

As a result, it’s necessary to have an understanding of the procurement process—or the business of going bey
confines of your company’s everyday capabilities.

This is a big responsibility for the project managers, as well as a tremendous opportunity to showcase their ski
they can accomplish tasks requiring external resources.

That means knowing the six processes with the project procurement management knowledge areas as outline
Project Management Body of Knowledge (PMBOK). The first being the plan purchases and acquisitions, mean
determining what external resources are needed for the project. The project manager will have control over this
more knowledgeable about overall project needs.

Plan contracting is the creating of requirements for whatever products or services are needed, including what c
offer these products or services. Then request seller responses by narrowing down the companies to a handfu
selecting the sellers, which is usually the purvey of the purchasing department.

Contract administration is the management of the contract with the vendor. The project manager will work daily
vendor’s account manager. When the contract is fulfilled, there is contract closure. This is usually handled aga
purchasing department.

While procurement is an area into which a project manager will give input, in many, and perhaps most compan
area that the project manager doesn't own. The project manager usually does not have the authority to enter in
on behalf of the company, and he is usually not asked to administer the contracts once they're in place. But it's
you need to know about.

The Project Management Institute (PMI) describes six processes within the Project Procurement Management
areas.

Plan purchases and acquisitions

This is the process of determining the items to purchase for your project and when you need them. This is typic
the control of the project manager since the centralized Purchasing Department is not going to know what each
project team needs.

Plan contracting
 This is the process of creating requirements for all the products and services your project team needs, and it h
performed by the project management team. You also need to start identifying potential companies that can su
products and services.

Request seller responses

This is when you identify a list of vendors to consider and receive information on their capabilities and prices th
vendor proposals and price quotes. You typically narrow down a long list of potential companies to a shortlist o
companies. Although the project team may perform much of the work associated with this process, it is typicall
that is owned by Purchasing.

Select sellers
Selecting sellers is the process associated with actually choosing the vendor that will provide the product or se
project team may make the final selection, but usually within an overall process that is owned by the Purchasin
Department. The Purchasing Department generally also signs the final contracts. Most companies don't want t
manager to enter legal contractual relationships.

Contract administration
This is the process of managing the relationship with the contracted company. The project manager will work o
day basis with the vendor's account manager.

Contract closure
This occurs if the contractual relationship existed only for the life of the project. For instance, if the contract was
provide raw materials for a particular project, then the contract will probably end after the project is over. The p
will be involved with the Purchasing Department to make sure all the contracted work was completed and to ga
feedback about the vendor relationship.

The bottom line

In most organizations, the project manager should understand the basics of procurement management, but it's
responsibility he or she shares with the Procurement Department. The project manager should provide require
procurement specialist to make sure the correct vendor is chosen, and the procurement specialist, in turn, prov
guidance to the project manager on managing the vendor relationship successfully.

A project manager shoulders many responsibilities throughout the procurement process, from determining who
the request for proposal (RFP) to developing a timeline for project milestones and verifying the receipt of mater
consequence, project managers must maintain regular communications with vendors, team members, supervis
some cases, regulatory agencies.

2. What activities are performed prior to going to the market for the supply of goods or services?

It is important that the purchase is planned in advance. This will ensure an effective value for
money outcome that is compliant with supply policy and limits the compliance and
administration costs for both public authorities and any prospective suppliers.

Step 1 – Establish the Business Need

Start by clearly defining the need for the purchase and specify what is to be purchased.
Consider the range of purchase options available and the potential sources of supply. Poor
identification of needs and suppliers may lead to incorrect products or services being sought or offered, resultin
additional time, effort and cost. Activities that can assist in establishing the business need include:
● Undertake research to identify purchase and potential suppliers;
● Identify/agree the outcome and determine best purchasing option in terms of policy
● requirements, risk, cost and other management issues; and
● Preliminary cost-benefit analysis.
●
Market sounding
Market sounding is a research tool to assist in gathering information prior to developing a
business case and procurement strategy.

Step 2 – Develop the Business Case

Where a purchase is likely to be high-risk, high-value or of a unique nature, consider
developing a business case. The business case defines the scope of the purchase, develops
the implementation strategy and ensures that the option selected will meet the public
authority’s requirements.
● Issues to consider when developing the business case include:
● Identify and appraise options;
● Establish affordability;
● Develop program or project brief;
● Develop the procurement strategy and process to ensure a viable outcome (contract) can be achieved;
● Obtain endorsement from appropriate forum or authority within your agency

Obtain approval to proceed with the purchase

It is necessary to obtain the appropriate written internal approval to undertake the purchase. A
signed memorandum or email may be sufficient. When seeking approval to proceed with the
purchase, ensure that there is an approved budget sufficient to cover the cost of the purchase

Step 3 – Procurement Strategy

The following matters in the Procurement Planning phase of the open tender process should
be considered in finalising the procurement strategy, prior to commencing the contract
formation phase.
Maintaining probity and accountability
Keep any relevant documentation and information on the purchase for audit purposes. You
should ensure that the documents are stored in a secure and confidential manner.

Conduct risk analysis

For each procurement process, it is mandatory to conduct a risk analysis to identify potential
problems, the likelihood that they will occur and their consequences.

Review previous purchases

You should review any previous purchases made for similar products and/or services to
identify any potential problems and solutions. There may have been issues in the past with the scope or cost o
purchase or with the supplier’s ability to deliver.

Step 4 – Competitive Procurement

The following describes the competitive process undertaken for open tenders.

Advertise the request

The request period should provide sufficient time to encourage potential suppliers to submit an offer and for the
competitive offer. When setting the timeframe consider the value, complexity or strategic nature of the Reques
a common period is four weeks, with two weeks the minimum required by SSC policy.

Receive and record offers

An authorised officer should be responsible for the tender opening process. Offers must be
held in a secure location. During the opening process it is recommended that at least two
officers should be present. The procedures for the receipt, opening and registration of offers
must safeguard their security and confidentiality. Be mindful of probity issues associated with
late offers.

Evaluate offers
Now that the responses have been received, it is time to evaluate the offers. It is time to
convene the evaluation panel and review the offers. Finance has developed templates to
assist with the process. The Finance member of the evaluation panel will facilitate the process.
The Finance evaluation handbook template provides a format and methodology for rating the
responses according to the selection criteria. The evaluation handbook should be prepared
and the evaluation methodology and scoring agreed to by the evaluation panel before the
Request’s closing date.

Step 5 – Award and Implement Contract

Once the competitive procurement process is complete the contract can be awarded. The
following items relate to the award and implementation of the contract.
Obtain approval to award contract
The conduct of a competitive process through an open tender does not constitute approval to
award a contract. Once the evaluation of offers has been completed, all relevant departmental
approvals for procurement processes and financial expenditure must be obtained.
Once that has been done, the authorised officer will formally notify the contract award to the
successful respondent

Notify unsuccessful suppliers

Formally notify the unsuccessful suppliers. A public authority must provide unsuccessful
suppliers with the name and total contract value or total estimated contract value of the
successful supplier.

Step 6 – Manage Contract

Contract management including supplier performance management is an integral part of the
purchasing cycle and should include all aspects relative to the value, risk and complexity of the contract. The c
administration arrangements should be identified and planned when the specification is prepared. This include
delegations, reporting requirements and relationships, and specific task responsibilities.

Step 7 – Closure and Review

A contract review process should be conducted at the completion of the contract, and prior to
or concurrently with any new contract process. The outcome from this process should
establish a clear understanding of future requirements and the information necessary to select
the best course of action. A new contract should be tendered and awarded prior to the
completion of the current contract where there is an ongoing need for the products and/or
services covered by the existing contract. The commencement of the new contract should
coincide with the expiry of the existing contract.
4. After awarding the contract (agreement) with the successful supplier/s, how is the contract
performance monitored, reviewed and modified?

Effective supplier performance monitoring and management requires the contract manager to:

• regularly check the supplier’s progress to ensure that contractual obligations are being met
• conduct regular random inspections of the supplied goods and/or services during the contract period to ensur
meet specification and are of a suitable standard
• check that all conditions and clauses in the contract are acted upon; the contract manager should be aware o
breaches of contract and be prepared to take action (after seeking legal advice) if any non-conformance with th
occurs
• advise the supplier in writing if dissatisfied with any aspect of performance under the contract
• act immediately if a problem occurs and involve senior representatives of both the procurer and supplier to so
identified problems as soon as appropriate
• develop effective mechanisms for obtaining feedback from stakeholders about the procurement
• keep adequate, written records of all dealings with the supplier and of the administration of the contract (e.g.
inspections, telephone conversations, records of meetings and
documented invoice processing)
• perform regular inspections of work to ensure compliance with any applicable legislation, contract conditions,
provisions; or workplace health and safety – depending on the nature of the procurement, its complexity and as
risks, this could be on a daily, weekly or monthly basis.

Monitor and manage a supplier’s performance

A key issue in contract management is the monitoring of the supplier’s performance to ensure all standards are
accordance with the contract. The extent of performance monitoring applied to a supplier should be determined
of risk involved in the procurement and the nature of the goods or services provided. Good monitoring of contra
performance progressively anticipates, identifies and facilitates correction of shortcomings before the relations
supplier is adversely affected and before value for money is compromised.

Performance monitoring approaches

An important issue in monitoring a supplier’s performance is deciding who is best placed to actually monitor tha
performance. The supplier’s performance must be assessed objectively against criteria that are pre-determined
understood and agreed by both parties in the conditions of contract. Sound performance monitoring techniques
applied. These approaches may include direct monitoring by the procuring agency, regular reporting by the sup
monitoring by customers, independent monitoring or some combination of these.

Direct monitoring by the procuring agency

This approach ensures that the agency is in control of the monitoring process. This may increase the cost to th
but will allow timely resolution of any problems that are detected.

Monitoring devolved to the supplier

Even if the responsibility for monitoring performance is devolved to the supplier, accountability for contract outc
remains with the agency. Information provided by the supplier should be regularly audited to ensure its accurac
reliability. It may be necessary to test the accuracy of supplier reports through follow-up, site visits, spot checks
forms of audit.

Monitoring by customers
In this approach, supplier performance is monitored by regular follow-up with customers. This approach can be
 effective in gaining an accurate perception of the real quality of a supplier’s performance under actual service
conditions. However, it can be costly and time-consuming to apply.

Independent third party monitoring

Independent third-party monitoring can be performed directly, by giving the responsibility over to an external m
body, or indirectly through an accreditation process. In an accreditation process, service standards are set, rev
monitored normally through an independent body. This approach is often used by the community welfare secto
Accreditation programs can be expensive for the agency to implement. Potential costs incurred would need to
against the potential benefits of accreditation to determine if this method of monitoring is the most appropriate
contract.

Combination of monitoring methods

A combination of monitoring methods can be used effectively to ensure that contract outcomes are achieved. F
accreditation may be used to provide a front-end quality screening of potential providers, but further ongoing m
the agency may be required. This ongoing monitoring may include input from stakeholders, such as client repre
purchaser and provider representatives.

5. In finalising the procurement closeout activities, what contractual acceptance criteria are in place to ensure ha
that all documents and lessons learned finalised?

Using past performance as an evaluation factor in the procurement process can allow agencies to better predic
and likely degree of customer satisfaction with future work. It also provides a strong

The incentive to suppliers to maintain high levels of performance. Effective supplier performance monitoring th
integrated with the procurement process can provide agencies with considerable insight into supplier capabilitie
and weaknesses.
Past performance measures that can be recorded (preferably on a corporately controlled database) and referre
procurement decisions must wherever possible, be objective. Some areas of performance that should be recor
• conformance with specifications and standards of quality
• containment and forecasting of costs
• adherence to contract schedules, including administrative aspects of performance
• history of reasonable and cooperative behaviour and overall business-like concern for the interests of the cus
• service to the end-user of the goods or services.

The following checklists are not exhaustive. They are intended to provide a starting point for the types of issues
be monitored if a supplier’s performance is to be effectively managed. Officers should add to these lists with ad
monitoring issues that are appropriate to the nature of the procurement being undertaken.

Delivery
Consider whether the supplier:
• delivers on time
• meets due date without expediting
• offers a competitive lead time
• delivers correct items and quantities
• provides accurate documentation and information
• responds to emergency delivery requirements.
 Pricing
Consider the following factors:
• competitiveness
• price stability
• volume or other discounts
• manner in which price changes are introduced.

Customer service
Consider the following factors for each supplier:
• compliance with contract terms and conditions
• supplier representatives have sincere desire to serve
• provides feedback to the procuring organisation from factory/manufacturer
• effectiveness of sales support
• market insight
• training provided on equipment or products
• support on professional or technical matters
• administrative efficiency (including order acknowledgment and accurate invoicing)
• adherence to their company policies
• adherence to their company quality systems.

Product
Consider these aspects relating to the product or service being procured:
• meets specifications
• reliability/durability
• product or contract service quality
• quality and availability of documentation, instructions, technical manuals
• packaging suitability, environmental aspects.

ASSESSMENT TASK 2 – CASE STUDY

Case Study 11 Open for Tender

1. How would developing a procurement management plan address some of the historical issues faced by
Sharon?

Historically, some previous tenders had gone

out with the wrong attachments, addendums hadn't been issued, clauses had been copied and
pasted from other (unrelated) contracts to cut down on the preparation time and certain privacy
conventions were not always followed with existing preferred suppliers. Sharon knew she was responsible for en
everything was correct prior to publication. So she need to develop sustainable procurement plan.
The following issues can come into address while developing plan.

● How much will it cost to prepare the tender?

● What information do we need to gather?
● What resources will we need to fulfil the contract?
● Who will manage the tender project?
 ● How will we plan the workload, assign the work required, schedule the meetings?
● Who is our competition and what are our chances of winning?
● What is our plan for marketing our products and services and pitching our business?
- Compelling bid:
Prepare your tender proposal. This includes planning, drafting and refining it.
Making sure that we use the response forms provided and answer all questions.
- Structure and propositions: Decide on several key propositions you can use to set your tender apart from othe
- Understanding the payment terms
When putting together your tender, make sure you are aware of the payment schedule specified. Government p
schedules will vary from agency to agency and procurement to procurement.
We may not get paid as soon as the job is finished or goods are delivered. If we require payment different to tha
we should detail this in our offer.
- Find referees:
Find referees who know our business and can attest to our work.
Giving referees clear information about the tender request so they know what points to emphasise in their refere
have previously supplied goods or services to a government agency, ask them for a reference.
- Check and submit bid
Use a checklist to make sure our bid meets all the requirements.
- Present bid: Tender panels responsible for high-value contracts may request a formal presentation from bidde
to present our offer to an evaluation panel, we have to stay focused on the key messages in our proposal. Mos
prepare. Planing our presentation carefully, rehearse
- Request a debriefing
We have to always request a debriefing on the tender after the process, especially if our bid is unsuccessful. Fe
the evaluation panel can be extremely useful in understanding how our offering can be improved and can assist
preparing for your next tender. Look for ways to improve your next bid.
complaints about a tender have to process, like below steps need to be undertake
1. Gather evidence to support our concerns.
2. Contact the agency concerned and communicate our issues reasonably and professionally.
3. If we are a tenderer concerned about an offer you made, please use the tender complaints process of th
agency.
4. If our concerns haven't been addressed, you can submit a complaint to the government's Procurement P
Compliance Unit ( Compliance Unit).
- Uncomplicated projects
For straight forward projects, preparation and planning may follow the Agency’s standard documents and proce
- Complex and unique projects
For more complex projects, individualised and detailed preparation processes may be required, in addition to an
standard documents and processes.
Examples where more detailed planning may be required include:
● where a different Procurement Model is needed to deal with the individual features of a project;
● a project of a scale not previously procured;
● a sensitive project with an active stakeholder group; or
● an environmentally sensitive project that may require “real option” decisions under certain circumstances
Elements of tender planning and preparation
Identifying clear procurement objectives
Clear procurement objectives are fundamental to:
● defining what you are asking the market to provide; and
● assessing value-for-money.
Procurement objectives come from different documents depending on the characteristics of the project:
Project characteristic Source of objectives

Uncomplicated projects Internal funding approval documents

Annual asset management plan

Complex, high value or unique The project business case

Detailed project benefits analysis

A project brief is usually developed to define the scope of the project. The project brief should also define:
● the objectives of the project;
● the procurement objectives for the project;
● project stakeholder requirements (including functional goals, performance, technical criteria and complet
term date requirements); and
● any known constraints associated with the delivery of the project, for example public access requiremen
availability of land.
- Market analysis, market sounding and engagement strategy
Understanding the nature of the supplier market and developing a strategy for market engagement is important
competition and contestability. Consider the target market for the procurement and the best way to reach potent
participants.
A forward procurement notice is required for open and Selective Tenders. Include planning for the forward notic
market engagement strategy.
- The market engagement strategy should consider the characteristics of the project:
Project characteristic Elements of market analysis strategy
 Uncomplicated projects Relatively simple process such as:
● identifying the relevant websites / publications to advertise a
procurement; or
● determining categories on a Register.

Complex high value or Process may start many months in advance of a Tender Notice and
unique may include:
● briefings to market participants;
● a supply market analysis;
● a market identification process that involves soliciting
interest from market participants;
● project scoping and a demand analysis review; and
● delivery planning to determine the optimal market approach
and engagement strategy.

2. What are the risks involved in getting potential suppliers to provide the specification?

Following risks involved in getting potential suppliers to provide the specification

1. Inviting, clarifying and closing offers

Risk
Failure to adequately
address enquiries from
tenderers
Actual or perceived
favouritism in providing
information
Actual or perceived
breach of confidentiality
Likely consequences Action
Claims of unfair Implement standardised
practices procedures for
Offers with qualifications responding to enquiries
by tenderers Provide staff with
Withdrawal of offers appropriate tender
management training
and experience
Respond in a timely
manner to enquiries
Allow adequate time for
tenderers to respond
Complaints from As above
tenderers Answer queries in writing
Withdrawal of offers and provide copies to all
potential tenderers
Ensure that all potential
tenderers are provided
with any addenda
Complaints from Establish formal security
tenderers procedures
Mistrust by tenderers

Insufficient number of
responses
No response from known
quality suppliers
2. Evaluating offers
Risk
Failure to follow effective
evaluation procedures
Train staff in their
obligations
Perform regular audits
and reviews of security
processes
Advise tenderers of
security measures
Need to undertake Use appropriate tender
process again advertisement strategy
Increased costs to increase competition
Delayed delivery to the (eg. consider advertising
client tenders in other
Poor value for money publications as well as
due to limited the local paper)
competition Provide potential
tenderers with advance
notice of tender requests
Improve tender
documentation and
specifications
Allow sufficient time for
tenderers to respond
Reduced competition Actions as above for
Increased costs of insufficient number of
products or services responses
Improve your market
knowledge
Review specifications or
conditions
Seek feedback from
known suppliers on their
non-response
Likely consequences Action
Inconsistent evaluations Provide staff with
Possible complaints from appropriate tender
tenderers assessment and
Subjective not objective evaluation training and
evaluation of offers experience
Improve tender
assessment and
evaluation processes
Maintain, audit and
review evaluation
procedures
Ensure that Evaluation
Committee members

Breaches of security
Offers fail to meet needs
Failure to identify a clear
winner
Decision made on
subjective grounds
3. Selecting the successful tenderer
Risk Likely consequences
Selecting an Failure to fulfil the
inappropriate supplier contract
declare any conflicts of
interest
Claims of unethical or Maintain, audit and
unfair practices review security
Loss of faith with procedures
tenderers Provide staff with
appropriate training and
experience and monitor
performance
Ensure that Evaluation
Committee members
understand and sign
Confidentiality
Agreements
Need to call tenders Improve market
again knowledge
Additional costs Improve tender
Delay in delivery documentation
Conduct market
research
Develop functional and
performance
specifications
Claims of unethical and Ensure evaluation
unfair behaviour criteria contain the
Complaints from critical factors on which
tenderers the assessment of
tenders will be based
and that they are clearly
identifiable to tenderers
in tender documents
Ensure evaluation
criteria are appropriate
and measurable
Ensure that Evaluation
Committee members
sign Declaration of
Conflict and
Confidentiality
Agreements
Action
Provide staff with
appropriate tender
evaluation, financial and
technical skills training
and commercial
expertise
 Improve evaluation
procedures
Improve evaluation
criteria and clearly
identify them to
tenderers in tender
documents
Reject unacceptable
offers
Perform financial,
technical and company
evaluations before
awarding contract
Procurement Review
Committee to review
tender and selection
process prior to
awarding contract
Selecting inappropriate Failure to meet the Ensure users are
product client’s need involved in the
evaluation/selection
process
Improve technical
evaluation procedures
and train staff as
appropriate
Procurement Review
Committee to review
tender and selection
process prior to
awarding contract

4. Negotiations
Risk Likely consequences Action
Not matching the Contract disputes Improve communication,
expectations of buyer Delivery delays including ensuring that
and tenderer Cost variations Conditions of Contract
Reduction in value for form part of the Request
money for Tender
Purchase of less suitable Provide staff with
product training in contract
Inefficient use of planning and
resources management
Define terms carefully
Record each party’s
obligations
Clarify all ambiguities
before signing the
contract
 Deadlock on details of Delays in delivery Look at alternatives to
agreement Need to restart share risk
procurement Distinguish between
Possible cost of legal essential and non-
action essential goals and
requirements
Failure to secure Inability to finalise Establish baseline
mandatory conditions contract before negotiations
Delays in delivery Distinguish essential
Variations in cost goals from others
Inefficient use of Consider variations to
resources contract
Provide negotiators with
adequate training
Failure to secure Inability to finalise Ensure potential
agreement in relation to contract suppliers aware of Policy
Crown Contracts Delays in delivery requirements before
Confidentiality Policy Inefficient use of submitting responses
resources Seek exemption from
Requirement to Crown Contracts
negotiate with other Confidentiality Standing
ranked suppliers Committee
Unfair or onerous Contract disputes Provide negotiators with
requirements on the Invalidity of contract adequate training and
tenderer in the contract Legal action support
conditions Poor supplier/customer Negotiate commercial
relationship terms
Terms should be fair and
reasonable
Failure to reflect the Contract disputes Check final draft of
terms offered and Legal action contract with successful
agreed in the contract Poor supplier/customer tenderer
relationship Keep records of all
negotiations and
agreements
Inadvertently creating a Expense of negotiating Procedure in place to
contract without the out of the contract and ensure delegate’s
delegate’s prior approval paying damages approval obtained first
Committing to other Provide negotiators with
associated work prior to adequate training
main contract existing

5. Contract management
Risk Likely consequences Action
Variations in price and Cost overruns Agree on prices and the
foreign exchange basis of prices
Agree on a formula for
calculating variations
Unwillingness of the
supplier to accept the
contract
Failure of either party to
fulfil the conditions of the
contract
Inadequately
administering the
contract
Commencement of work
by the supplier before
contract is exchanged or
letter of acceptance
issued
Unauthorised increase in
scope of work
Loss of intellectual
property
Failure to meet liabilities
of third parties (eg.
royalties or third party
property insurance)
Delays in delivery
Need to restart
procurement
Contract disputes
Failure to satisfy needs
Delays in delivery
Downtime
Legal action
Cost increases
Failure of contract
Full benefits not
achieved
Delivery of
unsatisfactory product
Contract/supply disputes
Potential liability to pay
for unauthorised work
Possibility of legal action
for perceived breach of
contract
Unanticipated cost
increases
Contract disputes
Loss of commercial
opportunity
Unwarranted reliance on
supplier for product
support
Legal action
Damage to the agency’s
professional reputation
Seek legal redress if
non-acceptance causes
loss
Negotiate but retain
integrity of the contract
Ensure good contract
administration and
performance
management
Hold regular inspections
/ meetings and ensure
progress reports
Ensure all staff know
responsibilities and
conditions
Ensure good record
keeping and
documentation
Maintain up-to-date
agency procedures and
practices
Ensure all staff are
suitably trained and
experienced in contract
planning and
management
Confirm verbal
acceptance of contract
with written advice
Accept all contracts in
writing
Ensure approvals are
received before allowing
work to start
Ensure all contract
amendments are issued
in writing
Record all discussions
and negotiations
Confirm instructions in
writing
Ensure suitable clauses
are included in the
contract
Check that all obligations
are covered in the
contract
Agree on responsibilities
 Implement appropriate
safety standards and
programs
Loss or damage to Delays in delivery Include appropriate
goods in transit Downtime packaging instructions in
Liability disputes specification
Agree on insurance
cover for supplier to
provide
Accept delivery only
after inspection
Know when title of goods
is transferred to buyer
Fraud Misuse of resources Maintain an ethical
Legal action environment
Disruption to Follow and maintain
procurement activities fraud control procedures
Key personnel not Progress on project Include requirement in
available disrupted specification and ensure
Less expertise compliance in post-
tender negotiation
Know the market
Accept risk and manage
possible delay

3. What would be appropriate selection criteria (and weighting) for this tender evaluation?

The evaluation criteria will be well targeted, clearly measurable and not excessive in number.
Organisations may decide to indicate the relative importance of evaluation criteria - for example, by listing any ‘d
criteria in order of relative importance - to help tender participants to develop their response.
Evaluation criteria come in different forms:
● mandatory criteria, which are pass or fail criteria but are not generally included in scoring submissions
● criteria that are critical to the project objectives or context
● criteria that support a level of confidence in a tender participant’s performance
● criteria to distinguish value for money
● criteria to address broader government policies (for example the Victorian Industry Participation Policy)
Evaluation criteria should be linked to the project’s objectives to:
● help determine which response represents the best value for money; and
● help tender participants understand the drivers or constraints for the project, which may affect the way th
their response.
Projects on operational brownfield sites can require a careful strategy for staging.
The recommended evaluation criteria for assessing works are:
● general criteria related to capability (or pre-qualification criteria):
 ● financial capacity
● organisational capacity
● previous experience
● resource availability
● performance capability
● environmental management
● quality assurance systems
● previous performance record
● occupational health and safety management
● industrial relations management
Project specific criteria:
● project personnel and their competencies
● the method proposed for the project including program
● a project Health and Safety Management Plan
● systems proposed for the project
● the capacity and current commitments of key personnel
● insurances
● the response to government policies that apply to the project
Recommended evaluation criteria for assessing Construction Services are:
● general criteria related to capability (or pre-qualification criteria):
● organisational capacity
● technical and professional expertise and qualifications
● quality assurance systems
● previous experience
● innovative ability
● resource availability
● environmental management
● previous performance record
● occupational health and safety management
Project specific criteria:
● project personnel proposed and their competencies
● the method proposed for project
● systems proposed for the project
● the capacity and current commitments (particularly for key personnel)
● the response to government policies applying to the project
Mandatory evaluation criteria
● Mandatory evaluation criteria must be set out in the Tender Documentation
● Mandatory evaluation criteria must be clearly identified as mandatory criteria
Make sure all suppliers engaged to perform Works or Construction Services satisfy the mandatory evaluation cr
in the Evaluation criteria where the thresholds listed in the Instruction have been met
Where an evaluation criterion has been assessed as part of pre-qualification to a Register:
● avoid requesting the same information in a tender process because this duplicates the pre-qualification p
 ● require the tender participant to confirm that they remain on the Register
● require tender participants to confirm that their circumstances or response to the criterion remains the sa
last submitted to the Register or earlier tender stage.
Value for money
Value for money should focus on the costs and benefits of the response, as well as the risks associated with the
the tender participant itself.
Occupational health and safety management criteria must be used:
● for Works, where the value exceeds $500,000 (inclusive of GST)
● for Construction Services, where the value of the services exceeds $200,000 (inclusive of GST)
Industrial relations management
Industrial relations management criteria must be used for Works where the value exceeds $500,000 (inclusive o
Considering a tender participant’s past performance
Consideration of past performance may include:
● experience on similar projects and performance
● references provided by the tender participant
● performance reports about the tender participant from previous work that are held by the Agency or the V
Government
Project specific evaluation criteria
Project-specific evaluation criteria:
● relate to the complexity or unique characteristics of the project
● often address potential risks or uncertainties and quality of design: including accurately interpreting funct
requirements
● cover the ability to incorporate innovation, environmentally sustainable design or a level of flexibility
● apply government social procurement policies
● address specific site requirements
● address how time frames will be met
● demonstrate expertise in a construction method
● address how security requirements will be met
Project-specific evaluation criteria may be mandatory – for example, if a tender participant is required to hold a p
licence. Project-specific mandatory evaluation criteria must be clearly described as being mandatory.
Under the Value Creation and Capture Framework, evaluation criteria may address how a tender proposal can
social, economic and environmental value from the infrastructure investment. For example, a proposal to build a
station could include criteria for incorporating retail or residential facilities to reduce the cost to Government and
value of the land.
Probity considerations in tender evaluation
It is essential that tender evaluation criteria, weightings and processes are developed in the tender developmen
ensures that the Tender Documentation is drafted in a way that will elicit all the information that the tender evalu
requires and avoids having to request unnecessary information after the tender is released.
Well-defined Conditions of Tender and evaluation criteria give tender participants a clear indication of the projec
requirements. This aims to prevent unproductive use of resources and unsuitable or misdirected responses.
Decisions on the selection of suppliers should be made via an independent and objective evaluation against the
evaluation criteria and supply conditions.
Evaluation criteria:
 ● should not selectively advantage or disadvantage a particular tender participant or group of tender partic
● should be based on objective measures that meet the primary procurement needs
● avoid using technical specifications or criteria that discriminate against international or interstate tender p
● should not discriminate on the basis of foreign ownership where an Agency is required to comply with In
Agreements
The tender evaluation team needs:
● appropriate technical and commercial capabilities to assess the responses
● skills in communicating and negotiating
● the ability to maintain critical objectivity during the tender process
● to be free of any conflict of interest that might undermine the objectivity of the evaluation

4. What recommendation would you give Sharon as the 'correct' contract pricing model to accept?

Because of the unique nature of constructed facilities, it is almost imperative to have a separate price for each fa
construction contract price includes the direct project cost including field supervision expenses plus the markup
contractors for general overhead expenses and profit. The factors influencing a facility price will vary by type of
location as well. Within each of the major categories of construction such as residential housing, commercial bu
industrial complexes and infrastructure, there are smaller segments which have very different environments with
price setting. However, all pricing arrangements have some common features in the form of the legal document
owner and the supplier(s) of the facility. Without addressing special issues in various industry segments, the mo
types of pricing arrangements can be described broadly to illustrate the basic principles.
Competitive Bidding
The basic structure of the bidding process consists of the formulation of detailed plans and specifications of a fa
on the objectives and requirements of the owner, and the invitation of qualified contractors to bid for the right to
project. The definition of a qualified contractor usually calls for a minimal evidence of previous experience and fi
stability. In the private sector, the owner has considerable latitude in selecting the bidders, ranging from open co
the restriction of bidders to a few favored contractors. In the public sector, the rules are carefully delineated to p
qualified contractors on an equal footing for competition, and strictly enforced to prevent collusion among contra
unethical or illegal actions by public officials.
Detailed plans and specifications are usually prepared by an architectural/engineering firm which oversees the b
process on behalf of the owner. The final bids are normally submitted on either a lump sum or unit price basis, a
by the owner. A lump sum bid represents the total price for which a contractor offers to complete a facility accor
detailed plans and specifications. Unit price bidding is used in projects for which the quantity of materials or the
labor involved in some key tasks is particularly uncertain. In such cases, the contractor is permitted to submit a
prices for those tasks, and the final price used to determine the lowest bidder is based on the lump sum price co
multiplying the quoted unit price for each specified task by the corresponding quantity in the owner's estimates f
However, the total payment to the winning contractor will be based on the actual quantities multiplied by the res
quoted unit prices.
Negotiated Contracts
Instead of inviting competitive bidding, private owners often choose to award construction contracts with one or
contractors. A major reason for using negotiated contracts is the flexibility of this type of pricing arrangement, pa
projects of large size and great complexity or for projects which substantially duplicate previous facilities sponso
owner. An owner may value the expertise and integrity of a particular contractor who has a good reputation or h
successfully for the owner in the past. If it becomes necessary to meet a deadline for completion of the project,
construction of a project may proceed without waiting for the completion of the detailed plans and specifications
contractor that the owner can trust. However, the owner's staff must be highly knowledgeable and competent in
contractor proposals and monitoring subsequent performance.
Generally, negotiated contracts require the reimbursement of direct project cost plus the contractor's fee as dete
one of the following methods:
1. Cost plus fixed percentage
2. Cost plus fixed fee
3. Cost plus variable fee
4. Target estimate
5. Guaranteed maximum price or cost
The fixed percentage or fixed fee is determined at the outset of the project, while variable fee and target estimat
as an incentive to reduce costs by sharing any cost savings. A guaranteed maximum cost arrangement imposes
a contractor for cost overruns and failure to complete the project on time. With a guaranteed maximum price con
amounts below the maximum are typically shared between the owner and the contractor, while the contractor is
for costs above the maximum.
Speculative Residential Construction
In residential construction, developers often build houses and condominiums in anticipation of the demand of ho
Because the basic needs of home buyers are very similar and home designs can be standardized to some degr
probability of finding buyers of good housing units within a relatively short time is quite high. Consequently, deve
willing to undertake speculative building and lending institutions are also willing to finance such construction. Th
essentially set the price for each housing unit as the market will bear, and can adjust the prices of remaining un
given time according to the market trend.
Force-Account Construction
Some owners use in-house labor forces to perform a substantial amount of construction, particularly for addition
and repair work. Then, the total of the force-account charges including in-house overhead expenses will be the
arrangement for the construction.

5. Is Sharon being unrealistic (or even paranoid) in wanting to tighten up the contractual performance cl
bespoke contract?

Yes, Finding a reliable and competitively-priced supplier is vital to the success of your business.
Get quality service from your suppliers
To ensure a productive working relationship, select suppliers who offer a quality service and meet your specific
Quality service
There are a number of national and international certification bodies that enable you to check the quality of a po
supplier.
Choose suppliers who can meet your specific needs. For example, if faster turnaround is a priority for you, then
point in selecting on grounds of cost if the turnaround requirements cannot be met.
One way in which to formalise this is to draw up a service level agreement (SLA) between your business and yo
most cases it will determine the major responsibilities of the business/supplier trading relationship. It will genera
issues as problem management, compensation, warranties and remedies, resolution of disputes and legal comp
also be extremely useful if legal proceedings ensue.
Building good relationships with suppliers
It pays to invest time in building good relationships with your key suppliers. If you can save money or improve th
the goods or services you buy from your suppliers, your business stands to gain.
Hints on dealing with your suppliers
Consider some of the following when working with your suppliers:
● Meet your contacts face-to-face and see how their business operates. Understanding how your supplier
you a better sense of how it can benefit your business.
● Meet the people who'll be managing your account and make sure they can be easily contacted.
● Ask about their plans for development or expansion. Will this affect the goods or services they're providin
● Help your suppliers by placing orders in good time, being clear about deadlines and paying on time.
● Keep an eye open for any opportunities you can pass their way -in a good customer-supplier relationship
same for you.
● Make your business important to your suppliers and they will work harder for you. Some suppliers may o
deals if you promise to use them exclusively.
However this may cause significant problems if they go out of business.
Don't ignore opportunities offered elsewhere. Keep your options open by monitoring the deals offered by other s
Consider whether a contract or a service level agreement (SLA) is necessary. This process will guard against co
on the part of the supplier.
How you can help your key suppliers
It is in everyone's interests that you do well out of key supplier relationships. Suppliers warrant careful attention,
performance may be crucial to your business.
Here are some ways that you can help your key suppliers:
● Co-ordinate your production schedule with theirs.
● Discuss ways to reduce overall costs through size or timing of orders/contracts.
● Consider additional products or services that your supplier could provide.
● Update them on strategic changes or new products early on - this helps them adapt to meet those chang
● Analyse how well you forecast sales and plan to meet your supply needs. Sharing the results of this ana
suppliers will allow you to develop accurate sales plans and hone shared sales forecasts and schedules
● Use a purchase order system to control and monitor the buying of goods and services from suppliers - th
internal financial controls and prevents specification misunderstandings at the supplier's end.
Pay bills promptly. Paying late will strain your relationship with the supplier and could lead to less favour
future. Ideally you should have a payment policy that commits your business to paying undisputed bills o
copy should be sent to your suppliers.
There are many ways in which technology - especially Internet-based communications - can help you develop a
good relationship with your suppliers.
Use technology to improve efficiency
A high speed Internet connection such as broadband will allow you to collaborate more closely with your supplie
sharing plans, forecasts and consumer data.
Sharing such information with your suppliers makes it easier for you to:
● analyse real-time information about sales, orders or market trends
● forecast and react quickly to changes in demand
● improve efficiency - accurate information on stock means you will only order the supplies you need
E-collaboration with your suppliers, such as using email and sharing spreadsheets, can be simple, but the great
come from sharing information in "real time". This requires more sophisticated technology, such as the following
 ● Inventory planning or forecasting systems - use your inventory records to forecast the market demand fo
product.
● Online analytical processing systems - analyse past sales performances and compare the forecasts from
suppliers.
● Enterprise resource planning (ERP) systems - can plan and schedule your entire business. By connectin
and purchasing system with that of your suppliers, orders can automatically be placed and tracked and t
will automatically issue an invoice.
These systems can be very expensive. ERP systems can be rented from an Application Service Provider - how
still be some extra costs, such as staff training.
When sharing information, make sure that your data and your suppliers' data is protected.
Service level agreements
Service level agreements (SLAs) are agreements or contracts with suppliers that define the service they must p
level of service to be delivered, and which also set out responsibilities and priorities.
SLAs themselves are contractual obligations and are often built into a contract - in the form of one or more claus
entire section. SLAs can be used in any supplier contract where a business' ability to meet its customer requirem
dependent on the supplier.
SLAs are complex documents that should be well defined and cannot be drawn up in an ad hoc fashion.
Drawing up an SLA
It is important that you are involved in drawing up the agreement together with the supplier.
Typical SLAs set out:
● the service being provided
● the standards of service
● the timetable for delivery
● respective responsibilities of supplier and customer
● provisions for legal and regulatory compliance
● mechanisms for monitoring and reporting of service
● payment terms
● how disputes will be resolved
● confidentiality and non-disclosure provisions
● termination conditions
If suppliers fail to meet agreed levels of service, SLAs usually provide for compensation, commonly in the form o
monthly service charges. When drawing up your SLA with your supplier, highlight the most critical components o
you can apply the strictest penalties to these. Build periodic performance reviews into the SLA.
SLAs require constant discussion and updating. If the needs of your business change, you may require different
criteria. Likewise improvements in technology should be taken into account when reviewing your SLA.
Review your suppliers' performance
It is a good idea to review your suppliers' performance at regular intervals. If you have a service level agreemen
will help you to assess the business/supplier relationship in the most objective way possible.
If not, even at this stage it may be worth using an SLA to define the terms and level of service you require from
The review process is particularly important as it will prevent existing suppliers becoming complacent.
Asking the following essential questions will help you ensure you are getting the best possible deal:
● Price - are you getting the best price? Does your supplier offer bulk discounts or other favourable terms?
● Quality - are you satisfied with the quality of your supplies?
 ● Innovation - do your suppliers regularly inform you of new products and services that might help improve
business?
● Delivery - are your suppliers punctual? Do the supplies arrive in good condition?
● Account management - do your suppliers respond quickly to any orders or queries that you place with th
● SLAs - are your suppliers living up to their end of the agreement?
If, after the review process, you find that your suppliers are not living up to certain aspects of your agreement th
usually provide for compensation, commonly in the form of rebates on monthly service charges.
You'll also need to review your own performance. For example, failing to pay your suppliers on time won't encou
keep their standards high.
Ending supplier contracts
There are many reasons for terminating a contract with a supplier. They might consistently fail to provide you wi
goods that meet your requirements, or you may find a cheaper or more reliable supplier elsewhere, for example
First check the contract to see whether there are penalties for terminating the deal early. Ideally, when drawing
contract, you will have agreed an exit clause that minimises what you have to pay. Otherwise, the penalties may
you are effectively locked in with that supplier. If the quality and effectiveness of your supplier decreases, your b
suffer.
As well as financial barriers to changing suppliers, you will also face operational ones. There may be disruption
business when you switch to a new supplier with different processes or systems.

ASSESSMENT TASK 3 – PROJECT DOCUMENTATION

Task 1: Project Procurement Plan

Develop and complete a Project Procurement Plan that determines the procurement requirements of the projec
establishes the agreed procurement processes.

Project Procurement Plan

1.1 Background

Project:
● Recognises that:
○ Developing a procurement strategy and adopting appropriate best practice contracting and proc
principles, policies, processes and procedures for all goods, services and works by Council, will
achievement of Council objectives such as sustainable and social Procurement; bottom-line cos
supporting local economies; achieving innovation; and better services for communities.
○ The elements of best practice applicable to local government procurement incorporate:
■ broad principles covering ethics, value for money, responsibilities and accountabilities;
■ guidelines giving effect to those principles;
■ a system of delegations (i.e. the authorisation of officers to approve and undertake a ran
functions in the procurement process);
■ procurement processes, with appropriate procedures covering minor, simple procuremen
value, more complex procurement; and
 ● Council’s contracting, purchasing and contract management activities endeavour to:support the Counc
strategies, aims and objectives including, but not limited to those related to sustainability, protection of t
environment, and corporate social responsibility;
● take a long term strategic view of its procurement needs while continually assessing, reviewing and aud
procedures, strategy and objectives;
● provide a robust and transparent audit trail which ensures that procurement projects are delivered on tim
cost constraints and that the needs of end users are fully met;
● are conducted, and are seen to be conducted, in an impartial, fair and ethical manner;
● achieve value for money and quality in the acquisition of goods, services and works by the Council;
● ensure that risk is identified, assessed and managed at all stages of the procurement process,
● Use strategic procurement practices and innovative procurement solutions to promote sustainability and
in particular making use of collaboration and partnership opportunities;
● Use social procurement to enhance sustainable and strategic procurement to effectively contribute towa
stronger communities and meeting the wider social objectives of the Council;
● Comply with legislation, corporate policies or other requirements, ensuring that all staff responsible for p
and contract management are aware of and adhere to the legislative requirements, Council standards a
practice.
1.2 Scope
This Procurement Policy is made under Section 186a of the Local Government Act 1989. The Act is the key le
framework that regulates the process of all local government procurement in Victoria. Section 186a of the Act r
Council to prepare, approve and comply with a Procurement policy encompassing the principles, processes an
applied to all purchases of goods, services and works by the Council.

This policy applies to all contracting and procurement activities at Council and is binding upon Councillors, Cou
and temporary employees, contractors and consultants while engaged by the Council.

The Act and the Procurement Policy of the Council is the primary reference point for how all procurement shou
performed.

1.3 Purpose
The purpose of this Policy is to:
● provide policy and guidance to the Council to allow consistency and control over Procurement activities
● demonstrate accountability to rate payers;
● provide guidance on ethical behaviour in public sector purchasing;
● demonstrate the application of elements of best practice in purchasing; and
● increase the probability of obtaining the right outcome when purchasing goods and services.
1.4 Treatment of GST
All monetary values stated in this policy include GST except, where specifically stated otherwise.

2 Effective Legislative and Policy Compliance and Control

2.1 Ethics and Probity
○ 2.1.1 Requirement
The Council’s Procurement activities shall be performed with integrity and in a manner able to withstand the cl
possible audit scrutiny.
2.1.2 Conduct of Councillors and Council Staff
○ 2.1.2.1 General
Councillors and Council staff shall at all times conduct themselves in ways that are, and are seen to be, ethica
highest integrity and will:

● treat potential and existing suppliers with equality and fairness;

● not seek or receive personal gain;
● maintain confidentiality of Commercial in Confidence information such as contract prices and other sen
information;
● present the highest standards of professionalism and probity;
● deal with suppliers in an honest and impartial manner that does not allow conflicts of interest;
● provide all suppliers and tenderers with the same information and equal opportunity; and
● be able to account for all decisions and provide feedback on them.
.

2.1.3 Tender Processes

All tender processes shall be conducted in accordance with the requirements of this policy and any associated
relevant legislation, relevant Australian Standards and the Act.

2.1.4 Conflict of Interest

Councillors and Council staff shall at all times avoid situations in which private interests conflict, or might reaso
thought to conflict, or have the potential to conflict, with their Council duties.

Councillors and Council staff involved in the procurement process, in particular preparing tender documentatio
writing tender specifications, tender opening, and tender evaluation panels, must:

● Avoid conflicts, whether actual, potential or perceived, arising between their official duties and their priv
Private interests include the financial and other interests of Councillors and Council Staff, plus their rela
close associates

● Declare that there is no conflict of interest. Where future conflicts, or relevant private interests arise Co
must make their manager, or the chairperson of the relevant tender assessment panel or board aware a
them to decide whether the officer should continue to be involved in the specific Procurement exercise

● Observe prevailing Council, VGPB and e-hub guidelines on how to prevent or deal with conflict of intere
and not take advantage of any tender related information whether or not for personal gain.

2.1.5 Fair and Honest Dealing

All prospective contractors and suppliers must be afforded an equal opportunity to tender or quote.
Impartiality must be maintained throughout the procurement process so it can withstand public scrutiny.

The commercial interests of existing and potential suppliers must be protected.

Confidentiality of information provided by existing and prospective suppliers must be maintained at all times, pa
commercially sensitive material such as, but not limited to prices, discounts, rebates, profit, manufacturing and
information.

2.1.6 Gifts and Hospitality

No Councillor or member of Council staff shall, either directly or indirectly solicit or accept gifts or presents from
member of the public involved with any matter that is connected with the duties of the officer, or in which the C
interested.

Councillors and Council staff must exercise the utmost discretion in accepting hospitality from contractors or th
representatives, or from organisations, firms or individuals with whom they have official dealings. Councillors a
staff should also avoid the ambiguous situation created by visiting the premises of a contractor, organisation, fi
individual uninvited and/or not on official business.

Offers of bribes, commissions or other irregular approaches from organisations or individuals (no matter how fl
evidence available), must be promptly brought to the attention of the CEO.

2.1.7 Disclosure of Information

Commercial in-confidence information received by the Council must not be disclosed and is to be stored in a se
location.

Councillors and Council staff are to protect, by refusing to release or discuss the following:
● Allocated Council budgets for proposed tenderes;
● information disclosed by organisations in tenders, quotation or during tender negotiations;
● all information that is Commercial in Confidence information; and
● pre-contract information including but not limited to information provided in quotes and tenders or subse
provided in pre-contract negotiations.
Discussion with potential suppliers during tender evaluations should not go beyond the extent necessary to res
on what is being offered by that supplier.

2.2 Governance
○ 2.2.1 Structure
The Council shall:
● establish a procurement management responsibility structure and delegations ensuring accountability,
and auditability of all procurement decisions made over the lifecycle of all goods, services and works pu
the Council;
● ensure that the Councils’ procurement structure:
○ is flexible enough to purchase in a timely manner the diverse range of material, goods, works an
required by Council;
 ○ ensures that prospective contractors and suppliers are afforded an equal opportunity to tender/
○ encourages competition.

2.2.2 Standards
The Council’s procurement activities shall be carried out to the professional standards required by best practice
compliance with:

● The Act,
● The Council’s policies,
● The Council’s Code of Conduct,
● Local Government Procurement Best Practice Guidelines
● Other relevant legislative requirements such as but not limited to the Trade Practices Act, Goods Act an
Environmental Protection Act.

2.2.3 Methods
The Council’s standard methods for purchasing goods, services and works shall be by some or all of the follow

● purchasing card;
● purchase order following a quotation process from suppliers for goods or services that represent best v
money under directed quotation thresholds;
● under contract following a tender process;
● using aggregated purchasing arrangements with other Councils, MAV Procurement, Victorian Governm
bodies;
○ other arrangements authorised by the Council or the CEO on a needs basis as required by abno
circumstances such as emergencies

The Council may, at the CEO’s discretion and based on the complexity and cost of the project, conduct one sta
stage tenders.

Typically a multi-stage tender process will commence with a registration of interest stage followed by a tender
involving the organisations selected as a consequence of the registration of interest stage.

2.2.4 Responsible Financial Management

The principle of responsible financial management shall be applied to all procurement activities.

Accordingly, to give effect to this principle, the availability of existing funds within an approved budget, or sourc
shall be established prior to the commencement of any procurement action for the supply of goods, services or

Council staff must not authorise the expenditure of funds in excess of their financial delegations.

Council staff must not disclose allocated tender budgets to suppliers.

Council funds must be used efficiently and effectively to procure goods, services and works and every attempt
made to contain the costs of the procurement process without compromising any of the procurement principles
this Policy.
2.3.1 Process

Council procurement processes are based on a number of principles:

● Best Value

The benefits of the purchase are weighted against the costs necessary for the optimum result for the Council a
community. The Council is not required to accept the lowest tender. Instead, the Council is required to take into
issues of quality, cost, the accessibility of the service and other factors relevant to both the overall objectives o
Government Act.

Best value is often mistaken for meaning the lowest price, however, in terms of the contracting process, best v
us to balance quality and price with as much transparency as is reasonably achievable. In this context price sh
account the whole life cost of the provision so far as is practicable. It follows that the delivery of Best value is d
upon Council priorities.

Achieving best value also requires challenging the need for the procurement and the way in which the service
reconfigured to achieve improvements in service delivery, comparing service provision options against all those
consulting with key stakeholders and ensuring competition in the open market.

Achieving best value for money must be the basis of all procurement decisions within the Council.

● Open and Fair Competition

All suppliers are treated fairly in an open and transparent manner and have access to the same informa

● Accountability
The Council maintains consistency in the approach to procurement across the whole organisation through coh
frameworks, policies and procedures. Accountability in procurement means being able to explain and provide e
the process followed. The test of accountability is that an independent third party must be able to see clearly t
process has been followed and that the process is fair and reasonable.

Therefore the processes by which all procurement activities are conducted will be in accordance with the Coun
procurement policies and procedures as set out in this policy and related, relevant Council policies and proced

Additionally:
all Council staff must be able to account for all procurement decisions made over the lifecycle of all goods, ser
works purchased by the Council and provide feedback on them; and
all procurement activities are to provide for an audit trail for monitoring and reporting purposes.
Risk Management
Strategies for managing risks associated with all procurement processes are in place and consistent.
Probity and Transparency
All Council procurement processes must be conducted in a fair, honest and open manner, with the highest leve
and in the public interest

2.3.2 Minimum Spend Competition Thresholds

● Any Council procurement under the threshold must comply with the Council’s own policy and procedure

The Council will from time to time decide and publish in this policy clear guidelines for minimum spend compet
thresholds. These will be decided by the Council by analyzing the historical size and complexity of the procurem
and of proposed procurement activities.
2.3.2.1 Tenders

Purchase of all goods and services for which the estimated expenditure exceeds $150,000, and building and c
works for which the estimated expenditure exceeds $200,000, must be undertaken by public tender as per the
contained in the Local Government Act.

The tender thresholds shall apply for two financial accounting periods.

However, should the CEO consider that the nature of the requirement and the characteristics of the market are
the public tender process would lead to a better result for the Council, public tenders may be called for purchas
services and works for which the estimated expenditure is below these thresholds.
2.3.2.2 Quotations
Purchase of goods, services having a total $150,000 and works having a total valuation of $200,000 or less ma
undertaken using the procurement by quotation method as
described below:

● Items with a value up to $5,000 – Request for Quotation.

A minimum of one email quotation must be obtained and the details recorded before placing an order (
details must be recorded where more than one supplier has quoted) and documented in the Councils’ R
system.
● Items with a value $5,001 to $15,000 – Request for Quotation.
Council will receive a minimum of three email quotations.

The quotation offering the best value for money must be confirmed by the supplier on company letterhead and
placed with that firm.

Details of the suppliers contacted and their quotations must be recorded on at least a simple spreadsheet or si
document in the Councils’ Records system.
 ● Items with a value $15,001 to $149,000/$199,000 – Request for Quotation.
Council will receive up to five written quotations by issuing a written Request for Quotation. Public advertising i
required.

Quotations returned by the nominated closing date must be evaluated and a recommendation made in favour o
supplier offering the best value for money outcome.

The original supplier’s quotations must be maintained in Councils’ Record system.

● Public Advertising.
Quotations may be advertised at the Council staff member’s discretion in addition to the methods above. This m
when a field of potential tenderers hasn’t been established, or an innovative approach is required, or the projec
appeal that may attract keen prices, etc.

2.4 Delegation of Authority

○ 2.4.1 Requirement
Delegations define the limitations within which Council staff are permitted to work. Delegation of procurement a
allows specified Council staff to approve certain purchases, quotation, tender and contractual processes witho
referral to the Council. This enables the Council to conduct procurement activities in an efficient and timely ma
maintaining transparency and integrity.

2.4.2 Delegations
○ 2.4.2.1 Council Staff
The Council shall maintain a documented scheme of procurement delegations, identifying the Council staff aut
make such procurement commitments in respect of goods, services and works on behalf of the Council and th
delegations contained in Financial Delegations policies

● Acceptance of tenders
● Acceptance of quotes
● Contract term extensions (within authorised budget)
● Contract amendment (non-financial)
● Contract amendment (financial)
● Appointment to register of pre-qualified suppliers
● Credit Card purchases
● Procedural exceptions
2.4.2.2 Delegations Reserved for the Council
Commitments and processes which exceed the CEO’s delegation and which must be approved by the Council

● Initial signing and sealing of contract documents.

● Tender recommendations and Contract approval for all expenditure over $150,000+ for goods and serv
$200,000+ for Design and Construct works in value.
 ● Variations and contract term extensions (requiring additional budget).
2.5 Internal Controls
The Council will install and maintain a framework of internal controls over procurement processes that will ensu

● more than one person is involved in and responsible for a transaction end to end;
● transparency in the procurement process;
● a clearly documented audit trail exists for procurement activities;
● appropriate authorisations are obtained and documented; and
● systems are in place for appropriate monitoring and performance measurement.
2.6 Risk Management
○ 2.6.1 General
Risk Management is to be appropriately applied at all stages of procurement activities which will be properly pl
carried out in a manner that will protect and enhance the Councils capability to prevent, withstand and recover
interruption to the supply of goods, services and works.
2.6.2 Supply by Contract
The provision of goods, services and works by contract potentially exposes the Council to risk.

The Council will minimise its risk exposure by measures such as:
● standardising contracts to include current, relevant clauses;
● requiring security deposits where appropriate;
● referring specifications to relevant experts;
● requiring contractual agreement before allowing the commencement of work;
● use of or reference to relevant Australian Standards (or equivalent); and
● effectively managing the contract including monitoring and enforcing performance.
2.7 Contract Terms
All contractual relationships must be documented in writing based on standard terms and conditions.

Where this is not possible, approval must be obtained from the appropriate member of Council staff listed in th
Delegations.

To protect the best interests of the Council, terms and conditions must be settled in advance of any commitme
made with a supplier. Any exceptions to doing this expose the Council to risk and thus must be authorised by t
appropriate member of Council staff listed in the Council Delegations.
2.8 Dispute Resolution
All Council contracts shall incorporate dispute management and alternative dispute resolution provisions to min
chance of disputes getting out of hand and leading to legal action.
2.9 Category Management
The Council has a Category Management approach to procurement which brings together expertise from acros
Council to identify the most appropriate and effective approach to deliver the Council’s outcomes through sourc
supply arrangements.
The main objective of category management is to reach a point where all or a very high percentage of the Cou
within a category is being channeled through approved arrangements, aligned with strategic priorities such tha
maximised on every dollar of expenditure.
2.10 Contract Management
The purpose of contract management is to ensure that the Council, and where applicable its clients, receive th
services or works provided to the required standards of quality and quantity as intended by the contract by:

● establishing a system monitoring and achieving the responsibilities and obligations of both parties’ unde
contract; and
● providing a means for the early recognition of issues and performance problems and the identification o
○ adhering to Council’s Risk Management Framework and adhering to relevant Occupational Hea
Safety Contractor Compliance Procedures.

All Council contracts are to include contract management requirements. Furthermore, contracts are to be proa
managed by the member of Council staff responsible for the delivery of the contracted goods, services or work
the Council receives Value for Money.

2.11 e-Procurement

e-Procurement is integral to the overall development of procurement processes and involves the use of an elec
system/s to acquire and pay for supplies, services` and works.

By utilising e-procurement the Council aim to:

● reduce transaction costs

● achieve greater leverage

● make processes more efficient;

● improve management information and visibility of spend;

● increasing control and consistency of processes, and

● improve spend compliance.

3 Demonstrate Sustained Value

3.1 Integration with Council Strategy
The Council procurement strategy shall support its corporate strategy, aims and objectives, including but not lim
those related to sustainability, protection of the environment, corporate social responsibility and meeting the ne
local community such as:
 ● feeling safe,
● living in a clean and pleasant environment, and
● receiving good quality and well managed Council services that are Value for Money
3.2 Achieving Best Value
○ 3.2.1 Requirement
The Council’s procurement activities will be carried out on the basis of obtaining best value..

This means minimising the total cost of ownership over the lifetime of the requirement consistent with acceptab
reliability and delivery considerations. Lowest price is not the sole determinate of best value..
3.2.2 Approach
This will be facilitated by:

● developing, implementing and managing procurement strategies that support the co-ordination and stre
activities throughout the lifecycle;
● effective use of competition;
● using aggregated contracts where appropriate;
● identifying and rectifying inefficiencies in procurement processes;
● developing cost efficient tender processes including appropriate use of e-solutions;
● Council staff responsible for providing procurement services or assistance within the Council providing
advice in terms of available products and agreements; and
● working with suppliers to create relationships that are professional and productive, and are appropriate
and importance of the goods, services and works being acquired.
3.2.3 Role of Specifications
Specifications used in quotations, tenders and contracts are to support and contribute to the Council’s Value fo
objectives through being written in a manner that:

● ensures impartiality and objectivity;

● clearly defines the Council’s requirements;
● encourages the use of standard products;
● encourages sustainability;
● eliminates unnecessarily stringent requirements
3.3 Performance Measures and Continuous Improvement
Appropriate performance measures are to be established and reporting systems will be used to monitor perform
compliance with procurement policies, procedures and controls

Procurement procedures, practices and costs will be benchmarked externally. Internal service standards will be
within the Council and performance against these targets will be measured and reviewed regularly to support c
improvement.

The performance measurements developed will be used to:

● Highlight trend and exceptions where necessary to enhance performance.
● Improve the internal efficiency of the procurement process and where relevant the performance of supp
 ● Facilitate programs to drive improvement in procurement to eliminate waste and inefficiencies across k
categories.
● Corporate Social Responsibility
Corporate Social Responsibility (CSR) is about taking positive action to demonstrate the Council’s commitmen
community and environment on which it impacts. This means the Council maximising the benefits of the servic
provide across the community and minimising the negative aspects of their activities.

The Council integrates CSR into its organisational policies and practices through social procurement, sustainab
diversity.

3.4.1 Social Procurement

Social Procurement generates positive outcomes by building on initiatives already undertaken by the Council in
sustainable and strategic procurement practice, further enabling procurement to effectively contribute towards
stronger communities and meeting the social objectives of the Council.

The Council is committed to Social Procurement by:

● Ensuring all procurement practices are sustainable and strategically aligned with the wider Council obje

● Achieving greater value for money across the community through the use of effective procurement

● Ensuring all businesses have the same opportunity to tender for Council contracts

● Enhancing partnerships with other Councils, suppliers and community stakeholders

● Building and maintaining a strong community by exploring ways to generate local employment (particul
disadvantaged residents) and further strengthening the local economy

● Purchasing ethical and fair trade goods to support equitable, local, national and international trade.

3.5 Sustainability
○ 3.5.1 General
The Council is committed to achieving sustainability and ensuring it monitors and reports on Council activities a
that have an impact on or contribute to the environment including but not limited to the following:

● waste management,
● recycling,
● energy management,
● emission management,
● water conservation,
● green building design, and
 ● procurement.
● 3.5.2 Sustainable Procurement
The Council recognises it has an implicit role in furthering sustainable development, through its procurement o
services and works.

In addition, the Council recognises the potential impact this spend has on the environment and where applicab
integrate sustainability, environmental and social issues into the procurement process. The Council aims to ach

● Taking into account the need to minimise emissions and reducing the negative impacts of transportatio
purchasing goods and services

● Taking steps to minimise carbon dioxide and other greenhouse gas emissions through the detailed con
products and services procured

● Considering the environmental performance of all suppliers and contractors, and encouraging them to c
operations in an environmentally sensitive manner

● Considering the basic life cycle analysis of products to minimise the adverse effects on the environmen
directly or indirectly from products

● Selecting products / services that have minimal effect on the depletion of natural resources and biodive

● Giving a preference to Fairtrade, or equivalent, and ethically sourced and produced goods and services

● Working more effectively with local suppliers to ensure they are encouraged to bid for the Council’s bus
with the Procurement Policy.

● Ensuring all relevant procurement contracts and tenders contain sustainability specifications as approp
product or service being procured.

● Comply with all Australian regulations and legislation and ensuring our suppliers do the same

● Training all Council staff on sustainability considerations within the procurement process
●
3.6 Diversity
Promoting equality through procurement can improve competition, best value, the quality of public services, sa
among users, and community relations. It should be a consideration in every procurement project and reflect c
commitment to diversity and equal opportunities wherever possible.
4 Apply a Consistent and Standard Approach
The Council will provide effective and efficient commercial arrangements for the acquisition of goods and servi

4.1 Standard Processes

The Council will provide effective commercial arrangements covering standard products and provision of stand
across the Council to enable employees to source requirements in an efficient manner.

This will be achieved via establishing the following:

● Pricing where relevant

● Processes, procedures and techniques
● Tools and business systems (e.g. implementing appropriate e-tendering, e-evaluation; e-catalogue or e
arrangements).
● Reporting requirements
● Application of standard contract terms and conditions.

4.2 Performance Indicators

A list of performance indicators will be developed to measure procurement performance. They will include crite

● The proportion of spend against corporate contracts

● User and supplier satisfaction levels
● Knowledge and skill of Council employees in procurement process
● Level of compliance and understanding of Council procurement policies
● Measuring the success of procurement initiatives eg. procurement cards

4.3 Management Information

The Council seeks to improve its’ performance by capturing and analysing procurement management informat
variety of areas, including:

● Volume of spend
● Number of transactions per supplier
● Compliance
● Supplier performance
● User satisfaction
● Category management
● Green spend
The Council will also use external sources of management information to assist with the procurement decision
process including:

● Benchmarking data
● Information from professional bodies such as the Chartered Institute of Purchasing and Supply Australi
● Supplier reports
5 Build and Maintain Supply Relationships
Council recognises that in order to achieve sustainable value, a strategic assessment of the appropriate ‘chann
should be undertaken – whether to go to market on its own, participate in regional or sector aggregated project
access State Government panel agreements or other means. Council will consider supply arrangements that d
best value outcomes in terms of time, expertise, cost, value and outcome.
 5.1 Developing and Managing Suppliers

Developing and managing suppliers is essential to achieving a competitive market capable of delivering the Co
services and works requirements.

Council need to interact with the market and our suppliers in particular to understand their views and what ena
encourages diverse parts of the market to bid for work with the Council. At the same time Council will ensure th
relationship with strategic suppliers is mutually productive and that goals are shared. Council aim to develop a
with suppliers that creates mutually advantageous, flexible and long term relations based on the quality of perfo
financial savings.
5.2 Supply Market Development
A wide range of suppliers should be encouraged to compete for Council work. The focus for new work need no
with the larger more familiar businesses. Other types of organisations offering business diversity include:

● Local businesses
● Green suppliers
● Small to medium sized enterprises (SME’s)
● Social enterprises
● Ethnic and minority business
● Voluntary and community organisations

5.3 Relationship Management

The Council is committed to developing constructive long-term relationships with suppliers. It is important that t
identifies its key suppliers so that its efforts are focused to best effect. Such areas may include:

● Size of spend across the Council

● Criticality of goods / services, to the delivery of the Council’s services
● Availability of substitutes

5.4 Communication
External communication is very important in ensuring a healthy interest from potential suppliers and partners to
The external website will be updated and provide:
● Information about Council and how to become an approved supplier.
● A list of existing and forthcoming contract opportunities, projected over a number of years.
● Guidelines for doing business with Council.
● Standard documentation used in the procurement process.
● Links to other relevant sites.

6. Review Process
. The Council endeavours to continually improve its procurement performance such that all relevant policies, gu
training are continually reviewed and updated. The effectiveness of this approach will be measured and reporte
annually.
 7. Policy Owner and Contact Details
XXXXXXXX, Procurement Manager,XXXXXXX Council is the designated owner of this policy.

For further information on the policy, please contact via email: XXXXXXX phone XXXXXXX.

Task 2: Tender Evaluation Checklist

Develop and complete a Tender Evaluation Checklist to guide a tender panel through the process of reviewing a
and awarding the contract to a successful tenderer

Tendering, Evaluation and Acceptance Checklist

To complete this checklist, progressively tick the boxes in the ‘Provided’ column corresponding to the activiti
On completion, sign the authorisation box and forward a copy to the approving Project Manager.

Provided

Pre-Tender
Procurement Method Selected
Approved Tender Process
● Selective Tendering
● Public Tender
● Tender by Invitation

Tender Documents Completed and Checked

● Working Drawings
● Specification
● Tender Forms
● Bill of Quantities

Approved Cost Plan D

SPAppointed & KSC weightings determined

Contract and Standard inclusions have been provided:

● Special Conditions
● Insurance notices to builders
 ● Alternatives have been selected
● Annexure has been completed satisfactorily

Contract documents are ‘fit for purpose’ including consultant sign off that they
are checked as being:
● Compliant with statutory requirements including:
● Building certification
● Relevant planning approvals
● Complete, comprehensive, co-ordinated
● Within approved Cost Plan ‘D’ Budget

Contract provisions for site specific concerns

● Safety
● Security
● OH&S
● DH standard docs
● Sub-Contract processes etc

Advertising
For a 2-stage tender process
● Short-listing approved by the Department
● Financial Viability Checks undertaken

Approved Contract (if other than AS 2124 – 1992)

Annexure Part A inclusions
Special Conditions of Contract (Annexure Part B)
Insurances Requirements Confirmed
Building Certification

Tendering
Issue of Documents to Tenderers Tender Forms
Addenda Issued

Post Tender
Clarification with tenderers
Reference Checks
Negotiations completed
Tender Evaluation & Recommendation Report
Tender Process
Tender Panel
Addenda included in Tender
Provisional Sums included
Estimate/Tender/Trade Breakdown Comparison
Conforming Tender
Alternative Tender Submission
Program Provided
Tender Proforma Completed
Evaluation Table
Recommendations
Referee Checks
Financial checks and if required a detailed assessment by qualified group
for projects exceeding $5M
Note: This is to be funded from the project and is to be assessed during the tender /
selection process

Clarifications / Negotiations with Lowest Tenderer including

confirmation of addenda etc

Tender selection report together with accompanying material required for execution of
the contract including endorsement of the Steering Committee, PCG or appropriately
constituted group

PCG Endorsement
DH (CPSP) Approval
Notify Tenderers of Outcome

Tendering, Evaluation and Acceptance Checklist Endorsement

Certified by

Principal Consultant Date

Endorsed by

Consultant Project Manager Date

Checked by

Departmental Project Manager Date

Final Endorsement By

PCG Date
Task 3: Variation Register
Develop and complete a Variation Register to record all proposed and agreed variations throughout the project.
Variations
Contingency allowances
Time period extension options
Options for additional Works or
Construction Services
Schedule of rates
Task 4: Procurement Lessons Learned log
Develop and complete a Procurement Lessons Learned Log that documents and recommends improvements fo
projects.
Initial disclosure
Contract description, contract duration
and contract value of the initial scope
as agreed to by the supplier, without
disclosing the contingency allowance
Contract description, contract period
and contract value over the initial term
as agreed with the supplier
Contract description, contract duration
and contract value of the initial scope
as agreed with the supplier
Describe that the contract is a schedule
of rates contract
Advise that periodic updates to the
disclosure will be made to reflect the
actual scope of the works or services
undertaken
Describe the frequency when updates
to the disclosure will be made
Disclose the initial scope of works and
initial estimated contract value as
instructed to the supplier
Revised disclosure
Adjust the contract period
value as required
Treat the additional works
as one of the variations wi
summary variation. The va
arose via the contingency
does not need to be individ
identified
Adjust the contract period
required
Describe each time period
if it was a variation, noting
from a time period extensi
under the contract
Adjust the contract descrip
and value as required
Describe each additional w
service as if it was a variat
that it arose from an option
contract
Adjust the contract descrip
and value as required
Describe each additional c
if it was a variation, noting
as a periodic disclosure un
schedule of rates contract
Following strategy to follow to improve future projects

Project objectives and description

● Outline the key project objectives including:
– government policy and service delivery objectives.
● Describe the primary benefits arising from addressing the problem(s) including:
– type and level of benefits (social, economic, environmental etc.);
– beneficiaries; and
– how benefits arise from solving the problem(s).
● Describe dis-benefits that might or will arise from the investment.
Note: This section should deal with benefits associated with dealing with the problem; they should not pre-supp
specific intervention or project option. For example, if the problem is increasing prisoner numbers or overcrowd
the benefits should not presume that the solution is to build a new prison.
● Describe the project, including scope, characteristics and timing including:
– any unique project characteristics;
– procurement staging, for example, will the procurement process be simply the selection of a provide
also include a preliminary stage to identify a preferred solution or technology;
– project components that can be bundled or procured separately;
– time dependencies, for example, closure of other infrastructure;
– project duration and estimated schedule; and
– likely impacts on users and stakeholders.
● Identify the preferred technical solution.

Project service delivery requirements

● Describe the expected outcomes:
– What factors will determine whether the procurement has been successful? This should include desi
and performance criteria that can be used to measure benefits realisation and project success.
– Have the critical project success factors been clearly defined and agreed and signed off with stakeho
● Describe what is the capability to be acquired (i.e. what is being bought?)
– How will value for money be achieved and measured?

Risk analysis
● Describe key risks to the procurement/project, considering:
– the project risk management plan; and
– ‘show-stopping’ risks.
● Describe how identified risks will be managed through the procurement process, including:
– implications of transferring risks; and
– implications of delivery models on risk.
Evidence presented in this section should demonstrate:
● stress test modelling under various risk scenarios has been undertaken (do not limit this to the ideal
scenario but consider consequences if one or more key risks emerge); and
● strategies to lower overall risk.

Opportunity analysis
Identify any opportunities (additional to intended benefits) that may arise during procurement and project delive
outline any strategies to capitalise and manage their potential.

Policy context
● Describe the government policies that impact on or influence the procurement, including:
 – how policy implications will be managed throughout the procurement;
– the ability of each procurement method to address policy requirements;
– probity risks and ethical issues; and
– interfaces with the regulatory framework, and any impacts this may have on the different procuremen
● Outline how the project priorities align with other departmental and broader government projects and
including:
– interfaces with other governmental projects, including location and timing synergies.

Market analysis
Provide an analysis of the market capability and capacity to meet the procurement objectives.
Evidence presented in this section should demonstrate:
● the ability of the market to deliver the project objectives and produce what is needed;
● general market capacity and expected interest in this project;
● the opportunity and need to influence and develop markets;
● market familiarity with the type of project;
● the market’s familiarity doing business with government; and
● market access to suppliers and resources, noting any expected supply anomalies in the availability o
materials or components.
This section should include (as appropriate):
● current and forecast market activity levels;
● supplier community characteristics;
● supply chain characteristics and methods within applicable industries;
● the market structure, for example, the number of players, if there is a monopoly; and
● maturity of the market.

Agency capability and management arrangements

Outline the capability of the agency to manage the procurement including:
● the agency’s capacity to manage what is required in the procurement under different delivery models
● management capability in the agency ;
● where projects cross organisational boundaries, clear management arrangements are in place to en
alignment of all organisations business objectives;
● governance arrangements within the agency;
● if there is a skilled and experienced procurement/project team with clearly defined roles and respons
not, if there is access to expertise for those fulfilling the roles);
● reporting and monitoring arrangements;
● if there are systems and processes in place for monitoring and controlling project expenditure and fo
and tracking realisation of project benefits;
● if governance arrangements are robust enough to ensure that bad news is not filtered out of reports
management; and
● if processes and training are in place to ensure ethical behaviour to support accountability and open
procurement process, giving supplier’s confidence to participate and reduce the cost of managing ris
corruption etc.).

Procurement option evaluation process and outcomes

Outline the process used to evaluate procurement options and determine the preferred delivery model.
Present the outcomes of the procurement short-listing and detailed analysis.
Short-listing
Document the process and criteria for short-listing potential options, and present short-listing results:
● Short-list an agreed range of procurement options to be considered in the detailed evaluation.
● Outline the process and criteria used to short-list:
 – examine existing local, national and international precedents;
– consider whether mandatory requirements exclude any delivery models; and
– unique project characteristics.
● Present the results of the short-listing:
– Identify short-listed models, and clearly demonstrate the proposed options are capable of delivering
– Provide reasons for models not short-listed where applicable.
Detailed analysis
<Document the process, criteria and rankings for detailed analysis of short-listed options.>
Establish a framework for the comparative analysis of procurement options, including the identification and ran
of evaluation criteria and a system for rating the options against each criterion. The evaluation criteria should b
by the project objectives, as well as analysis of information compiled during the data gathering stage of the pro
strategy development and documented in the preceding template sections.
This should include:
● identifying the project objectives and unique aspects of the project that can be used to determine pr
model suitability (note: these would also be measures of project success);
● drafting evaluation criteria against which to assess each procurement option, consistent with the ov
objectives for the project;
● agreeing the relative materiality of each criterion, ranking the criteria in terms of high, medium or low
(establish a rating system to facilitate a qualitative assessment of the procurement options against t
criteria); and
● undertaking an assessment of key project risks relevant to selecting a procurement approach (build
risk analysis already completed to date).
To assist you to shape the procurement objectives, consider completing the following table:
Procurement Description Priority Ranking Discussion
objective
Risk Extent to which the High/Med/ Higher <Explain why
management delivery model Low priority – the objective
supports effective higher has been
risk management ranking given its
and mitigation particular
ranking>
Time – time Extent to which the
to market delivery model
facilitates rapid
selection of
contractors
Time – Extent to which the
delivery deliver model
speed/time facilitates rapid
to delivery
completion
Innovation – Extent to which the
outcomes delivery model
maximises
opportunities for
innovation in
project outcomes
Innovation – Extent to which the
delivery delivery model
 maximises
opportunities for
innovation in
delivery method
and approach
Certainty – Extent to which the
cost delivery model
provides the State
with certainty
regarding cost
outcomes
Certainty – Extent to which the
time delivery model
provides the State
with certainty
regarding time
outcomes
Note: The table has been populated with generic procurement objectives and descriptions that should be edite
specific project.

Document the process, criteria and rankings for detailed analysis of short-listed options.
Template evaluation matrix
The results of an assessment should be summarised in an evaluation matrix, such as the following example:
Evaluation criteria Importan Option 1 Option 2 Option 3 Option 4
ce of
criteria
Operational flexibility
The extent to which each
procurement option enables
the government to retain
flexibility in terms of the
operational profile
Risk management
The extent to which each
procurement option provides
incentives effectively and
efficiently to manage and
reduce risks, thereby
minimising the whole-of-life-
cost to the government
Time to deliver project
The extent to which each
procurement option is able to
support achieving an
operational supply by X date.
Market interest
The extent to which each
procurement option assists in
maximising market interest
amongst the appropriate
market participants with the
relevant skills, expertise and
capacity to deliver the project
Value for money
The extent to which each
procurement option assists in
maximising the government’s
value for money from
implementing the project:
● design and
construction
innovation
● other innovation
factors
● whole-of-life cost
considerations
● risk allocation
● competitive tension
● government
development and
tender costs and
resources
● external development
and tender costs
Budget certainty
The extent to which each
procurement option assist in
providing earlier budget
certainty to the government
Flexibility (future scope
changes)
The extent to which each
procurement option assists
the government in managing
and implementing changes to
the functional requirements of
the project over time
(particularly in relation to any
variation in the required
capacity of the plant)
Stakeholder management
The extent to which each
procurement option assists
the government in managing
stakeholders through the
delivery of the project
Overall rating
 Suggested evaluation criteria rating system:
● 4 – the procurement option is extremely effective in satisfying the requirements of the criterion;
● 3 – the procurement option is effective in satisfying the requirements of the criterion;
● 2 – the procurement option just satisfies the requirements of the criterion; or
● 1 – the procurement option is ineffective in satisfying the requirements of the criterion.
Preferred procurement option
● Demonstrate that the preferred procurement methodology addresses the key procurement objective
● Provide a value-for-money assessment of the preferred procurement option.
● Outline how the preferred procurement model will be tailored to the given project.
● Complete the delivery strategy options analysis:
– How will the market be engaged and how will the engagement be reflected contractually?
– Advise about approaches for tendering and contracting with an analysis on which is most appropriat
implications of the procurement methodology options (risk and opportunity – the risk management st
influence choice of procurement methodology).
– Is there a case for limited tendering, a Partnerships Victoria PPP or alliancing?
– Are there post-construction services that could be bundled into the constructions contract (e.g. finan
maintenance, ongoing service delivery) in which case a PPP could be considered?
– There may be a need for more than one procurement activity such as separating acquisition from su
procuring design services independently of construction.
– Acquisition can be performance based.
– Industry standard practices may exist and can be used or there may be a need to innovate in the inte
getting optimal alignment between suppliers and buyers.
– The procurement methodology needs to be worked out for the life of the procurement and include po
activity to ensure delivery of contracted benefits, obtain ongoing improvements, mange relationships
suppliers and control the costs and performance schedule.
– Summarise the commercial structure to be implemented to deliver the project using the preferred pro
model, including the contractual framework, proposed contract term, potential risk allocation and pot
payment mechanism. Address any legislative requirements.

DEMONSTRATION / OBSERVATION
1. You will be observed performing the criteria listed below in a workplace or simulated
environment.
o work with others to determine procurement requirements and produce a
procurement management plan for a project o carry out procurement and contracting activities according to
processes o monitor activities across a project's life cycle and resolve issues that could affect
achievement of project objectives o create and maintain procurement records and documentation according
requirements of project and organisation o document a review of procurement management processes and
describe the general features of a procurement management plan o summarise procurement proced
required documentation o identify criteria that could be used to select vendors or suppliers o explai
conditions and legal obligations of contracts as they relate to
 project procurement o explain probity and project governance constraints that relate to project
procurement in a project and industry context.

• .For this Demonstration / Observation Checklist you can be observed in a workplace, or you can be obs
one role play scenario. You may choose a role play scenario discussed between yourself and your traine
a case study related to this subject.
• Role plays can and should be modified to suit the industry you are working in or in a simulated workpla
with your trainer

2. You can review previous assessments completed by you and marked as satisfactory,
identifying where the particular Skill or Knowledge is demonstrated. In this case use the Demonstration / Ob
Checklist form and note the location by assessment number, page and paragraph number in the “How and w
were observed” column.

3. You can have a competency interview with your Assessor who will ask you specific questions.
Verify your conversation with a transcript of the questions and answers.

4. You can write a further report specifically addressing the skills and knowledge as required and
as detailed on the attached checklist In this case use the observation form and note the location by report pa
paragraph number in the “How and where actions were observed” column.
You will be provided with access to:
5. Office equipment and technology

6. Workplace documents, organisational policies and procedures for subject

7. Examples of forms, documents & templates where applicable

8. Case studies and, where possible, real situations

9. Interaction with others

SIMULATED CONSTRUCTION PROCUREMENT PLAN

Figure 1: Site location: The site area is approximately 7892 sq.m and is located at
Camberwell Rd, Hawthorn East VIC 3123.

This is a report to visit the construction site. It identified with our construction modules The
construction site visit was sorted out on 12 May 2019. The construction site named Taman
Impian Murni and it is situated in Camberwell Rd, Hawthorn East VIC 3123. This task is
private houses. There are 42 unit twofold story porch house and three story patio house. The
reason for the site visit was basic which is we expected to comprehend and envision the
hypothesis that addresses educated in class. This is an incredible open door for us to
increase some construction information for the arrangement of their future career.Construction
Methods and Management
Duration: 2 Weeks 20 hours per week

Scope:

1. To observe how your company meets its obligations.

2. To identify strengths in the approach used by the company.
3. Any improvements/ Suggestions for the company.
4. Who holds responsibility for the functions.
Observation include:
- All statutory requirements related to the company, and building and construction
process, including any licensing requirements site communication processes, including
site meetings and any written communication used
- OHS, including all induction, safety analysis and reporting processes
- welfare of the workforce, including subcontractors
- supply, installation, maintenance and handling of materials, and plant and equipment
hazard management in relation to safety staff and contractor management including
 HR and IR functions scheduling for multiple projects
- managing variance in the project costing, cost monitoring, cost control and reporting
- processing progress claims and payments
- management of multiple sites and project control, including management of delays
- Procurement plan

On every visit our team have target to focus and analysis each of above scope in depth, the
day one started with taking to the company project manager and building relationship with
them, He agreed to share the information we were looking into for our college assessment.

Details on statutory requirements related to the company, and building and

construction process, including any licensing requirements site communication
processes, including site meetings and any written communication used :

Building and construction process:

The structure exchanges and works will be upheld by pinnacle cranes for the lifting of
materials, formwork derricks to lift reused formwork, Ali makes to transport agents and
materials to the decks, satellite putting blasts to place solid, exclusive border edge screens to
give fall insurance to agents. Standards Australia. (2007)
See Appendix 1 materials taking care of design including real plant.

Framework necessities have been considered and the two most huge regions are conceived
to be:

Pulverization
Road to level 4 – non-regular floor plates
Rooftop

Statutory requirements

A Development Approval is required for the works covering the removal, storm cellar and
tower(s) works. We predict that the Development Approval will contain conditions that specific
reports should be finished, submitted and affirmed before works can initiate. Rosefielde,
Steven and Daniel Quinn Mills

Some of these reports requiring endorsement will no doubt be:

Development Management Plan;

Disintegration and Sediment Control;
Earthworks Plan for uncovering

Preceding initiating transitory change of traffic game plans, further endorsements will
be required from Melbourne City Council including however not constrained to:

- Application/Notification to Work on Council Property

- Transitory Lane/Road
 - Conclusion Application
- Application for Permit to Occupy Road
- Nightfall Application
- Common Operational Works
- Scene Operational Works
- Signs and Line Marking Operational Works

Site meetings and written communication used:

We were not permitted to be a piece of any site gatherings so we couldn't get the subtleties of
gatherings and composed correspondence utilized by organization. Yet, by and large we
became more acquainted with that they utilize portable correspondence and face-to-face
gatherings so as to convey site necessities.

supply, installation, maintenance and handling of materials, and plant and equipment hazard
management in relation to safety staff and contractor management including HR and IR
functions scheduling for multiple projects

Under the WHS Act, an individual directing a business or undertaking has the essential
obligation to guarantee, so far as is sensibly practicable, that the wellbeing and security of
labourers and different people are not put in danger from work did as a feature of the lead of
the business or undertaking.
This incorporates guaranteeing the protected use, taking care of and capacity of substances.
The WHS Regulations incorporate explicit obligations for an individual leading a business or
undertaking to deal with the dangers to wellbeing and security related with utilizing, taking
care of, producing and putting away perilous synthetics at a work environment. The
organization is satisfying the obligations as stated below:

· right naming of compartments and pipework, utilizing cautioning bulletins and external
cautioning notices and showing of wellbeing signs
· keeping up a register and show (where important) of dangerous synthetic substances
and giving notice to the controller of show amounts whenever required
· recognizing danger of physical or synthetic response of perilous synthetic substances
and guaranteeing the strength of unsafe synthetics
· guaranteeing that introduction models are not surpassed
· arrangement of wellbeing checking to specialists
· arrangement of data, preparing, guidance and supervision to laborers
· arrangement of spill control framework for perilous synthetics if fundamental
 · acquiring the present Safety Data Sheet (SDS) from the producer, shipper or provider of
the compound
· controlling start sources and amassing of combustible and flammable substances
· arrangement and accessibility of flame insurance, putting out fires gear and crisis and
wellbeing hardware
· setting up a crisis plan if the amount of a class of risky concoction at
· a working environment surpasses the show amount for that risky substance
· dependability and backing of compartments for mass unsafe synthetics including
pipework and connections
· decommissioning of underground stockpiling and taking care of frameworks
· advising the controller when practicable of surrendered tanks in specific conditions

The plant is obtained, think about what it will be utilized for and the wellbeing of the individuals
who use it. Master has attempted a pre-buy chance appraisal to distinguish all perils related
with the establishment, dispatching and utilization of the gear. they have likewise created
suitable controls preceding buy. G.R. Desnoyers

Managing variance in the project costing, cost monitoring, cost control and reporting

Costs are partitioned into immediate and roundabout costs. Inside direct costs, costs are
partitioned into material, subcontract, impermanent work and apparatus costs. Allude
Appendix 3. This financial limit demonstrates total sums for the different classes. Cost
subtleties related with specific cost records would enhance and bolster the total spending
plan.

For undertaking control, chiefs would concentrate on things showing considerable deviation
from planned sums. Specifically, the cost overwhelms in the work and in the "other cost
classification would be deserving of consideration by an undertaking administrator. A following
stage is look in more noteworthy detail at the different parts of these classes. Overwhelms in
expense may be because of lower than anticipated profitability, higher than anticipated pay
rates, higher than anticipated material expenses, or different variables. Much further, low
profitability may be brought about by insufficient preparing, absence of required assets, for
example, hardware or apparatuses, or unnecessary measures of re-work to address quality
issues. Audit of work status report is just the initial phase in task control.

1. Processing progress claims and payments

1.The contractual worker exhibits an advancement guarantee to the planner.

2.The draftsman surveys the case, decides the fiscal sum which the temporary worker is
qualified for under the agreement and issues an advancement authentication to the
contractual worker.

3.The contractual worker exhibits the advancement authentication and an expense receipt to
you for installment.

4.The structure contract expresses a constrained time inside which you should make the
installment. Stukhart, G. and Bell,
Mark on brick: 5:12
Experiment:

I took two bricks and struck them together, a ringing metallic sound was heard which affirmed
the great nature of bricks utilized.

2. Customer service:
Criteria for a product Followed:
95% defect free
All regulatory requirements are met
All reports and online displays tie out and balance.

Appendix:

Appendix: 1
Appendix: 2
Appendix 3:
 Table 1

ASCE Journal of Construction Engineering and Management

Part 3 -group discussion

 EXPERIENCE ON OUR CONSTRUCTION SITE VISIT:

While we reach the construction site, the administration give every one of us a security cap as a head assuran
any mishap occur in Construction site. They have to guarantee we as a whole appropriately attired with wellbe
protector and secured shoe to ensure ourselves before we entering the site. Security is the most significant pa
construction site. Entire encompassing of site was secured by vertical storing. A short concise about the ventur
by Mr Lim before we begin the visit around the site. R.L. Tucker

When we experience the construction site, we can plainly observed a couple temporary works installed

Description Board : Project

data sign board appeared
front of the principle
entrance.

Safeguard board
Precaution board were all
around set at the principle
entrance as an update.
Everybody in the site is
required wellbeing gear to
forestall mishap.
 Hoarding: The building site
is fenced by vertical
accumulating. Storing is
utilized to stop unapproved
individual access to the
site. It is considered a
hazardous demonstration
on the off chance that you
go into building site
without the consent

The fascinating thing we observed was this venture really finished with piling and secured by strip footing. Strip
have two capacity, it go about as a top and go about as a shaft (ground beam)

Pile foundation is a profound establishment which is utilized in this task. Pile foundation are the piece of a stru
to convey and exchange the heap of the structure to the bearing ground situated at some profundity subterrane
Material of heaping can be steel, timber or cement and it crashed into soil and to help establishment, holding d
different structures. Points of interest of heap establishment is it reasonable for all kind of soil.

The other detailed study i have enclose in the report as below.

 - Two resources required at your construction site
1. Machinery eg: Concrete Mixer A Concrete Mixer is a gadget that joins bond, total, for example, sand or
water to frame concrete. Exceptional solid transport trucks are made to transport and blend cement up
construction site. They can be accused of dry materials and water, with the blending happening amid
transport.Construction Engineering and Management,13.

2. Raw material eg: bricks

Fill up the Procurement Material slip

Procure Material Slip

Date: 28th May 2019 Deliver To: Site 1

Requested By: Labour (Mr Jim)

Approved By: Architect

Recommended Supplier:
Charge To Account: Direct Material Mr. David Meyer.

Description Needed By Quantity Price Total

Bricks pallets Labours 500 $4 $2000

Total $2000