Towards a Cost Effective Procurement Process : In Search of New Strategies

When facing a procurement of a complex technical system, many questions are to be asked. The main question is how the best and most suitable systems are obtained, at the right cost. In order to answer that question numerous aspects must be considered and investigated. Even after having conducted careful analysis the question will most certainly never be entirely answered. In the early stages of procurement projects it is important that time is allocated for evaluation and decision-making concerning what truly is needed and most important on the management strategy to use. Procurement projects often misses someone that have a totality perspective, the projects are often extended in time, the experience and competence of the involved actors are often not properly used in the projects and it is impossible to write clear-cut contracts between the involved actors. These incongruities create need for focused and applicable procurement strategies. It is in the beginning of the procurement process that these decisions concerning which procurement strategies to be used in the project have to be made. The strategy decisions should primarily be based on the available competence of the already involved actors, and secondly on what competencies available at possible actors to involve. The competencies needed in the different phases of the procurement project can be predicted fairly accurately. The risks and responsibilities should be distributed among the involved actors depending on their accessible competence and resources. Focus should be on the capabilities of the involved actors instead of on the cost. Decisions made in the initial phases must also allow as much flexibility as possible for the later phases to come. In the research, case studies on procurement projects have been conducted. In the case studies data have been gathered and case study analyses have formed a comprehensive view of procurement projects. The research in this thesis offers insight on the impact of procurement strategy on allocation of responsibilities and risks in procurement projects and the importance of a well formulated procurement strategy is stressed. The procurement strategy is important when to efficiently utilize available competencies and resources. Also, the importance of how to formulate requirements that enable the best possible contribution to the project of all the available and involved actors has been examined. How the requirements are formulated and communicated determine to very large extend how the project should be organised, both by the client and the supplier. This thesis gives guidelines on the organisation of procurement projects for complex technical systems. It further discusses the formulation of procurement strategies depending on the involved actors’ competencies. A framework for procurement of complex technical systems is also presented.