Pain of Contracts and Procurement

 

     Pain of Contracts and Procurement

Every Profession has its own challenge and pride , as a professional it’s depend on us how we tackle them.C&P is integral part of organisation, and has potential to impact company performance.

Contracts and procurement department also have some advantages and disadvantages. Everyone knows the benefits, 

however I  have tried to highlight the few challenges based on my experience.

Time

There is a saying that “curd does not freeze on hand” but it does not apply in construction, here everything is urgent.

Here today you will get the requirement and next day material shall be required on the site. And if you ask for more time, then it will be said directly that you do not know the pain of the site and you don't care about the progress of the site.

Every company has a process to award the work, and it takes time to award any package. 

One thing we have to understand that contracts is not about on-boarding any contractor, it’s a process to select the good contractor. And these process mainly include

-Selection of good vendor (On which all the stakeholders have an opinion)

-Preparation of Contract condition based on package and site requirement

-Preparation of Tender Package

- Requesting offers from contractor

-Negotiation and award

Generally people think preparing contract documents are just copy paste job in standard templet, But it’s not like that.

Every project is different, its needs are different attention, in the same way the work/package is also different and you have to prepare the contracts by aligning operation and business teams ,so that it doesn't hamper company's goal.

And simply I am telling you above process take good amount of time because at each process multiple stakeholders are involved and all have to align.

In the process of award, you also have to see that you are not deviating the company's operating procedure anywhere. Because when there is an audit, then people forget everything and question will be asked directly to you.

Most of the organisation depends on manual process for C&P , which also delay the commitment.

If we can develop standard procedure, technology for award process,it will be great help and it will increase overall efficiency of procurement department.

Budget

We get a budget from the costing team, within that we have to award the package and this is the part of KRA of any C&P professional.

The interesting part is that most of the time provided budget doesn’t have backup based on market condition. And we are asked to award the package well within budget. If the cost exceed the budget then question shall be asked to C&P department about the escalation.

Now a days construction industry has become very competitive and this creates lot of difficulty material procurement and hiring services required for project.

Volatility in Market

In construction cement, steel, copper and Aluminum contribute as major item and now a days their prices are changing frequently. Suppliers are not ready to provide price validity due to fluctuation in market due to which it has become a big challenge for C&P professional to finalize the contractor/supplier and successfully bring them on the site.

Under Doubt

This department is always under suspicion.

No matter how honestly you completing you work and but people will think that this guy have some nexus with the contractor.

The funny thing is when you award two or three packages and the next day you bring something new, people start saying “koi bada jhol kiya hai (made a big mess) “.

Question on Capabilities

If a package is awarded with escalation (exceed the budget), then without knowing the reason, people start questioning the ability of the Purchaser.

And if the award is done within the budget, then it will be said directly that the budget was more.

But no one sees that how much value addition and cost optimization contracts professional had did, people ignore the effort even after knowing it.

Least priority

Everyone thinks that contracts and procurement are the spending department that's why C&P are placed in the least priority when reward is given.

Credit

There can be many reasons for the good or bad performance of any vendor.

But if a contractor is not working properly on site or supplier have delivered material as per requirement, then the C&P guy is said to be directly responsible for that without knowing the actual reason. And everyone will back down and now C&P will be responsible for solving the whole matter.

Conclusion

This department has its own challenges, but it also have a lot of benefits. And the biggest benefit is diversity. You meet a lot of stockholders and learn a lot in this which is very important for a bright professional career, because you can't learn everything from books.

As we know, C&P is an expenditure department, you often get the opportunity to interact with the higher management which gives a different kind of learning.

And I know nothing comes without pain, so ready to take the pain.

Thanks for giving your valuable time, kindly share your feedback.

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