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PMN605 Strategic Project Procurement

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  • Course Code: PMN605
  • University: Queensland University Of Technology
  • Country: Australia

Question 1

(a) Contract Monitoring and Delivery in Operations/Manufacture
  1. What “legacy” benefits are envisaged as being provided byCrossrail;
  2. How did “legacy” benefits influence the financial approach taken byCrossrail?
(b) Supply Chain Management - in context of this unit - and case of government procurement across national borders 
  1. How successful has Crossrail been in converging their supplychain?
  2. What else could the UK government/Crossrail have done to facilitate supply chainmanagement?
  • Suggest approaches to government procurement policy and procedures that may have increased interest from bidders headquartered

Question 2

  • Discuss the approach to risk taken by the UK government to procure the Crossrail
  • Suggest and justify alternative approaches to risk that the UK Government could have taken to procuring the Crossrail project, including approaches to combining risk allocation and risk

Question 3

Assess and justify the relative importance procurement versus other Project Management areas/dimensions that affect project outcomes.

Question 4

Assess the extent of congruence of theory and practice in other Project Management areas/dimensions and comment, in a critical way, on how far away you think the Project Management Discipline is from a Project Management Body of Scientific Knowledge.

 

Answer:

Introduction

Crossrail is the largest construction project that is being undertaken in the history of Europe. The Crossrail Limited was established in the year 2001 in order to build the largest rail line in London, which will be known as Elizabeth line as it starts functioning. This project is wholly owned subsidiary undertaken by the Transport for London (TfL) in sponsorship with the Department for Transport. After the completion of the project, this rail line will be run by the TfL as an integral part of the transport network of London (Crossrail, 2018). This is a 118Km rail line project which is going to pass through nearly 40 stations. This rail is going to cover distance from Heathrow to Reading in the West till Abbey Wood and Shenfield in the East. This project has been undertaken with an aim to carry nearly 200 million passengers on a yearly basis increasing the rail capacity of London by 10 per cent. This rail line has the ability to facilitate the rail transportation in London and will also be able to accommodate the growing population of London in a strategic manner. Apart from this, the project has economic benefits also. It has been forecasted that this project will make an addition of £42 billion in the economy of United Kingdom. This project has other benefits as well like, because of this project 40 public spaces around London will be improved; 200 meter long new trains will be developed for this purpose, 42 Km of new tunnel’s construction will take place. The Elizabeth line is London’s first underground line project that is been undertaken in last 30 years. With the help of this rail line, an increase of 1.5 million people will be able to travel to central London in a time span of 45 minutes (Bechtel, 2018). This project was initially scheduled to be delivered by 2017, but due to some delay this project is being estimated to be complete by 2018. Hence, it is believed that this project is being undertaken with a twin approach that is to cope with the increasing population of London as well as to achieve economic growth. This is a very huge and complex project and hence, requires highly qualified engineering and project management techniques to deliver a successful project (Railway Technology, 2018). This project has attracted worldwide attention and many world leaders are eyeing on this project of London, as it will have a direct impact on the economy of UK.

 

1.

Legacy

Legacy in simple words can be understood as a system where past is used for learning purpose and with the help of this, a different future is developed. Development of legacy is important as it provides a sense to the project being undertaken (Bosak, 2018). The Crossrail project is aiming to develop legacy with this project. The objective of this project is to collate as well as disseminate better practices with the lessons learned from the past projects and by undertaking innovation in the construction activity of this Crossrail. This project has taken into consideration many other factors that have the ability to influence the future projects of UK. One of the important legacy benefits that can be identified with this project is that this project has given emphasis on women empowerment. This has been done by Crossrail by boosting the contribution of women in the construction activities and by encouraging them to work in such complex and important projects. According to the facts, UK has the lowest number of women working in the construction industry. The number of women engineers is very less in UK; only 8.5% of women are engineers in the country. This trend has been broken by Crossrail Ltd. The company has ensured that nearly one third of the positions in the organization are filled by women. This rate is higher than the average working rate of women in UK, which is just 20% of women in UK have job roles. Crossrail has made sure that it provides lucrative opportunity to the women workforce to come ahead and work with Crossrail. The main benefit of this is that it will improve the job performance rate of women and will also improve the women participation in the overall workforce of the country. Many of the engineers at Crossrail are women. Hence, it can be said that Crossrail is setting benchmark for future project managers to employee women in the construction work. This will have a direct impact on the economic conditions of the country (Crossrail, 2018). Another legacy being set by Crossrail is related to archaeology. As the company is taking excavation activity, many new artefacts has been unearthed from these sites, which has the ability to increase the interest of many institutions and individuals undertaking activities in this field. Hence, it can be said that after the completion of this project, the archaeological legacy of the country will be boosted and an increase in the public visit can be expected through this project (McDermott, 2017). Another legacy benefits attached to this project is that it has facilitated the legacy of learning. Crossrail has taken the initiative to include ideas submitted from almost every stakeholders involved in this project, so that a diverse view and new and innovative ideas can be gathered to undertake this project. Another benefit of this project is that that Crossrail would share the experiences of this project with the future projects so that the project managers undertaking such projects in future can learn form the activities of Crossrail. The website, documents and templates used by Crossrail will be allowed by future project managers to pinch with pride on their projects. The sharing of this information is easy for Crossrail, as this project has been funded by UK government. Hence, knowledge and experience are the two most important factors that can act as a source of profit for future projects (Wolmar, 2018). All these benefits have a direct impact on the financial performance of the project. These benefits can help in strategic coordination of the decisions of financial professionals and the goals and objectives of the project. With the help of these legacies, the project managers can undertake financial measurements as well as use the appropriate metrics and can add value to the project activities. This is so because with the help of these legacies, a balanced analysis can be undertaken that will help in improving the financial performance of the project (Deloitte, 2017).  

 

Supply Chain

Management of supply chain is an important activity in order to gain competitive advantage in the industry. This also helps in maximization of customer value (NC State University, 2017). With the help of its supply chain, Crossrail is aiming to drive economic growth and also achieve environmental and social sustainability. Crossrail has taken efforts to give opportunity to all sizes of firms as well as firms from different regions. As a result, 62% of the firms in the supply chain are from outside London. There is a need to have a mixture of local as well as international supply chains in order to gain competitive advantage (Premier Construction, 2016). Some of the benefits attached to international supply chain are that it helps in reducing the costs, and hence, increase in revenue is expected as well as improved reliability as international manufacturing is used in the project (Abdellaue, 2010). The benefit of lower wages can be utilized as well as the fewer regulatory restrictions can also be utilized in international supply chain (Andersen & Christensen, 2005). Though apart from these advantages, international supply chains also have certain drawbacks like managing the flow of supply chain becomes very difficult as coordination is hampered because of indulgence of international boundaries. Also, economic factors like taxes, duties as well as foreign exchange rates and other important trade barriers may differ from country to country. This directly impacts the management of supply chain and the quality of the project (Meixell & Gargeya, 2005). This is the main reason that majority of the supply chain in Crossrail is from within the national boundaries.

Few key lessons have been learned by Crossrail when it comes to their procurement activity. These lessons majorly include evaluation of the results of market sounding that has helped to analyze the future trends. Developing packages in a manner that proper risk allocation can be undertaken, undertaking the activity of designing the works information; making use of the expert panel in order to gain stronger assurance. Apart from this, Crossrail has also learned that it is very important to develop the entire market in order to achieve inclusive economic growth (Learning Legacy, 2018). Crossrail understands the importance of this project and as a result has used a vast supply chain. The main strategy that has been adopted by Crossrail in order to manage their supply chain includes monitoring and data collection. For this purpose, the Crossrail has adopted few major pillars to consider in the supply chain management; this includes supply chain data management and control; use of effective supply chain intelligence; engagement of supply chain in the risk management activity; adopting fair payment system in the supply chain; and communicating the results as well as feedback along with planning directed towards performance improvement (Crossrail, 2018).

Apart from the above strategies, there are many other strategies that can be adopted by Crossrail in order to facilitate their supply management activities. The first thing that can be adopted is that the planning activity of Crossrail should be demand- driven that is based on real time demands. The main benefit of this approach is that it helps in analyzing the opportunities and using them and to find out the potential threats so that measures to mitigate such threats can be developed pre hand. Apart from this, Crossrail can develop an agile supply chain that will help to deal with rapid planning. This will help in managing the changing demands in a strategic manner. Another strategy that can be adopted by Crossrail is that it can align the business goals with the supply chain with the help of integration of operations planning and the business planning. This will also help in improving the financial performance. Another thing that can be adopted is the integration of sustainability with the supply chain operations been undertaken at Crossrail (Slade, 2017). If the Crossrail becomes successful in adopting these measures in its supply chain operations, then there are chances that a visible change will be seen in the supply chain management.

Competitiveness has increased tremendously in today’s market. Hence, it has become very important to develop strategies that will help to attract international bidders by increasing their interest in our projects. UK has always been a favourite destination for foreign direct investment (FDI) investors. On the basis of Ernst & Young’s 2017 European Attractiveness Survey, it was found that UK ranked second among the most attractive market for FDI investors. It reflects that the factors of UK are in favour of the country and its projects. But, in order to maintain competitiveness, it is important to continuously innovate and as a result new strategies need to be adopted. The first and the most important thing that can be adopted by Crossrail is that they should develop a post Brexit strategy in order to attract investors depending upon the current situation of the country. This will help in demonstrating that Crossrail still continues to give the best results even after the Brexit. Another strategy is that Crossrail can build strong networks in order to attract more international bidders as they will see the chances of growth because of these networks. This will also show that the company does not have limited reliance (Hurley, 2017). It is also important to know what these international bidders expect from your business and then adopt changes accordingly to attract them (Street Easy, 2016). Also, it is very important to keep the books of the business updated. This is so because in UK, the law of ‘caveat emptor’ that is ‘buyer beware’ is applicable. There, it has been seen that in case of UK, the international bidders before bidding analyze the records of the business in order to decide whether they want to invest in that particular business or not. Also, an advisor can be adopted in order to deal with international matters. Because of this, special emphasis can be given to these bidders and accordingly strategies can be designed, planned and implemented (Hurley, 2017).

 

2. Risk Management

Risk management is very important for successful completion of projects being undertaken on such a huge scale (Majeed, 2018). It has been seen that the funding framework of this project established in the year 2007 declared that the cost incurred on this project will be met by the UK government (Crossrail, 2018). As a result, in order to implement this project in a successful manner, it becomes necessary to adopt necessary approach towards the risk management of this project. The UK government adopted the risk management approach for Crossrail by analyzing and using many different standard approaches that were earlier used by the UK government. The main features of the risk approach adopted by UK in this case includes the adoption of project specific processes as well as procedures that are developed by keeping in mind about the Crossrail project. Apart from this, the risk management includes risk ownership that will help in determining who played an important role in mitigating the risk. That is both the organization as well as individuals were included in this projects risk approach to make it strategically more meaningful. Also, the UK government ensured that a fully dedicated risk management team is developed who will undertake the management activity of the processes. This will also help to keep a check on the compliance with the necessary policies and procedures as well as regulations that are important to this project. Apart from this, regular quantification of the risks attached was being undertaken so that monitoring and control can be practiced in the risk management of Crossrail. It has been pointed out that the risk management approach adopted by UK in Crossrail project was different in many aspects from the other projects being undertaken by the UK government. This difference majorly revolved around governance of this project, the organizational culture, the selection of the risk management tools, process, and the reporting as well as analysis of this project.

In the case of risk management tools, the difference in case of Crossrail is the involvement of risk management database and the risk analysis (Monte Carlo tools).

Under the organization and culture heading, the main difference in this project was the use of Alarm Risk Maturity Model and the National Performance Model adopted for risk management in this project. Apart from this, a central risk management organization has been developed especially for this project. Also, a clear accountability was developed for the activities being undertaken so that risks can be managed strategically.

Under the heading of process risk management, policy and processes were developed by keeping into consideration the major objectives of the risk management approach adopted by UK. Proper documentation of the policy and processes has been undertaken with the help of which risk management strategies has been developed. Also, apart from this, qualitative and quantitative risk assessment has been undertaken.

Under the heading of governance risk, subcommittee has been developed whose main task is to review the implementation of the risk management as well as to monitor the performance of risk management.

Under the heading of reporting and analysis, reporting of the information related to risks has been adopted and different risk assessment strategies have been adopted with the help of which risk analysis has become easy (Underwood, 2018).

This change in the risk management strategy was adopted by the UK government because in past few projects undertaken by the UK government, the government failed to complete those projects within the estimated budget and schedule. Some of the examples of such failed projects include the Jubilee Line Extension which experienced cost overrun as well as time overrun. The main reason behind this failure was the poor integration of risks between the contractors. Another example from which lessons were taken in the Crossrail project is the Heathrow Express Rail Link which was delivered very late and also cost overrun was experienced in this project. The reason behind this was that the managers of the project overlooked the risk related to the use of sprayed concrete lining. Another example is of the Channel Tunnel in which nearly 80% over budget had happened and 20% over time as estimated in the initial phase.  Hence, in order to avoid such issues in this project, a different approach was adopted for the risk management of the Crossrail project (Underwood, 2018).  

 


Other risk management approaches

Apart from the above used risk management approach, there are other approaches as well that can be used by the UK government. One of the best approaches is the combination of the risk allocation and the risk sharing. This approach is usually adopted in hybrid cases of project alliancing where risks are determined on the basis of the risk allocation on the basis of client or the contractor (Hovy, 2015). Because of risk sharing, the chances of project failures are reduced to a great extent. This is so because the client as well as the contractor both has e equal responsibility in this approach. Blame for the failure of projects or the rise of risks cannot be given to a single person. The client does not have the ability to undertake the construction activities and hence, the client may deny from sharing the risks attached to the project as the client does not play any role in controlling the events that may appear in the construction process (Koolwijk, 2018). But, this was considered in traditional construction projects or contract. Now the scenario has changed, this is so because it is believed that client’s requirements play a major role in determining the risks attached to a specific project (NAP, 2018). Hence, the risks arising from the conditions of the contract cannot be avoided by the contractor and also, all the uncertainties cannot be identified by the contractor. Hence, today, the system of shared risk has been adopted in projects where the risk is shared by both the client as well as the contractor. In this approach, a common alliance is built on the basis of which both the parties agree to share the risks involved in a specific project which represents moving away from the traditional type of contracts (Koolwijk, 2018).

Though, it is believed that there are also certain drawbacks of this approach. Like for example, in such projects it is believed that such projects cannot be completely fair and reasonable. Also, there are high chances of project disputes because of which project delays can be caused (Almarri & Blackwell, 2014). This may also impact the quality of the projects. Hence, it is very important to develop a decision system in the projects that adopt risk sharing approach especially in the public construction projects. This decision system will help to analyze the risk sharing decisions (Lee, Lee, & Wang, 2009). Some of the models that can be adopted include risk liability judgement model; assessment model on risk controlling ability (KarimiAzari, Mousavi, Mousavi, & Hosseini, 2011), evaluation model related to cost of risk sharing and evaluation model related to performance of risk sharing; this is best suitable for procurement contract and undertakes activities like quantitative risk analysis and evaluation of the risks attached to the projects (Gupta & Thakkar, 2018).

In the case of public private partnership (PPP) projects, it has been seen that a large number of uncertainties are there that affects the procurement approach. Hence, in PPP projects it is important to undertake comprehensive risk analysis which should be followed by a set of valid actions. All these efforts will help to achieve success in such complex projects (Li, Akintoye, & Hardcastle, 2001).

Another major approach that can be adopted includes involving risk management strategy with the external financing sources. In the case of Crossrail, it has been seen that this project has adopted strategies to integrate risk management strategies with the supply chain of the project. Apart from this, the project can also adopt the risk management approach in which the external financing sources are also covered under the risk management strategies of the project. This will save the project managers from the price shocks taking place in the national as well as international market. This can take place with the help of contractual agreements, developing strong relationships with the shareholders of the project, banks, etc. This way the project can rely on these external sources at the time of financial trouble (Campello, Giambona, Graham, & Harvey, 2011). This risk management approach will help the project managers to maintain their liquidity of the project and will also save the project from experiencing cost overrun (Amberg & Friberg, 2016). In the case of Crossrail, it can be said that the project has taken many appropriate measures from past experiences in order to avoid factors that leads to the failure of the project. But still, it has been seen that the project has not been able to complete the project according to the stipulated time and has delayed the delivery date of the complete project. Adoption of mixture of the above mentioned risk management approaches may help Crossrail to rectify the mistakes in the project and can facilitate the project completion work in an effective manner. Therefore, the UK government can use these strategies and can take lesson for their future projects.

Conclusion

In the end, it can be concluded that in order to achieve success, it is very important to consider many factors like, supply chain management, risk management, innovation, procurement, etc. It is very important that the project managers analyze past projects in order to learn from past mistakes and avoid such mistakes in the future. This will ensure higher success rate of the project. Also, the past experience can help in framing strategies for the current project. Different approaches, models as well as decision -making system can be adopted in order to manage projects efficiently. It has been discussed that Crossrail is one of the largest rail construction projects that is being undertaken in Europe. As a result, there are many factors that need to be coordinated in a proper manner to achieve success in the project. It has been seen that many projects undertaken by the UK government in past has suffered failure despite of the fact that the project were completed. This means that the failure of the project does not depend on the fact that whether the project was completed or not. Success or failure of the project rather depends on the factors like the budget of the project, time schedule of the project, quality of the project, involvement of international as well as local bidders in the project, management of external findings in proper manner, strong supply chain management, right approach to risk management, etc. Every project has some legacies to pass. Crossrail has focused on women empowerment and job creation as well as leading with example by adopting innovative approached to undertake this project. Crossrail has given special emphasis to the supply chain of the project and has combined the supply chain with risk management activity of the project. The UK government by learning from their past experiences has adopted different approach towards risk management in this project. It has involved factors like governance, process, risk analysis, adoption of risk management tools, organization and culture, etc. to make this project different from their past projects and set example for future projects. Though, it has been found out that the project has still not been able to deliver the project on time and within the speculated budget. Hence, it can be said that there is still scope for improvements in future projects so that cost overrun and time overrun can be avoided.

 

References

Abdellaue, C. (2010). Risks in global supply chains. Retrieved from arno.uvt.nl: https://arno.uvt.nl/show.cgi?fid=120843

Almarri, K., & Blackwell, P. (2014). Improving risk sharing and investment appraisal for PPP procurement success in large green projects. Procedia - Social and Behavioral Sciences, 119, 847 – 856.

Amberg, N., & Friberg, R. (2016). Three Approaches to Risk Management— and How and Why Swedish Companies Use Them. Journal of Applied Corporate Finance, 28(1).

Andersen, P. H., & Christensen, P. R. (2005). Bridges over troubled water: suppliers as connective nodes in global supply networks. Journal of Business Research, 58(9), 1261-1273.

Bechtel. (2018). Working with Crossrail to deliver the Elizabeth line. Retrieved from www.bechtel.com: https://www.bechtel.com/projects/crossrail-london/

Bosak, S. V. (2018). What is legacy? Retrieved from www.legacyproject.org: https://www.legacyproject.org/guides/whatislegacy.html

Campello, M., Giambona, E., Graham, J. R., & Harvey, C. R. (2011). Liquidity management and corporate investment during a financial crisis. Review of Financial Studies, 24(6), 1944-1979.

Crossrail. (2018). About Crossrail Ltd . Retrieved from www.crossrail.co.uk: https://www.crossrail.co.uk/about-us/

Crossrail. (2018). Boosting the representation of women working in construction. Retrieved from www.crossrail.co.uk: https://www.crossrail.co.uk/careers/engineer-your-future

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Gupta, V. K., & Thakkar, J. J. (2018). A quantitative risk assessment methodology for construction project. Sådhanå, 1-16.

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KarimiAzari, A., Mousavi, N., Mousavi, S. F., & Hosseini, S. (2011). Risk assessment model selection in construction industry. Expert Systems with Applications, 38, 9105–9111.

Koolwijk, J. (2018). Risks Shared and Allocated by Construction Clients and Contractors in Dutch (hybrid) Project Alliances. Retrieved from www.irbnet.de: https://www.irbnet.de/daten/iconda/CIB19085.pdf

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Lee, T.-C., Lee, T.-H., & Wang, C.-H. (2009). Decision analysis for construction contract risk-sharing. Journal of Marine Science and Technology, 17(2), 75-87.

Li, B., Akintoye, A., & Hardcastle, C. (2001). Risk analysis and allocation in public private partnership projects. 17th Annual ARCOM Conference (pp. 895-904). University of.

Majeed, M. (2018). Risk Management: an Important Part of Project Management. Retrieved from project-management.com: https://project-management.com/risk-management-an-important-part-of-project-management/

McDermott, J. (2017). The archaeological legacy of the Crossrail excavations. Retrieved from www.bbc.com: https://www.bbc.com/news/uk-england-london-38919314

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NC State University. (2017). What is Supply Chain Management (SCM)? Retrieved from scm.ncsu.edu: https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management-scm

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Railway Technology. (2018). Crossrail, London. Retrieved from www.railway-technology.com: https://www.railway-technology.com/projects/crossrail/

Slade, S. (2017). 6 Strategies for Better Supply Chain Management in the Current Economy. Retrieved from blogs.oracle.com: https://blogs.oracle.com/scm/5-strategies-for-better-supply-chain-management-in-the-current-economy

Street Easy. (2016). How to Attract International Real Estate Buyers. Retrieved from streeteasy.com: https://streeteasy.com/blog/international-real-estate-buyers/

Underwood, N. (2018). Implementing risk management at Crossrail. Retrieved from learninglegacy.crossrail.co.uk: https://learninglegacy.crossrail.co.uk/documents/implementing-risk-management-crossrail/

Wolmar, C. (2018). The Story of Crossrail. Head of Zeus Ltd.                           

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Lloyd Bernabe

MSc in Accounting

London, United Kingdom

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All the questions where answered professionally, very happy with the result. I am very happy and i definitely recommend

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User Id: 343249 - 26 Feb 2020

Australia

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Very good and very helpful , I advise to use this website Thanks too much for helping

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User Id: 255833 - 25 Feb 2020

Australia

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The project looked great but I wish y’all would have used the nsca textbook for the project

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User Id: 218030 - 25 Feb 2020

Australia

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very efficiency and good work .delivery before dealine most of the time.thank you for help.

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User Id: 332509 - 25 Feb 2020

Australia

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