DATE:

PROCUREMENT METHODOLOGY
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1.00 Introduction

In formulating the procurement strategy for this project, we have moved away
from rigidly following the traditional tendered approach, in favour of a Best
Value approach.

The procurement strategy relies on appointing the contractor identified in

Appendix One Project Structure.

Reasoning behind this procurement methodology is that

 Tendering is no longer recognised as the only and/or most effective way of
procuring goods and services.
 A partnering approach facilitates early integration of the specialists upstream
of the contract letting period providing designers with much needed help.
 Reduction in design/construction/implementation time

2.00 Background to Best value Approach

A Best Value approach is more discriminating than equating price with cost and
selecting designers and constructors almost exclusively on the basis of
tendered price. It is achieved by creating an integrated project process
around four key elements of:
 Partnering the Supply Chain
 Partnering the Production of Components Chain
 Product Development
 Project Implementation

The above four elements and their application in this project are summarised as
follows:

Partnering the Supply Chain.

 Early utilisation and development of an alliance with a contractor in the supply
chain for the various services demanded by this project, facilitates early
organisation and management of the project.
 The relationship between the constructors/consultants in the attached Project
Structure is soundly based and the parties recognise their mutual
interdependence.
 Value for money can be demonstrated in comparison between
consultants/constructors and measurement of their performance over a
sustained period of their involvement on similar projects for other
 organisations. We will also use open book accounting to adequately
demonstrate value for money and ensure proper project auditing. Budget
holders are responsible for demonstrating accountability, auditability and
transparency of their respective project costs.

Partnering the Production of Components Chain

 Facilitates early detailed planning and management of the production
process, leading to elimination of waste and ensuring the right components
are produced and delivered at the right time, in the right order and without any
defects.
 Allows effective logistics management.
 Allows detailed engineering design of components and sub-assemblies.

Product Development
 Requires detailed knowledge by consultants and contractors of Sovereign
aspirations.
 Allows innovating with consultants/suppliers to improve the product without
loss of reliability.
 Requires continuity from a team with product design skills and close links to
the supply chain through which the skills of suppliers and their innovations
can be utilised.

Project Implementation
 Use of this procurement methodology allows the implementation team, to
work together in the design of the systems, selection of key components and
pre-planning.
 More effective project implementation is seen as one of the keys, which can
unlock greater efficiency, arising from for example precise engineering fit.
 Process requires a dedicated team of consultants/contractors who develop
their expertise over a series of projects.

3.00 Value Management

We will implement a value management approach of eliminating waste from the

brief and from the design before binding commitments are made. For example
through taking unnecessary costs out of designs, ensuring clearer understanding
of the brief by all project participants and improving team-working. Working
closely with consultants, contractors and suppliers to implement lean production

4.00 Conclusion

The conventional tender process is generally sequential reflecting the input of

designers, constructors and key suppliers. This process may well minimise the
risk to constructors by defining what precisely, through specifications and
contracts, what the next company in the process will do. In this instance the
conventional tender process is unlikely to protect Sovereign, as on this project it
will act as a barrier to using the skills and knowledge of suppliers and
constructors effectively in the design and planning stages of this project.

The conventional tender process assumes Sovereign will benefit from choosing a
new team of designers, constructors and suppliers competitively for every project
we undertake. The repeated selection of new teams inhibits learning, innovation
and the development of skilled and experienced teams.

The key premise of the Best Value approach is that teams of designers,
constructors and suppliers work together through a series of projects,
continuously developing the product and the supply chain, eliminating waste in
the delivery process, innovating and learning from experience.

The Best Value approach on this project will facilitate a quality driven agenda,
zero defects and right first time, delivery on time and to budget, stripping out
waste, whether it be in design, materials or construction on site. It also means
after-sales care and reduced cost in use.

5.00 Recommendation

That the Project Manager be given authority to implement the Best Value
approach procurement strategy, as set out in this paper and utilising the services
of the consultants as listed in the attached Appendix One Project Structure.

Project Manger

Recommendation Approved

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Project Convenor
 APPENDIX ONE
PROJECT STRUCTURE