Procurement and Other Evils

In one of the many visits I make to what we hope to be new clients, I met with a group of the that Owner Company's people. One of those folks was the Director of Procurement. He was a very nice fellow and looked to be very competent with the best interests of his company at heart.

Most of the conversation centered around the great difficulty this client was having in bringing projects in on budget or schedule. These fine people were being savaged by their management because of their perceived inability to manage projects, i.e. costs were not in line with budgets and schedules were not being met.

Just as hammers see nails everywhere, the Director of Procurement was sure that better purchasing practices would be a large part of the solution. He was interested in how contracts and purchase orders could be better structured to achieve cost protection for his company. As is often the case with Corporate Procurement, the focus was on risk avoidance rather than risk management.

While the subject of why projects regularly overrun their budgets is something that we could talk about for days, (in fact I have, see my last two columns in the ForeRunner Precedent) I experience is that procurement is more often the problem than the solution. Projects revolve around two centers of activity; purchasing and construction. Everything on a project is subservient to those two activities. So purchasing is very very important to projects.

But like everything, projects need to be managed. That is the function of Project Managers. In my view, everybody and everything in a project reports to the Project Manager. When that is not the case, projects suffer. Projects especially suffer when the most important elements, purchasing and construction, are outside the control of the Project Manager.

Going back to my meeting at the possible future client. The organizational titles for the project people at the meeting were "Manager" and "Supervisor". The organizational title for the procurement person was "Director". The client was very open and honest about their difficulties in successfully executing projects. I think the titles of the people in that meeting say it all.