How to select a procurement process for a program or project?

Procurement processes, depending on the desired outcome can be designed to be basic or sophisticated. An easy to understand purchase which is unlikely to present any difficulties during the procurement process can be defined as a basic procurement. In contrast, purchasing different and interconnected components at different times which is likely to present difficulties during the procurement process can be defined as a sophisticated procurement.

The issue then becomes a question of how to distinguish between a situation where a basic procurement process is suitable as opposed to when a more sophisticated procurement process is appropriate. A good starting point, although not the sole determining factor, is the procurement value. For example, purchasing a moderately priced car with no modifications from a commercial dealership is a relatively straightforward procurement activity. Similarly, buying several cars of the same make and model, however with different paint schemes also offered by the dealership, does not make the purchase more difficult. Therefore, purchasing something that is ‘off-the-shelf’, with no modifications and is moderately priced, is an example of a basic procurement.

In contrast, things become trickier when a buyer’s needs have not been clearly articulated and there are no readily available solutions that satisfy those needs. For example, the considered solution that satisfies a buyer’s needs might require integration of extant proven technologies with those that are proven in a laboratory to work. However, these technologies may not be widely available in industry. Because the solution requires a custom design, there is a high probability that it may not be fully functional within the buyer’s expected delivery timeframe. Therefore, purchasing something which includes advanced technologies and requires custom design, is an example where a sophisticated procurement process is appropriate. In general, a sophisticated procurement activity would include; a description of the operating context along with needs, a detailed scope of work, selecting competent solution providers and a payment structure.

In summary, if the purpose of a project is to acquire something that uses proven technologies and is readily offered without modification by suppliers, then it can be realised using a basic procurement method. On the other hand, if a project is to acquire a solution that requires detailed custom design and takes several years to complete, then it can be realised using a sophisticated procurement method. - Michael Kim