Planning saves

Planning for procurement is one of the central policies of good procurement, along with its corollary requirement to first make an accurate assessment of government need. Construction contractors in Canada make that point in this article.

Report calls for culture change in procurement processes

“There needs to be more dialogue with government and private sector suppliers so government can become more open to how a supplier addresses a government’s need. Also, suppliers need to become more familiar with the rules and regulations that necessarily control government expenditure,” said Kevin McGuinness, co-author of The Price Implications of Government Contracting Practices in the GTHA (Greater Toronto-Hamilton Area).

“We all want to government to operate as efficiently as it can. I do not know anymore who would argue against that.”

Andy Manahan, executive director of RCCAO, said the report looks at how common government and public-sector procurement practices can lead to reduced competition and higher project prices.

Many government procurement representatives are involved in multiple files which “greatly exceeds the number that a private sector buyer would be expected to administer,” the report concluded.

The report provided an example of a Southern Ontario municipality that encountered a $5.6-million cost overrun on a stadium project originally budgeted for $39 million. The report noted that the municipality had placed unrealistic time frames on the project, failed to consult properly before taking the contract to market and failed to conduct proper site testing.

Items such as a required stormwater pond not initially considered in the application, an underestimation in required square footage in the design and an aggressive construction schedule that did not factor in overtime to meet completion all drove up costs.

Procurement barriers such as unrealistic time requirements, contract extension rights or qualification on volume work will cause contractors to adjust their prices for any unattractive contract features, noted McGuinness.

Stronger contractor candidates will also generally refuse to bid work with exceptional risk.

I would note that when the procurement is instigated by special legislation, such as the Guam legislation for the JFK High School project, it is essential that the legislators understand this need and defer to experts. Howling editorials and pumped up populism may make the planning process difficult, but cutting corners for pure political purposes is an expensive and ultimately less popular exercise.