Project Procurement and Contract Management
Read the short scenario and all supporting information carefully before addressing the tasks.
Responses should demonstrate comprehension of the course concepts addressed during the live sessions, online material, cases, readings, and discussions.
Your analysis should be well-structured, clear, and concise, and it should address all the issues raised.
Your answers should be supported by relevant theories, concepts, examples, as well as business and academic references. References must be submitted in accordance with APA v7 referencing standards.
ENOWA, NEOM’s energy and water company, is planning to build a sustainable project that includes the construction of a first-of-its-kind selective desalination plant powered by 100% renewable energy in Oxagon, NEOM’s advanced manufacturing and innovation city. This project will be developed in conjunction with Japanese trading company, ITOCHU, and Veolia, a global leader in water, waste, and energy management solutions.
The company has appointed an experienced project manager to oversee the procurement and contract management aspects of the project’s construction and the physical infrastructure of the desalinisation plant’s facilities.
The project manager has been tasked to provide insights and advice to the project’s steering committee in various key procurement areas. This include identifying and selecting potential vendors, negotiating contracts, and managing procurement risks. The company has a strong commitment to sustainability and ethical business practices and wants to ensure that the vendors they select share these values.
Abstract From Press Release:
Set to produce its early-water in 2024, the new facility will be key to realizing Enowa’s ambitions to create a sustainable, abundant water supply for residential, industrial, and commercial use. The new plant will meet the water needs of NEOM with a production capacity of 500,000m3 of desalinated water per day by project completion in 2025, approximately 30% of NEOM’s forecasted total water demand.
In line with NEOM’s environmental goals, it will use advanced and innovative membrane separation technologies to produce water, as well as concentrated brine streams. This enables the brine to be classified as a product, rather than waste, therefore minimizing the plant’s environmental impact and redefining the entire business model for desalination facilities of the future. Brine generated from the desalination plant will be treated by Enowa to feed industries utilizing High Purity Industrial Salt, Bromine, Boron, Potassium, Gypsum, Magnesium and Rare Metal feedstocks.
Full Press Release: Link Links to an external site., File Download File.
Identified Issues and Challenges
The PM has already put a team together, and they have identified several key issues and challenges that must be addressed:
The project involves multiple vendors and subcontractors, and coordination and communication will be critical to ensure that the project is completed successfully.
The project requires specialized skills and equipment that may not be available from local vendors, which will require international procurement.
The project must adhere to strict ethical standards, and must incorporate sustainability and governance principles across all planning and execution stages.
The project involves significant risks, including delays, cost overruns, and quality issues, and these risks must be identified and managed through appropriate contract types and risk mitigation strategies
Assuming the role of the project manager, develop a procurement and contract management plan that addresses your analytical interpretation of the issues and challenges above, while incorporating the principles of ethics, sustainability, and governance. In addition, you should consider vendor selection methods and address the risks related to the procurement and contracting processes.
What criteria should be used to select a vendor for the procurements associated with the construction and physical infrastructure aspects of the project? Explain your answer.
Critically discuss the different types of contracts that are commonly used in project procurement. Which type of contract would you recommend using, and why?
Identify and evaluate the risks associated with this project’s procurements and offer recommendations on how to mitigate them.
Explain the principles of ethics and sustainability and how they apply to this project. What role does the project manager play in ensuring that the project is managed ethically and sustainably?
From a project procurement and contract management perspective, what steps and/or measures could the project manager take to ensure the project is completed on time, within budget, and to the satisfaction of all stakeholders?