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301191 Procurement in Aviva Construction Assessment Answer

301191 Project Procurement Systems Spring 2019

Major Assignment Group Report (40%) and Individual Presentation (20%)

Weight:
60%
Type of Collaboration:
Both (Individual & Group)
Due:
Presentation: Week 13. Report: Week 14, 23:59 Friday 25 October 2019
Submission:
Online via vUWS
Format:
A professional written report (group; 30 marks) and a professional oral presentation (individual; 30 marks)

You have been appointed as the first Chief Procurement Officer of a medium sized company. The company does not have any policies or procedures for the procurement function. All employees currently purchase the required goods and services using their own initiative. There are no common processes or documentation. Describe in detail how you would go about introducing best practice procurement across the organization. Your response should cover areas such as cultural change, organizational structure.

The assignment comprises two components, including a group written professional report (Part 1; 30 marks; as- sessed as a team) and an oral presentation (Part 2; 30 marks; assessed individually). Your team is required to write a fully referenced and well structured professional report on your assigned topic and to make an oral presenta- tion on your report. The sources of information that you use for your presentation are your written professional report.

Professional Report (30 marks)

The submission must be a professionally written report. The report should be prepared jointly by all team members and will be assessed as team work. The report should be AT LEAST 4,000 words in length (excluding references and appendices). Page numbers are mandatory. You are encouraged to discuss the assignment with the teaching staff and other team members. The use of illustrations such as figures and tables, and other graphical information is encouraged to aid in your explanation and enliven your writing as well as to aid in the assessors understanding of the report. You should also use headings (including main and sub-headings) where appropriate to effectively structure and

organise the various sections of your report. The words you choose for the main and sub-headings should be able to succinctly reflect what you are trying to express in the various sections of the report. Remember, the report must be written in a logical and systemic format, which can be easily understood for assessment.

As well as content and structure, referencing correctly is equally important.Your report does not have to be overly referenced. However, the source of the information referred to in your report should be made clear. You must adopt the Harvard style for referencing. The report should be written in MS Word file and submitted electronically on vUWS through the assignment dropbox (not via Turnitin) by the due date and time, together with a Turnitin Originality Report. If an appendix is in some other format than MS Word, you may upload it as a separate file when lodging your submission. Each team only needs to lodge one submission. Student names, student IDs, assignment team number, and report topic should be on the cover page.

Turnitin Originality Report

Turnitin is web-based text-matching software that identifies and reports on similarities between documents. It is also widely utilised as a tool to improve academic writing skills. 

Turnitin is used in this unit to assist in the marking of the Professional Report. Before lodging submissions on vUWS, each group is required to obtain an Originality Report generated by Turnitin, by submitting the group assignment through the Turnitin system. A group must submit the corresponding Originality Report (as a separate attachment file) on vUWS when submitting their Professional Report on vUWS. Not submitting either one document may result in your being awarded zero (0) mark for your assignment.

PowerPoint Presentation (30 marks)

Presentations are in PowerPoint format. The presentation should be prepared and delivered as a team and will be assessed individually. Each group member will have four (4) minutes to present. The PowerPoint files should be submitted electronically on vUWS by the due date and time.Each team only needs to lodge one submission. The scripts used for your presentation should be included in your submission as note embedded in the PowerPoint file. Student names, student IDs, assignment team number, and report topic should be on the first slide. Because of the different time slots for the presentations by different groups, the submission of the PowerPoint files is more for the purpose of a progress check than marking by the teaching staff. You will be able to make minor amendments to your PowerPoint file and presentation after the submission. However, late submissions may incur penalties(refer to General Assessment Requirements).

Teaming Up

For this assignment, you are required to work in a team of up to three (3) students who are formally enrolled in this unit. A vUWS group discussion forum will be created exclusively for your team to facilitate your collaboration outside lecture and workshop times.

During Week 1, you are required to form your own team in the class and report to the lecturer. If you fail to do so, the teaching staff will help you by randomly enrolling you into a group with vacancies. If you wish to change your group membership, you must discuss it with the unit coordinator and seek his formal written approval. The unit coordinator will decide at his discretion whether or not to approve the proposed change on a case-by-case basis. Changing group membership without the unit coordinators approval may result in being awarded zero (0) mark for your assignment. A group list will be publicized on vUWS and regularly updated until WSU Census Date. It is every student’s responsibility to check this group list regularly and resort any group problem to the Unit Coordinator in a timely manner. Citing group issues at a late stage during the semester as an excuse wont be accepted.

Each team MUST have a team leader who will be managing and coordinating the team. Upon forming up your team, the team leader is required to contact the unit coordinator via email

Answer

Procurement Management

Executive Summary 

This paper deals with process of procurement in an organisation. With the help of procurement process the Aviva construction will be able to know how the involved procurement activity will offer exact value with respect to the money spent. The process will enable the Aviva construction to actualize the bigger goals and fulfil the related objectives. It will enable the Aviva construction to form a procurement strategy and put it in place to ensure its effectiveness. With exact execution of the plan the effectiveness of the procurement plan will be futile (Baily et.al., 2018). The report on procurement process will streamline all steps for clarity and better performance. 

Introduction 

Procurement is the method of strategic assortment and negotiation of merchandises or facilities which is very essential for an organization irrespective of its governing body (government or non-government organization). In the era of globalization, most of the organizations have their own allocated procurement route and rules.

The name of company is Aviva Construction pvt. Ltd. which has just come into force. Hence a full-proof procurement strategy is required to take this start-up to a whole new level. The Aviva construction needs to follow a certain set of procurement rules in order to grow efficiently. The budget of the Aviva construction is not huge hence it will be considered while designing the strategy.  The Aviva construction is located in Sydeny, Australia and provide services for constructions. 

The Aviva construction goes by the theories put forth by procurement scholars as well as practitioners that does not fit all size, every task and every Aviva construction needs a personalized strategy to devise a procurement plan that best suits the requirement.

The types of procurement can be listed as follows: 

  • Stock 
  • Single 
  • Inventory that’s vendor managed 
  • One time
  • Series 

Corporate Vision and Mission Statement 

The corporate mission of the Aviva construction is to fulfil the business goals in such a working environment where only fairness, courtesy and honesty prosper and traverse across its departments, business clients, associates, staff, suppliers, vendors, community and society on the whole (Fu et.al., 2015). Customer service and customer satisfaction are important to the Aviva construction and with innovation, the Aviva construction strives to achieve it by offering best service and products in the industry. 

The vision of the Aviva construction is to become the best customer-centric organization, simultaneously constructing a place where customer come with trust and leave with confidence after busying its products/services. The Aviva construction is here because they are here. 

Procurement’s Vision and mission statement 

The Aviva construction’s procurement vision and mission statement is that the sourcing and procurement landscape consistently comes up with fresh challenges, enhanced risks and better opportunities making the procurement process complex. In order to have longer availability of important goods at reasonable price, our Aviva construction needs to have a well-turned out procurement strategy that is made after systematic assessment (Mclauchlin & Mossburg, 2015). In the past few years, the Aviva construction has focused more on devising apt procurement strategy having spae for healthy supplier-buyer relationship feature, smooth interdependencies, thoughtful planning along with goods wise classifications.
Procurement

The procurement rules and regulations of Queensland government are stepwise discussed below. 

Queensland government follows a three step procurement process. They are procurement planning, supplier engagement and managing supply arrangement, respectively. 

Procurement’s Vision and mission statement

Procurement Planning

Demand analysis and supply market analysis are the prime part of procurement planning. Depending upon the demand and supply ratio the whole procurement plan is made. Available options are analyzed after figuring out the appropriate market demand. The amount of supply to the market depends on various parameters like availability of goods, obtainability of labors. Therefore supply to the market also depends on the above mentioned fact analysis. A proper procurement planning can accelerate the whole procurement process. 

Supplier Engagement

Any organization builds up its reputation by its work profile. After planning it is immensely important to execute the plan properly. Occasionally during execution of plan it became essential to recreate work plan due to some unavoidable circumstances. After suitable procurement planning, Queensland government analyses supplier engagement. This segment is consisting of four sub-segments. First sub-segment is developing requirements. Developing requirement assure business growth which eventually assists to empower the financial stability of the organization. Second sub-segment is ‘going to market’ or market survey. Appropriate market survey can create an immensely important database which can statistically show the increased or decreased rate of demand of any merchandise. Such crucial database always benefits the negotiation procedure further. Evaluation and selection is the third sub-segment under which the market survey is scrutinized. The last and final sub-segment of supplier engagement segment is award. Any supplier who effectively accomplished the above mentioned phases of marketing they are awarded by the Queensland government. Such awards help to build an awareness and eagerness among the suppliers. 

Managing Supply Arrangement

After appropriate planning and survey the final stage of procurement is compiled by the administration of the organization. The most crucial step in this segment is contract implementation. Under legal surveillance the management of the organization specifies the entire facilities or merchandise list after negotiation which denotes the completion of contract implementation procedure. After validation of the contract a constant monitoring is essential to ensure the product or service qualities. Queensland government employs highly experienced executives to observe the entire procedure. After completion of the assignment a thorough review and cross examination procedure take places to ratify any loophole of the given assignment. After finishing the entire procurement system Queensland government officially concludes the assignment. 

NSW Procurment process

NSW way of procurement

NSW Procurment process

Analyze Business needs – This is the first and crucial step where the Aviva construction needs to analyze the needs. Engaging stakeholders at this early stage is definitely going to be beneficial as a lot of experience will come into play. From very basic needs like resources, the Aviva construction must analyze the complex requirements like contractor, asset and so on. The entire project depends upon the needs that are being finalized in this step hence the requirement list should be made with attentive mindset. Once everything is done the procurement plan can shift to the next step. 

Analyze and Engage Market – This is the next step of this procurement plan. Since the needs of the business are known the Aviva construction can now move on to analyzing the market in order to research for the options that are available in the market. Considering the budget of the entire project Aviva construction can go on finding the relevant thing that is under the budget. The Aviva construction can hereby decide whether it is going to make or buy the product or service will be outsourced. All in all the engagement with the market is established under this step and a quest for resources is continued. Stakeholder’s opinion is also taken into consideration while analyzing the market. The goal is to figure out the solutions to the project that will make it successful. 

To begin with, supply hazard can be characterized extensively utilizing three components: 

1. Market chance: Availability of potential providers for the products, kind of market (restraining infrastructure or oligopoly condition) and passage boundary to the market 

2. Execution chance: Supplier's quality-and execution related issues, which can incorporate things like the provider's entrance to new innovation or the provider's pace at embracing new innovation 

3. Multifaceted nature hazard: Associated issues with institutionalization of the item or administration. Particular of the nudge ucts or administrations is basic. 

Second, benefit effect can be characterized as: 

1. Effect on productivity: This factor looks to address the run of the mill benefit yielded on the acquisition of every item. 

2. Significance of procurement: This factor tries to address the significance or need of the acquisition of every product. 

3. Estimation of procurement: This tends to the unmistakable and immaterial costs joined to or the worth got from the acquisition of every item. 

Finalize Procurement Strategy – Now since the needs of the project are defined and the market has been analyzed for the resources, it is the time to develop right strategy. The Aviva construction now needs to take a discussion with the relevant peoples and finalize the procurement strategy. Now here the Aviva construction can decide whether to work with local suppliers or take the project to global level. These are all the parts of strategy development. Marketplace, resources, budget, etc everything should be considered while designing the strategy and before finalizing it should be reviewed again. 

Approach the Market – Now is the time for the Aviva construction to approach the market. In this step the business’s as well as stakeholder’s need will be taken care of. The Aviva construction for the first time moves to the market with an objective to buying things. The Aviva construction will also look for the competitors in the market and what the competitors are doing. Assets will be looked for and source to get the essentials will be set here. It will be decided in this step which seller is going to get bulk order or not. The order which is allocate to the seller in the market also varies according to the seller/resource chosen by the competitor. 

Select – Now comes the time for selection. The tender is to be allotted at this step after considering all the important factors like; budget, expectation, time duration and so on. The rankings of the qualifiers will be analyzed accordingly. Key stakeholder’s need will also be taken care of while allotting the tender. Now after analyzing everything the tender parties will be called for the selection process and the final selection will be made from those who qualify for the getting the tender. Since after this process the tender is to be allocated to the contractor, it is very essential to chose the right person for the final selection process.

The Aviva construction believes in matching the externally available resources that are offered by various vendors as well as suppliers that to the in-house requirements   of the Aviva construction. This approach always has come across as an efficient method for brainstorming, visualizing, discussing as well as illustrating the opportunities related to differentiated buying along with supplier scheming.  

Negotiate and Award – Here the bidding will be done. The supplier is to be selected in this process hence the negotiation will be done with the qualifiers and the right authority will get the contract. Mostly this process is focused on finance and technical capabilities of the contractors. The tender will be allotted to the authority which is providing the value within budget. Technical audits, credit check and product sampling/trial is also done at this step only where these factors are taken into consideration before allotment of the project. Decommissioning, removal and disposal costs are also considered before making the final allotment. 

Implement Arrangement – Now since the Aviva construction has allotted the project to a contractor, it is the time when both the parties focus on understanding each other’s requirements in a better way. The focus is now on maintaining this relationship to the end of the project. The success strategy is to be discussed before carrying out the project. After both the parties are agree with each other, the implementation is done. The arrangements are made from both the Aviva construction and the contractor by taking stakeholder’s expectations in mind. The goal is to implement the project effectively in order to successfully lead the project. 

Manage Arrangement – Now comes the process of managing the arrangements. The goal here is to arrange the resources and everything in such a way that project’s qualifications are successfully met and objectives are easily achieved. Since the time of the project entirely depends on the type of purchase, strategy, length of project and marketplace, the goal is to manage these in such a way that the project is completed in a limited time frame giving the best outcome. The long term goal here is to increase the credibility of the organization by putting in the real value to the project. The target is to efficiently complete the project by reducing the risk factor. 

The team behind supply management requires addressing various bought items as well as the supplier-buyer rapport tackled with befitting strategies as the challenges and issues with respect to each one of them may differ drastically (Nagel, 2015). 

This is the reason why most procurement mangers plan and implement many procuring portfolio methods to demarcate items and extract efficient buying strategies.
This Aviva construction believe in employing a buying portfolio method for procuring ingredients. The same approach they apply to identify noncritical items and strategies for everyday procuring process of non-tangible commodities or services. They also use the same for the procurement of indirect and direct commodities (Schapper et.al., 2017). They also use it to come up with a strategy to form a synergy and use it across their business entities. 

Renew – This is the last and final step of this procurement strategy where everything is discussed from start. Whether there were any shortcomings with the project or there was something which can be improved. The entire project’s cost is to be calculated and analyzed whether it was under budget or not. The focus is also laid on whether there is a possibility of renewing anything, if yes then necessary steps are taken to achieve the goal. 

Other prerequisite to implement procurement process in Aviva construction

New regulations and processes can be formed with respect to procurement having much better control, in order the beat the competition and enhance the transparency. 

The existing staff will be required to be trained or new recruits need to be hired. 

In case the new framework will be not be completed or put into practice, we will have to work on the compliances problems if any with respect to the market dynamics and competition (Bower, 2013). This can be achieved by consistent monitoring. Depending on all these factors, the procurement process can be rated in terms of its effectiveness. Enhanced insights and very closely managing the process can yield better results. 

If required procurement providing service agents can be used or suppliers can be contacted directly after studying the whole sourcing market. 

The changing political and economical scenarios must also be considered by planning the process as the outdated or old processes cannot be blindly followed if any of the two has seen transformation in the recent years (Cox, 2018). There must be scope for the follow up activity as well as tracking the order. There should also be scope of including performance supervising practice in the procurement contracts. 

Approach for indirect procurements must be more structured as well as risk-based. Effectiveness of contract management is also very important for the overall-efficiency of a procurement process. Hence, it must be carefully planned and executed. There must be scope for reporting on important performance parameters as well as reporting methodologies along with KPIs (Croom, 2017). 

Procurement process is as important as budgeting and must be planned with utmost care with a set framework and timeframe and its execution and monitoring must be done with care too. 

Eastablishing procurement team

Decision about centralization

Procurement team can be eastablished in three ways. It can be centeralized as well as decentrilized.

centrilised team

De-centerlised team

Hybrid

Better Control

Quicker, less control

Best of both

Standard Policies  and bureaucratic

Committed people



Defined responsibilities


Segregation of Duties 

It can be done with the help of following tools in my Aviva construction.

Procedure Map 

It is useful for distinguishing potential shortcomings like absence of responsibility, duplication of responsibility, people missing from endorsement process, struggle of obligation, lack of control, more than one individual in control etc.

People Factor 

This grid help to know about the nature of people in procurement team and allot them work according to their abilities. Skill vs will grid is grid which divide people according to their level of skills and their commitment toward work.

Segregation of Duties

Excite people- these people have good skills but they are not willing to do so they are good to motivate other team member.

Delegate- These people are good to delegate jobs to others as they have knoweldge as well as interest

Direct- These people need directions as they are low on skill and will both

Guide- These people need guideance because these people want to do work but they are not able to do.

Conflict handling

Settling Conflict and mistaken assumptions 5 styles: 

Competing

These people are confident and un agreeable. They pursues claim worries at cost of others. These people use their ability to control. 

Accommodating 

These peopl are unassertive and helpful. They neglect possess concerns. They are Obedient and  requests.

 Avoiding – 

These people are unassertive and uncooperative. They neither pursure their own or others concerns.They don’t like to deal  with struggle 

Collaborating 

They are self-assured and agreeable. They prefer to find an answer that fulfils the two concerns

Compromising – These people think about mutual soultions for conflicts.

people who think about mutual solutions for conflicts

Leadership

There are two kind of leadership style which being procurement manager in Aviva construction, I must choose any style of both to impement procurement practices.

Transactional

Transformational

Task remunerate among pioneer and colleagues

change the requirements, qualities and desires of devotees to aggregate interests

Rewards and discipline to impact inspiration and execution

Consider more note worthy’s benefit of the gathering above self motivate supporters through trust

Effective in undertaking based groups – producing, monotonous work, hands on pioneers

Higher degrees of exertion, fulfilment and execution

Not viable for complex exercises


Team development in our Aviva construction

There are four major processes and stages in group development. These stages can be classified as stage 1:  forming, stage 2:  storming, stage 3: norming and stage 4:  performing

Team development in our Aviva construction

Stage 1 forming: this stage comprises of the following elements-

Developing trust in between the organization and its customers

Making contacts with the customers and strong bonding for long term relationship

Establishing Expectations at the basic level with the strong foothold

Identifying the various similarities

Agreeing upon a common goal and objectives of the organization

Setting up of the ground basic rules and regulations for the organization

Stage 2 storming:  this is the most important stage where many   teams experience failure. It comprises of the following elements-

Expressing of different ideas, views, opinions, suggestions and feelings about a product or a service

Reacting to the leadership of the managers or top management in the organization

The staff members are the team members might be independent or might be counter dependent fore support

Pushing up of boundaries

Challenging the leadership and authority of their managers or supervisors

Running for position

Identifying the raw materials and resources available

Stage 3 norming- this stage comprises of the most number of elements and can be considered as one of the lengthiest processes.

The decision through negotiating and building consensus upon a product or service

The team members agreed upon their role as a team member and processing related to solving a problem  or an issue

Resolving differences amongst team members

Appreciating the strength of the team members

Respecting authority of the team member or  leader

Having a constructive feedback

Commitment towards  common goals and objectives

Progressing towards the goals and objectives

Stage for performing- this is the last stage in the process of group development which comprises of the following elements.

Working collaboratively  as a team of individuals working towards a common goal

Being empathetic and caring towards every member in the team

The group and team must have a Unique Identity for themselves which must be appreciated

Members should be independent in completing their roles

The team should be able to find solutions to issues and problems collectively

Using various processes and structures

Delegating work

Allowing the team members to adjust themselves according to the new requirements of the task

Learning from suggestions and feedbacks and then taking a decision regarding work.

Organization structure of procurement department

Based on above analysis following procurment structure is finalised

Organization structure of procurement department

Ethics

Following ethical consideration will be kept in mind while implementing process

  1. To maintain integrity and impartiality
  2. To maintain commitment to the system of the government
  3. To promote the public good
  4. To maintain accountability and transparency in all works.

Sustainable procurement

Sustainable procurement

We can describe sustainable procurement to be a process where your organization assess their needs for goods and raw materials, various services and other capital objects, and meet this need in such a manner, that it allows them to achieve value out of the amount that they have spent on the process of procurement in terms of profit and benefits. These benefits are not only for the organization, but, they are divided in the society, economy and our natural surroundings.

The concept of Sustainable procurement comprises of three major dimensions namely:

Social sustainability

Environmental sustainability

Economic sustainability

The NSW procurement process will be implemented with sustainability. For this, following things will be taken care 

There are four major objectives to obtain sustainable procurement namely:

  1. Providing effective protection to the environment
  2. Prudently using natural resources without  wastage
  3. Social progress of the nation which recognizes the needs of  everyone including the future generation
  4. Maintaining high and stable levels of economic growth along with growth in employment

Social aspects of Sustainable procurement

The following aspects are not acceptable by the community and Society. These aspects have been discussed below:

  1. Damaging the environment through products
  2. Keeping exploitative practices at work
  3. Unhealthy and unsafe work environment and  workplaces
  4. Lacking of professional and ethical corporate behavior
  5. Failure to financially payback to suppliers and contractors
  6. Following sharp practices which lead to stripping shareholder value.

There are few more considerations while implementing procurement policies in Aviva constructions which will be taken care. These are mentioned below.

Category management –  

Category management is one of the major phase in a procurement process. Identifying different categories and managing them accordingly is extremely important in order to lead a project to success. Category management is basically an 8 stage process –

  1. Defining Category – First and foremost step is to define the category and identify the type. Unless and until the identity of the category is clear, nothing can be done upon it.
    Categories are basically of 6 types –
    • Supply Source
    • Internal use
    • Corporate
    • Supply Markets
    • Material based
    • Specification and department baseCategory management
  2. Asses the role of the category – Next step is to assess the role of the category. It should be found out what the category is meant for.
  3. Assess its performance – Performance of the category should be defined as well hence the analysis on the performance factor should be done.
  4. Devise category plan/objectives – A plan should be made for a specific category objective.
  5. Detail an overall strategy – A detailed strategy should be prepared.
  6. Set specific category tactics – Each category should have specified tactics in order to attain the best outcome.
  7. Implement the plan – The next task is the implementation of the plan. 
  8. Review its progress – The progress of the implemented plan should be reviewed in order to find out the performance of the plan.

Spend Analysis –

Under any project the analysis of expenditure is extremely important. In order to keep the project under the budget the spend analysis should be done. The factors that are taken into consideration in spend analysis are –

  1. Purchased item
  2. Date of Purchase
  3. Location
  4. Number of suppliers involved
  5. Expenditure on each
  6. Amount paid for the item

Once the data on these factors is collected the analysis can be made. 

spend analysis

Through spend analysis the cost can be minimized as well as the sellers involved can be reduced accordingly. These are important when the aim is to keep the project under budget. The financial reporting becomes easier and more accurate through spend analysis. The purchasing process is also improved and better supply strategies can be prepared. All in all spend analysis is important for any project. 

Selection of supplier – 

The selection of suppliers during any project should not be taken casually as it can impact the entire project. The supplier should be genuine, cost-effective and with moral values. Poor selection of supplier can cost any organization the entire project. 

The aim should be to select a supplier which can be retained for long-term and is profitable at the same time. The reputation of supplier in the market should be analyzed before finalizing the contract. The goal is to expand the business hence the supplier should be chosen wisely as a single project can keep the reputation of business at stake. 

The chosen supplier should be able to maintain continuous communication and should provide excellent service at the same time. Risk factor should be taken into consideration while selecting a supplier and supplier with least risk possibility should be chosen. 

Conclusion

The report concluded about the steps involved in the process identifying the procurement material/goods/service; recognizing its need; juggling with the options available as source of procurement; studying of the price, conditions and terms; preparation of purchasing order; delivery timeline; expedition; and receiving the order, checking the purchase and the receipt. Depending on the type of goods or services purchased there can be types of procurement. It is imperative to understand which procurement type to follow depending on the need and the nature of the goods.

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