It is important that the Owner's selection of a procurement strategy is driven by the project's VfM proposition (as articulated in the Business Case). The procurement strategy should not dictate the project's VfM proposition.
However, for VfM outcomes to be achieved:
'… the procurement strategy needs to be well planned, managed and executed. Successfully undertaking the procurement of major projects is a complex and substantial activity and resources with the relevant capacity and capability need to be deployed'.12
If the Owner is unable to apply sufficient and capable resources to the project, then irrespective of whether the contract is well structured, it is unlikely that optimal VfM outcomes will be recognised or understood, let alone realised (for this reason the Business Case has analysis supporting the recommended procurement strategy).
| A Cautionary Note 'VfM' is not an expression that can be used to ignore the impacts of price, but should take into account both price and non-price factors. Value-for-Money refers to 'procurement outcomes based on a balanced judgement of financial and non-financial factors relevant to the procurement'. (Quoted from Part 2, Section 9(a), the Victorian Public Finance and Accountability Bill 2009) |
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12 'Infrastructure procurement: delivering long term value', March 2008, HM Treasury UK Government, (page 39).