Addressing complex public procurement risk

Blog | October 14, 2014

Public procurement risks and complexityComplex public procurement projects, such as defence contracts, transport infrastructure programmes or major IT systems, bring with them a range of particular considerations and challenges. These types of procurements demand a different approach to everyday purchases. However, with the right planning, resources and methodology – and, increasingly, by using the right technology – public procurement risk can be addressed and managed.

Public procurement and risk

Public procurement processes are vulnerable to the same risks associated with any type of procurement activity. Namely:

  • Late delivery of goods and services
  • Sub-standard or poor quality goods and services
  • Over-ordering of stock and resources
  • Fraud or other crime
  • Not delivering value for money
  • Missed commercial opportunities

However, the more complex the procurement, the greater the risk to all parties concerned. With complex contracts, the level of risk will be magnified. Complex procurements are typically higher profile for organisations in the public sector, attracting an increased level of scrutiny – both formal and informal. Ensuring you have auditable, secure information on both suppliers and their bids is a key way to protect your organisation.

Less certainty and competition

Complex projects may require a new, highly technical or innovative solution. For that reason, there will typically be an increase in the amount of uncertainty and the number of unknown factors, particularly at the outset. Additionally, complex procurement contracts often demand a more specialised, more bespoke approach, there are likely to be fewer suppliers able to meet the full requirements and compete for the business. Finding, selecting and briefing a supplier can be far more involved. Ensuring you have the maximum amount of competition for your contract can also be a challenge so maintaining a dynamic database of potential suppliers and ensure the are appropriately qualified can be a key part of risk management.

Demonstrating accountability

The need for complete transparency and to be seen to be delivering value for money is definitely central to public procurement. Due to the very nature of complex contracts, procuring bodies often find it more difficult to measure accountability and demonstrate value for money within such contracts. These procurement projects are always large – and frequently long – with high-pressure timeframes and mountains of records and documentation. This brings a whole new set of headaches and challenges around tracking, reporting, management information and analysis.

Next-generation eProcurement offers a secure system where all relevant policies and project information can be held. Whilst making all appropriate information accessible to everyone involved in the project.

Managing complex contracts

A complex procurement process demands increased levels of oversight and control – and some new competencies – on the part of the purchasing team and the tools they use. So where a procurement project is deemed a complex one, with all the associated risks, concerns and considerations, public authorities need to ensure they possess the necessary knowledge, resources and technical support, to properly manage these complexities and deliver successful contracts.

To find out more about the challenges of public procurement risks and how eProcurement can help, download our free guide now: Managing Complexity in Public Procurement.