Course Outline Procurement and Contract Management BUSS 5143 Study Period 2 - 2017 Internal - City East Campus Introduction Welcome Welcome to the course Procurement and Contract Management. My name is Tony Ma and I have had extensive experience in the fields of project cost control and procurement. I started in the construction industry in 1977 and have worked in a professional capacity in Hong Kong as project quantity surveyor, cost officer and visiting lecturer in tertiary education before joining the University of South Australia as lecturer of Building in July 1995. I am now the senior lecturer in the School of Natural & Built Environments. I hold a Diploma and an Honours Degree in Quantity Surveying and a Masters Degree in Project Management. In August 2009 I was conferred the Doctor of Project Management specializing in public tender procurement. I am an active member of the professional organizations and have full membership of the Royal Institution of Chartered Surveyors and the Hong Kong Institute of Surveyors. I was conferred an Honorary Fellow of the Hong Kong Institute of Project Management (HKIPM) in December 2005. The HKIPM was established in May 2003 by a group of graduates from our Master of Project Management programs (transnational) in Hong Kong. In addition, I would like to introduce Ms Belinda Lambert and she will be teaching the elements of contract associated with contract management in procurement. Belinda is a lawyer at the Consumer Credit Law Centre SA and has worked for the Crown Solicitor’s Office and law firms. She has a background specialising in commercial law and litigation. She can be contacted at [email protected]. This course addresses the major phases of the procurement cycle as they relate to project management commencing with strategic planning, procurement, acquisition and contracting strategies through to contract administration and finalization. Dr. Tony Ma Course coordinator Course Teaching Staff Primary Coordinator: Dr Tony Ma Location: School of Natural and Built Environments BJ3-14 Telephone: +61 8 8302 2238 Fax: +61 8 8302 2252 Email: [email protected] Staff Home Page: people.unisa.edu.au/Tony.Ma * Please refer to your Course homepage for the most up to date list of course teaching staff. 1Version 3 (23 February 2017) 1Version 3 (23 February 2017) School Contact Details School of Natural and Built Environments Postal Address: School Phone: +61 8 8302 2227 School Fax: +61 8 8302 2252 2Version 3 (23 February 2017) 2Version 3 (23 February 2017) Course Overview Prerequisite(s) There are no prerequisite courses to be completed before this course can be undertaken. Corequisite(s) There are no corequisite courses to be completed in conjunction with this course. Course Aim To provide students with advanced knowledge on procurement methods, contract law and contractual practices common to projects. Course Objectives On completion of this course, students should be able to: CO1. Display advanced theoretical understandings of procurement and contract management processes within project management contexts over the life of a project. CO2. Critically analyse and report on procurement and contract-related problems within project management situations. CO3. Transfer complex knowledge in respect to procurement & contract management in an effective manner. CO4. Demonstrate advanced knowledge of the moral, ethical and legal considerations which underpin the planning and implementation of project procurement and contract management applications. Upon completion of this course, students will have achieved the following combination of Graduate Qualities and Course Objectives: Graduate Qualities being assessed through the course GQ1 GQ2 GQ3 GQ4 GQ5 GQ6 GQ7 CO1 • CO2 • • • CO3 • • CO4 • • Graduate Qualities A graduate of UniSA: GQ1. operates effectively with and upon a body of knowledge of sufficient depth to begin professional practice GQ2. is prepared for life-long learning in pursuit of personal development and excellence in professional practice GQ3. is an effective problem solver, capable of applying logical, critical, and creative thinking to a range of problems GQ4. can work both autonomously and collaboratively as a professional GQ5. is committed to ethical action and social responsibility as a professional and citizen 3Version 3 (23 February 2017) 3Version 3 (23 February 2017) GQ6. communicates effectively in professional practice and as a member of the community GQ7. demonstrates international perspectives as a professional and as a citizen Course Content Students will study a broad set of inter-related theoretical concepts and practical processes across the project lifecycle, including: procurement systems; project deliverables; project resources; green procurement; e- procurement; prequalification systems; tendering processes; negotiation techniques; contract law; contract administration; contract closeout, supply chain management; procurement probity and ethics; and contract dispute resolution. Teaching and Learning Arrangements Lecture 2 hours x 13 weeks Tutorial 1 hour x 13 weeks Unit Value 4.5 units Additional assessment requirements The minimum mark to be achieved in the exam to qualify for a passing grade is 40%. 4Version 3 (23 February 2017) 4Version 3 (23 February 2017) Learning Resources Textbook(s) You will need continual access to the following text(s) to complete this course. The library does not hold multiple copies of the nominated text books. It is strongly recommended that you purchase the book(s). Graw, S 2015, Introduction to the Law of Contracts, 8th edition, Thomson Reuters. Reference(s) A Guide to the Project Management Body of Knowledge (PMBOK Guide), 2013 5th Edition PMI, Philadelphia USA (Chapter 12 -Project Procurement Management recommended ) Bailey et al 2015, Procurement Principles and Management, Eleventh Ed, Pearson Derek H.T. Walker & Steve Rowlinson 2008, Procurement Systems – A cross-industry project management perspective, Taylor & Francis Fleming, Q, 2003, Project Procurement Management – Contracting, Subcontracting, Teaming, 1st edn. FMC Press, California. ISBN 0-9743912-0-4 Graw, S, 2015, An introduction to the Law of Contract, 8th Edition, Thomson Reuters, Australia (latest edition for Law components) Guth, S, 2009, Project Procurement Management: A Guide to Structured Procurements, Guth Ventures LLC Eglin I, 2013, Procurement Management, 1st Ed, Egism Ltd Morris, P, & Pinto JK, 2007, The wiley Guide to Project Technology, Supply Chain, and Procurement Management, John Wiley & Sons Ltd Ward, G., 2008, The Project Manager’s Guide to Purchasing, Gower Publishing Limited, England, ISBN 13:978-0566086922 http://www.ashgate.com/pdf/SamplePages/Project_Managers_Guide_to_Purchasing_Intro.pdf 5Version 3 (23 February 2017) 5Version 3 (23 February 2017) Materials to be accessed online learnonline course site All other course related materials can be accessed through your learnonline course site which you will be able to access from the my Courses section in myUniSA. myUniSA All study related materials can be accessed through: https://my.unisa.edu.au 6Version 3 (23 February 2017) 6Version 3 (23 February 2017) Assessment Assessment Details Details of assessment submission and return are listed under each assessment task. Assessment tasks will be returned to you within two to three weeks of submission. If the Course Coordinator allows submissions in hard copy format, you will be required to attach an Assignment Cover Sheet which is available on the learnonline student help and in myUniSA. Assessment Summary # Form of assessment Length Duration Weighting Due date (Adelaide Time) Submit via Objectives being assessed 1 Essay 1000 words N/A 20% 2 Apr 2017, 11:00 PM learnonline CO1, CO2 2 Group Report 1500 words per person N/A 30% 30 May 2017, 4:00 PM In person, learnonline CO2, CO3, CO4 3 Examination 2000 words (equivalent) 3 hours 50% Other - TBA Other - TBA CO1 Feedback proformas The feedback proforma is available on your learnonline course site. It can be accessed via the Feedback Form link in the Course Essentials block. Assessments Assessment #1 - Legal analysis (Graded) Assessment 1 - Legal analysis (20%) - details of format for submission shall be provided in class or via learnonline Read the following factual account and answer all of the questions at the end: The Onkaparinga Community Hub project is an important $14 million civic project initiated by the City Council in response to studies undertaken demonstrating that existing community facilities were ageing and reaching the end of their useful life. In early 2015, the City consulted with the local community to discuss what they wanted on the site. This consultation found there to be general community support and enthusiasm for an integrated neighbourhood community hub, including a modern community hall, a refurbished library, an upgraded oval and pedestrian linkages with open spaces incorporating public art and the inclusion of Aboriginal culture and local heritage. The City arranged for architects to proceed with detailed drawings to enable tenders for the building to be submitted before the end of the calendar year. They advertised for tenders from building companies for the restoration of the library. The advertisement stated that all tenders would be considered, amongst other criteria, according to “economic viability and integrity of workmanship”. McSunny Fowell Constructions, a building company that had recently been shamed in the media for an engineering design flaw that caused an arterial main road to close, submitted a tender for $ 5 million. A range of tenders were submitted by various other Adelaide builders, including Westside Building Services (WBS), who submitted a tender for $ 5.5 million. WBS is a small company that does not usually take on such big projects, however, they were keen to gain experience from a local government project. In view of their sound reputation for efficiency and quality finish the City awarded the contract to WBS. All other tenderers, including McSunny Fowell Constructions, were notified and thanked for their expressions of interest. McSunny Fowell Constructions heard through the industry grape-vine that the City had accepted a higher 7Version 3 (23 February 2017) 7Version 3 (23 February 2017) tender than theirs. Crash Bangers Demolition (CBD) successfully tendered for the demolition of the existing buildings. This was a much larger project than they were accustomed to so upon receiving official confirmation from the City they immediately set about hiring more employees and purchasing the extra equipment they needed, including a truck. The following advertisement placed by Warp Brothers Demolition appeared in the August edition of the “Machinery and Earthmoving Equipment Trader”: 2002 – Kenworth HR diesel - Enclosed sides – double axel bogey –156,000k. General Haulage. Price negotiable CBD contacted Warp Bros to arrange a time to look at the truck. On August 10 Warp’s representative informed CBD that they would be prepared to sell the truck for $150,000. CBD’s manager asked Warp’s representative if they would keep the deal open until the end of the month to give CBD time to arrange the necessary finance? Warp’s representative replied that he didn’t think this would be a problem. On August 17 CBD wrote to Warp: While we are interested in purchasing the truck you have for sale after looking at other similar trucks we are of the opinion that the price you are proposing is too high. Would you be prepared to accept $125,000 for it? On August 20 Warp replied by letter as follows: Thank you for expression of interest. Unfortunately the price you have proposed does not make sound economic sense to us in view of the prevailing market value for 2002 Kenworth’s. If you change your mind the truck is yours at our price. We wish you success in the Onkaparinga Community project. This letter arrived on August 23. On August 24 CBD were contacted by Westpac who informed them that the necessary finance to purchase the truck had been approved. They immediately posted a letter agreeing to the price that Warp Bros want for their truck. This letter arrived at Warp’s office on August 27. On August 26 Warp Bros were approached by a well-known local builder, who offered to buy the truck for the advertised price of $150,000. Warp immediately accepted the offer and sold the truck to him. On August 27 CBD contacted Warp Bros to arrange delivery of the truck, only to be informed that it has been sold. Since the demolition of the existing facilities was to commence in the first week of September CBD purchased the same make and model of truck from another dealer for $175,000. They are now claiming that Warp Bros should compensate them for the extra cost of buying a new truck. The demolition of the existing facilities commenced the first week of September 2015. All going to plan, construction was scheduled to begin in October 2015 and be completed by December 2016. The contract completion date for the library was Monday August 4 to enable the ‘fit-out’ to commence and be completed in time for the start of Book Week on August 22. The library would be officially opened by the Governor and it was expected that the occasion would also be attended by various high profile members of the community. In mid-July 2016 Westside Building Services (WBS) asked the City’s project manager if the completion date for the contract could be extended by several weeks. WBS was experiencing a cash flow problem since a client for whom they had completed a large renovation went into liquidation resulting in a huge loss in revenue to WBS. After consulting with the City, the project manager notified WBS that it was unable extend the completion date for the contract owing to the scheduled events for the opening date. Instead the City agreed to pay WBS an extra $10,000 if they guaranteed completion by the contract date. WBS agreed and hired the extra labour and purchased the extra supplies they needed to meet the contract deadline. WBS completed the library by the date agreed in their contract. The City is now refusing to pay the extra 8Version 3 (23 February 2017) 8Version 3 (23 February 2017) $10,000 that they promised for completion by that date claiming that Westside Building Services were always obligated to complete by the agreed contract date. Answer ALL of the following Questions Question 1 McSunny Fowell Constructions are threatening to take legal action against the City claiming that they should have accepted their tender before Westside Building Services, since they had costed the project for .5 million dollars less. Advise McSunny Fowell. Question 2 Crash Bangers claim that Warp Bros were obligated to sell them the Kenworth truck for the asking price of $150,000. They are now claiming the extra cost of having to purchase a similar truck from another dealer at a higher price. Advise Crash Bangers. Question 3 Westside Building Services claim to be entitled to the extra $10,000 promised by the City for completing the project on time. Advise Westside Building Services. Assessment #2 - Group Report/Presentation (Graded) Assessment 2 - Group Report and Presentation (30%) - Details of format and submission shall be provided in class or via learnonline. 1. Select one project of significant value or importance to the community. It must be a multi-million value project in Australia. Examples are: a) Adelaide Desalination Plant b) A sustainable apartment project e.g.11-19 Gilles Street, Adelaide, SA 5000 c) Wind farm project in South Australia d) A tramline project in Adelaide e) A 5-6 star Green Project in Adelaide f) A PPP project in Adelaide g) An IT related project, etc. 2. Locate the relevant project information from any legitimate source (e.g. project brochure, internet access, consultants, contracting organisations) 3. You report shall include various components as: a) project particulars (e.g. client, location, budget, duration, other major parties involved, organizational chart) b) Procurement strategies including tendering methods and selection of contract type c) Discuss how tenders are evaluated based on selection criteria. Does pre-qualification plays an important role for contractor selection? d) How the procedural fairness is maintained during the evaluation of bids by the tenderers? e) Tender specification requirements are an integral part of tender documentation. Briefly explain and comment on the types of specifications being used for this project f) Conclude if the overall performance of this project is satisfactory in relation to the overall procurement and contract management. Are there any lessons to be learnt for future procurement processes? 9Version 3 (23 February 2017) 9Version 3 (23 February 2017) Students may wish to organise interviews with the industry practitioners for information collection but please do not cause any nuisance or inconvenience to them. In week 12, every group will give a 15 mins presentation for their findings and conclusions. Attendance is compulsory for all students. 20% Marks are allocated to your collaborative verbal presentation and the clarity of the written report. All minutes of meetings shall also be appended at the end of your report. This is a group assignment and you can choose your group members to a maximum of 5. A hard copy shall be submitted in class and an e-copy should be submitted via learnonline. Requirements for your submission Your submission shall be in report form of about 5,000 - 6,000 words, excluding appendices. Words in Tables or diagrams shall also be counted. Except for minutes of meetings, appendices shall not be marked as they are just to provide for further illustrations. Penalty shall apply if the report exceeds the maximum words limit. 1. A minimum of 6 references including textbooks, journals, internet resources etc must be inserted in a reference list at the end of the essay/report. 2. All references must be cited in text, if they are paraphrased in the report. 3. Use relevant models, tables or figures where appropriate to support your analysis. 4. Students are advised that they must use a recognised referencing style (i.e. Harvard system), and this style is to be used consistently throughout the assignment. 5. The paragraphs shall be in 1.5 spacing with font size 12 6. All submissions shall be in hardcopies and via learnonline 7. Late submission shall be returned unmarked. Examination Examination 50% - Open-book The exam will assess students’ ability to understand and describe the principles of project procurement and contract management from start to finish. It may include multiple choice questions, short questions and long questions. The exam will be an open book exam. You are allowed therefore to bring in hard copies of text books, the standard and any notes. The duration of the exam will be 3 hours. The standards by which the exam will be assessed are: relevance of the answers to the question; logic and support of the argument, clarity of written expression; planning; and language. Please be aware that if we cannot read your writing or follow the logic of your answer, we cannot assess your understanding and application of course material, please write legibly. Dot points in your answers must be clearly explained. Specific items will be required in the examination room: calculator (you cannot use the calculator available on your mobile phone as phones will not be allowed in the examination). E-books are not permitted. The minimum mark to be achieved in the exam to qualify for a passing grade is 40%. Exam arrangements Students will receive advance notice of scheduled examination. All students are required to sit their examination at the scheduled date, time and location irrespective of any conflict with a planned holiday or special event. Internal students are required to sit their examination on-campus or at the central exam venue. More information about examination procedures and arrangements for students can be found by consulting the relevant policy http://w3.unisa.edu.au/policies/manual/default.asp (Section 6) 10Version 3 (23 February 2017) 10Version 3 (23 February 2017) Supplementary Assessment Supplementary assessment or examination offers students an opportunity to gain a supplementary pass (SP) and is available to all students under the following conditions unless supplementary assessment or examination has not been approved for the course: 1. if the student has achieved a final grade between 45-49 per cent (F1) in a course 2. if a student who has successfully completed all of the courses within their program, with the exception of two courses in their final study period, a supplementary assessment or examination may be granted where the final grade in either or both of these courses, is less than 45 percent (F1 or F2) More information about supplementary assessment is available in section 7.5 of the Assessment Policy and Procedures Manual. http://w3.unisa.edu.au/policies/manual/default.asp Important information about all assessment All students must adhere to the University of South Australia's policies about assessment: http://w3.unisa.edu.au/policies/manual/default.asp. Students with disabilities or medical conditions Student with disabilities or medical conditions or students who are carers may be entitled to a variation or modification to standard assessment arrangements. See Section 7 of the Assessment Policy and Procedures Manual (APPM) at: http://w3.unisa.edu.au/policies/manual/default.asp Students can register for an Access Plan with UniSA Disability Service. It is important to make contact early to ensure that appropriate support can be implemented or arranged in a timely manner. See the Disability Hub for more information: http://www.unisa.edu.au/Disability/Current-students Students are advised there is a deadline to finalise Access Plan arrangements for examinations. Further information is available at: http://i.unisa.edu.au/campus-central/Exams_R/Before-the-Exam/Alternative-exam- arrangements/ Deferred Assessment or Examination Delete all bold text and the statement below which is not applicable to your course STATEMENT 1 Deferred assessment or examination is available for the course Special Consideration Delete all bold text and either statement 1 or 2 below (the one not applicable to your course). One statement MUST remain and no extra text is to be added. STATEMENT 1 Special consideration is available for this course. Note: Special consideration cannot be granted for a deferred assessment or examination, or a supplementary assessment or examination. APPM 7.7.6 11Version 3 (23 February 2017) 11Version 3 (23 February 2017) Variations to assessment tasks Variation to assessment methods, tasks and timelines may be provided in: Unexpected or exceptional circumstances, for example bereavement, unexpected illness (details of unexpected or exceptional circumstances for which variation may be considered are discussed in clauses 7.8 - 7.10 of the Assessment Policy and Procedures Manual). Variation to assessment in unexpected or exceptional circumstances should be discussed with your course coordinator as soon as possible. Special circumstances, for example religious observance grounds, or community services (details of special circumstances for which variation can be considered are discussed in clause 7.11 of the Assessment Policy and Procedures Manual). Variations to assessment in expected circumstances must be requested within the first two weeks of the course (or equivalent for accelerated or intensive teaching). Extra time in exams (ENTEXT) and the use of a dictionary may be available to some students (for example, Indigenous Australian students and those of non-English speaking background) as follows: • extra time for reading or writing. This will be an extra ten minutes per hour for every hour of standard examination time, and • the use of an English language or bilingual print dictionary (without annotations). (APPM 7.2.2) More information about variation to assessment is available in section 7.2 of the Assessment Policy and Procedures Manual. http://w3.unisa.edu.au/policies/manual/default.asp (section 7) Academic Integrity Academic integrity is the foundation of university life and is fundamental to the reputation of UniSA and its staff and students. Academic integrity means a commitment by all staff and students to act with honesty, trustworthiness, fairness, respect and responsibility in all academic work. An important part of practising integrity in academic work is showing respect for other people's ideas, and being honest about how they have contributed to your work. This means taking care not to represent the work of others as your own. Using another person's work without proper acknowledgement is considered Academic Misconduct, and the University takes this very seriously. The University of South Australia expects students to demonstrate the highest standards of academic integrity so that its degrees are earned honestly and are trusted and valued by its students and their employers. To ensure this happens, the University has policies and procedures in place to promote academic integrity and manage academic misconduct. For example, work submitted electronically by students for assessment will be examined for copied and un-referenced text using the text comparison software Turnitin http://www.turnitin.com. More information about academic integrity and what constitutes academic misconduct can be found in Section 9 of the Assessment Policies and Procedures Manual (APPM): http://w3.unisa.edu.au/policies/manual/ default.asp. The Academic Integrity Module explains in more detail how students can work with integrity at the University: https://lo.unisa.edu.au/mod/book/view.php?id=252142 12Version 3 (23 February 2017) 12Version 3 (23 February 2017) Submission and return of assessment tasks See above under Assessment details. Action from previous evaluations Evaluation of the course will be collected electronically from students on week No. 13. The details will be announced in due course. Comments from students are always taken seriously. Many of the features of the course are a product of feedback and sugestions from students. 13Version 3 (23 February 2017) 13Version 3 (23 February 2017) Course Calendar Study Period 2 - 2017 Weeks Topic Assessment Details (Adelaide Time) 13 - 19 February Pre-teaching 20 - 26 February Pre-teaching 1 27 February - 05 March Introduction to Project Procurement; Procurement Cycles and Strategies 2 06 - 12 March Introduction to Australian Legal System and Contract Law 3 13 - 19 March Consideration and contents of a contract 4 20 - 26 March Enforceability of Contracts 5 27 March - 02 April Discharge of Contract and Breach of Contract Legal analysis due 02 Apr 2017, 11:00 PM 6 03 - 09 April Procurement Planning and Contract Strategies 10 - 16 April Mid-break 17 - 23 April Mid-break 7 24 - 30 April Code of Tendering, Tender Documentations and their legal implications. Prequalification. Probity 8 01 - 07 May Types of Contracts and Procurement Routes 9 08 - 14 May Contemporary procurement methods including GMP, ECI, Alliancing and PPP 10 15 - 21 May Contract Management - from planning to completion 11 22 - 28 May Contract Management - contractual issues including disputes resolutions 12 29 May - 04 June Group Presentations Group Report/Presentation due 30 May 2017, 4:00 PM 13 05 - 11 June Supply chain. e-procurement and green procurement. Revisions for Examination 12 - 18 June Swot-vac 19 - 25 June Exam week 26 June - 02 July Exam week 14Version 3 (23 February 2017) 14Version 3 (23 February 2017)