Advantages of Centralized Procurement
Another way that companies make contracting a little easier for
themselves is to centralize procurement. This has the following
- A department with a staff of acquisition specialists can know the
market better than the managers of individual projects.
- These specialists can buy more efficiently and reduce duplication of
common activities across a number of projects.
- Under certain circumstances they may also be able to buy more
competitively because they know competing suppliers, or they may
know of other work that the company can offer to make the
package more attractive.
- Senior management can establish better control of corporate
contracting terms and practices.
- It is easier to limit signing authority, and the extent to which the
organization is committed legally and financially.
- Centralized buying also helps to reduce bias, or personal favoritism
in the project environment.
- The buying process can be separated from the process of managing
These issues are especially important for public agencies. If you are
attempting to introduce a progressive acquisition approach into your
organization, it will be part of your job to convince your company's
centralized procurement people of its advantages. You should carefully
explain to your administrative counterparts the potential for cost and risk
reduction that progressive acquisition affords.
Next month, Part IV of this series will take a closer look at the contents we've outlined for progressive acquisition documents, and at how to build
flexibility into Head Contracts and CWOs.