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The Importance of Planning and Managing Contracts in Today’s Economy

Wherever we turn, people are discussing the economic down-turn / recession …… politicians, the media, economic experts, business people, the public at large. What should we do during these times of uncertainty?

There have been discussions on the amount of money it will take to “turn the economy around” and on who should receive this funding. But there has been little or no discussion on how these funds will be managed by the various elements and levels of the public sector that will receive this funding (for roads, bridges and other major infrastructure projects). These projects will be based on issuing contracts to private sector organizations through a tendering / solicitation process.

Is the public sector prepared to manage a significant increase in solicitation processes including tenders, quotes and requests for proposals?  Are finance, administration and project managers trained in procurement and contract management processes including project and contract planning, preparing requests for proposals and tenders, managing solicitation processes, planning and conducting negotiations and pre-work discussions, contract and project implementation, and monitoring and administration?

Are private sector companies prepared to respond with realistic bids and proposals and successfully complete these projects on time and within budget and according to their respective proposed solution and project plans? Are these companies confident in their procurement and project management abilities?

Numerous government initiated audits (e.g. the Auditor-General of Canada annual reports) have confirmed that poorly managed projects have resulted in millions of dollars in cost over-runs due to a lack of proper project, procurement and risk management planning.

The vast majority of these stimulus funds will be used through large procurement initiated projects that will be managed by government staff that may not have the training to administer this massive increase in spending.  The adage that “I spent $50,000 on my $25,000 kitchen renovation” is closer to the truth than many may realize.

There exists a sense of urgency to “get the funding”; however there should be an equal sense of urgency in training people on how to manage this funding with regard to contract and project planning, initiation and management processes.

There currently exists an attitude of saving money through decreased training; an attitude that will accomplish the opposite result with ineffective procurement and contract management processes!