Enhancing Procurement Practices: Comprehensive Approach to Acquiring Complex Facilities and Projects


Enhancing Procurement Practices is organised around four main points:

  • overview and analysis of procurement principles
  • practical approach to drafting of solicitation and contract documents
  • conduct of procurement procedures
  • overview of the e-procurement arena.

Although ...

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Enhancing Procurement Practices is organised around four main points:

  • overview and analysis of procurement principles
  • practical approach to drafting of solicitation and contract documents
  • conduct of procurement procedures
  • overview of the e-procurement arena.

Although the addressed procurement methods can be used on a wide scale, this book concentrates primarily on such cases when the subject of procurement is complex, or the solicited goods and services are relatively simple but the intended long-term relationship calls for a fairly conscious source selection.

Project procurement management - determined in PMI's Project Management Body of Knowledge (PMBOK) to handle the most complicated form of buying civil engineering work, goods, and services - is now seen from different perspectives, with much more details.

Beyond the structured overview and comparative analysis of terminology and principles, the book describes such new concepts as single-source preference for simultaneous procurements, dual-term frame contract for parallel suppliers, and the use of semi-consolidated contract documents. Effective utilisation of theories boils down - among others - to a consistent set of procurement-related terms, proven methodology for drafting comprehensive solicitation documents and contracts, and practical details.

About the Author
As an MscEE, Attila Kovács was first involved in exporting complex telecommunications systems, so he gained notable bidding and contracting experiences in the suppliers' frontline. Later, as a procurement director, he obtained remarkable skills in the procurement arena, including projects financed by the World Bank, EBRD, and EIB. He has also been invited as an advisor, guest lecturer, and workshop conductor. Recently he has got involved in the regulatory arena.

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Editorial Reviews

From the Publisher

"By including a substantial emphasis on ... complex procurements, the author makes a useful contribution to the literature. ... the author nicely integrates the Project Management Institute's Project Management Body of Knowledge (PMBOK) with the procurement process ... The strength of this book is in its perspective on procurement from the standpoint of project management, and hopefully it will spark greater interest in the subject." (Robert E. Lloyd, CPCM, U.S. Department of State for the Journal of Public Procurement, Volume 4:3)

"In an era where procurement is so essential in delivering services, public or private, a codification of practices through a comprehensive approach of the systems and procedures available is of immense benefit. (Kovács) has succeeded in opening the often closed and technocratic world of procurement to audiences that need to appreciate the importance of the interface between private and public sectors and their respective partners in the procurement process. The monograph represents a significant contribution to the international literature of procurement from a multi-discipline perspective." (Professor Christopher Bovis, Lancashire Law School)

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Product Details

  • ISBN-13: 9781461347316
  • Publisher: Springer US
  • Publication date: 4/30/2013
  • Edition description: Softcover reprint of the original 1st ed. 2004
  • Edition number: 1
  • Pages: 671
  • Product dimensions: 6.14 (w) x 9.21 (h) x 1.42 (d)

Table of Contents

Structural Approach and Targeted Fields of Procurement.- Terminology.- Focal Points of Procurement.- Procurement Environment.- Procurement Management Techniques.- Integrated Procurement Management.- Projects in the Context of Procurement.- Project Procurement Related Management Techniques.- Procurement in the Context Of Project Management.- Project Management Organisations.- Definition and Characteristics of Procurement Systems.- Public and Private procurement Systems.- Basic Procurement Systems.- Types of Contract.- Sourcing Patterns.- Types of Procurement Procedures.- Formation of the Drafting Organisation.- Structure of the Solicitation and Contract Documents.- General Drafting Principles.- Preparation for the Evaluation.- Preparation of the Prime Specifications.- Preparation of the Conditions of Contract.- Preparation of Realisation-Related Documents.- Preparation of the Instructions to Offerors.- Typical Time Schedule of Procurement Procedures.- Conduct of Prequalification.- From Publication to Evaluation.- Evaluation and Clarification of Offers.- Contract Negotiations.- Closing of the Procurement Procedure.- Procurement and the E-Volution.- E-Commerce Site Categories.- Relevance and Future of E-Procurement.- IX - Appendices.- Appendix A - Terms Used by International Organisations for Procurement Procedures.- Appendix B - Terms Used by International Organisations for Entities.- Appendix C - Terms Used by International Organisations for Documents.- Appendix D - Functional Analysis System Technique (Fast).- Appendix E - Procedural Timeframes Set by International Organisations.- Appendix F - Sample List of Attachments of Tender-,Bidding- And Contract Documents.- Appendix G - Sample Structure of Complex Contracts.- Appendix H - Sample Terms and Definitions of an IT Contract.- Appendix I - Sample Marking and Documentary Requirements of Delivery.- Appendix J - Sample Training and Consultancy Requirements.- Appendix K - Sample Documentation Requirements.- Appendix L - Sample Prerequisites of System Acceptance Procedures.- Appendix M - Sample List of Implementation-Related Documents.- Appendix N - Sample Project Management Organisation of the Client.- X - References and Further Readings.- Primary Procurement-Related Documents Considered.- Other Procurement-Related Documents.- Primary Project Management Related Document.- Suggested Further Readings.- Xi - Glossary and Index.
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Hopelessly many years ago, with a freshly earned M.Sc.E.E. degree, I began my career with assisting in the planning of medium range microwave links and other telecom systems offered to different countries. In addition, I started compiling technical brochures of some newly developed equipment. Those were exciting times of learning details about such kind of strange expressions like tendering, INCOTERMS, and other non-technical matters.

Over a period of thirteen years I had the opportunity to gain experiences in the field of selling complex systems abroad, mainly by participating in tendering procedures prepared by international consultants and organisations. I slowly but steadily became involved in the contractual side, as well.

Later the table turned and I found myself preparing and conducting international competitive tendering procedures for selecting consultants, suppliers of complex telecom/IT systems, building construction contractors, and other undertakers.

While digging ever deeper in the available literature and refining the everyday procurement practice on the basis of new contractual experiences, I came to the following conclusions:

  • There is a confusingly large pool of procurement-related expressions. This divergence has further been fostered by some suppliers of e-commerce systems. Without questioning justifiable co-existence of different phrases, in our shrinking and globalising world some efforts could be useful to harmonise and single out the commonly used "procurement dictionary".
  • Although the procurement arena has been developing to respond to new business challenges, the basic principles and methodologies are expected to remain more or less unchanged. For the sake of clarity, however, it would be advisable to compare the procurement procedures applied by widely known international organisations.
  • There is a huge selection of project management related literature. Project procurement, however, is rarely addressed. Procurement is usually seen as a facilitating area of project management. For a particular delivery, however, only the procured part of the whole project is meaningful for the contracting parties. This fact justifies a revision of the project procurement methodology, too.
  • There is a clear gap in the literature for the description of comprehensive procurement approaches. This topic is closely interrelated with compiling the contract from the solicitation documents and the awarded offer.
  • Available publications rarely address practical details of preparing and conducting source selection procedures. Discussion of issues like how to handle matters from the issuance of the solicitation documents to the offer submission deadline - including the running of the eventual pre-solicitation conference - may also be useful.
  • Recent developments in the field of e-commerce also deserve attention. Although some mistaken steps and unexpected circumstances have slowed down the extensive spread and roll-out of such systems, the e-world is quite likely to provide us with some long-awaited, fully electronic procurement solutions. From among the above-mentioned missing links this book intends to address two topics may require further explanation before delving into the details: project procurement and comprehensiveness of the solicitation documents.

In order to avoid any misunderstanding immediately at the outset, I must state that the book does not propose any substantial change in the procurement-related areas of integral project management. In the default case - when looking at things from inside the procuring entity's project - procurement should remain a facilitating knowledge area of project management, in harmony with the commonly recognised PMBOK of the Project Management Institute [60]. This is the basic situation even if the whole project is outsourced, meaning that realisation of the project is contracted with a supplier or contractor, and the procuring entity's control is exercised by an external consultant under a separate contract.

Nevertheless, for a better distinction I propose observing project procurement management from a narrower angle, too, in parallel with the classical integral view. However much the overall project management requires integration, the contracted supplier is not obliged to consider this aspect. He is interested solely in delivering the contractual scope. Whatever physical preparation, data, or interface is to be provided by the procuring entity in accordance with the responsibility-sharing matrix (RSM) of the contract, from the supplier's point of view it does not matter how such obligations are met. If the procuring entity's overall project management organisation accidentally coincides with the same stipulated in the contract for representing him, it is only a "good to know" kind of fact for the supplier.

For this reason I recommend setting up a consistent terminology to use with the supplier, in parallel with the overall project terminology. It is important to realise that the word "project" has a narrower meaning within a procurement contract, while the procuring entity's overall project management staff may refer to the delivered portion of the facility as a sub-project. Consequently, I suggest introducing the following new terms:

  • mother project - meaning the whole project in its classical sense; constituted by
  • the project shell - the common preparation, planning, and close-out of the insourced and outsourced parts of the mother project;
  • the project - the outsourced part of the mother project, contracted for with the supplier; and
  • the in-house project - the insourced part of the mother project.

Beyond this seemingly "irrelevant play" with phrases, it is advisable to distinguish concepts for more practical reasons, as well. The supplier can be controlled by the procuring entity only through the instruments and procedures stipulated in the contract. For example, harmonisation of the project and the in-house project is possible via an indirect channel, without straight intervention on the supplier's side by the procuring entity. In addition, any delay by the in-house project in providing contractual prerequisites of the supplier's delivery may even result in penalties to be paid by the procuring entity.

As far as the benefits of comprehensive solicitation documents are concerned, I would like to make a few preliminary statements. Regardless of the grade of usefulness of certain procurement principles, methods, and techniques, some of them are extremely well described in regulatory, institutional, and corporate documents. This is the case typically in those macro economic environments where the regulatory framework is elaborated and the business practice is established with a remarkable level of details. In other places procurement approaches are documented in a superficial manner, without giving adequate guidance for their consistent application. I found it worthwhile to make an attempt to bridge this gap between the two ends.

One of the grey or even white holes is the procurement of complex equipment, systems, and facilities under such circumstances when the procuring entity wishes to conduct a sophisticated procedure with comprehensive solicitation documents that are not at hand - in lack of detailed local regulations and preceding business practice. It would be time consuming to start everything from scratch by processing the available documents and literature, therefore a practical skeleton of medium complexity - what this book intends to be - may be useful.

By comprehensive solicitation documents I mean a structured set of materials which contain all case-specific requirements, terms, conditions, and procedural rules with the necessary level of detail, as well as a clear reference to the applicable general procurement and contractual regulations. This way a substantial portion of the necessary instruments - lacking in the given market environment - can be supplemented and both the procuring entity and the prospective offerors are aware of the rules of the game. This is particularly useful when the procuring entity wishes to attract new offerors from distant markets, and these potential undertakers can become acquainted quickly with the local environment and conditions by carefully reading the solicitation documents.

In my practice the use of comprehensive solicitation documents has proven to be quite helpful from other angles, too. One of them is that by proper structuring of the solicitation documents the procuring entity can prepare himself for almost all possible situations to avoid undesirable surprises. It is much better to focus on important details beforehand and conduct the sourcing smoothly, than the other way round.

Another advantage to the comprehensive approach is that during the joint preparatory efforts of the procurement/project team the experts involved have no other choice than actively contributing to the compilation of the solicitation documents. As a result, they become so familiar with the procurement package that leads to a more expedient evaluation of the offers with less uncertainty.

Though one of the basic preconditions of unambiguity is to avoid redundancy by addressing each issue only at a particular place of the solicitation documents - and referring to this point later on whenever necessary - a certain level of redundancy is useful to have.

An example is the responsibility-sharing matrix (RSM), prepared by the procuring entity in order to clarify the parties' role during the realisation of a facility. Pieces of this kind of information could be retrieved by offerors from the conditions of contract and the project scope breakdown, but it is safer to indicate precisely what sort of activities the parties will be responsible for.

Another example is the preparation of different templates by the procuring entity to facilitate the compilation of the offers. Although the required structure and content of solicited responses is normally also explained in the solicitation documents, it is better to enclose the necessary forms and populate them with mandatory text and/or obvious references to the relevant volume/section/clause of the solicitation documents. This way offerors can save considerable time with filling in e.g. different statement of compliance tables. In return, the procuring entity surely receives identically structured responses for easy comparison and evaluation.

The third example is the solicitation of the offerors' cash flow estimate (CFE) to be submitted. As the contract implementation schedule, the price schedule, and the payment terms of the conditions of contract are given in the offers, the procuring entity would be able to generate the CFE himself. By receiving CFEs from offerors, however, in the course of evaluation the procuring entity can save some time and double check whether the offeror concerned interpreted all applicable provisions of the solicitation documents in the right way.

The above-described derivatives of the comprehensive approach provide self-explanatory benefits, valuable dividends for the hard and seemingly complicated preparatory work. This fact was one of most stimulating factors that forced me to write this book.

Time will tell how this book is received. I would highly appreciate to get any feedback from you, the reader - particularly if you are going to challenge my statements with the aim of jointly enhancing our procurement practices.

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