Step 3: Project procurement plan

Funding has been approved for the procurement.

A market approach (procurement strategy) is prepared and adopted, defining the contracting arrangements that will be established to deliver the project. The approach to market must be fair, encourage competition and be consistent with government procurement obligations and agency procedures.

The project procurement plan describes the stages of the project and how it will be managed. It should be consistent with the business case developed in step 2. Procurement Plan approval should be obtained prior to proceeding, confirming available funding and resources for managing the procurement.  Deviations, if any, from the original business case should also be defined.

Key Document

Key Guideline

3.1 Establish governance structure

A project team is appointed and roles and responsibilities allocated. Project governance and reporting structure and communication channels are also determined.  The skills and experience of the team must be relevant to what is being procured.

3.2 Determine market approach (procurement strategy)

The agency must first determine whether it is accredited to undertake the delivery phase of the project.

If the agency is not accredited under the Agency Accrditation Scheme for Construction, it will need to obtain external support and assistance from an accredited agency or through the Procurement System for Construction.

The market approach/procurement strategy outlines how the project will be executed.  It depends on project characteristics such as its complexity and value and constraints such as timing, market capabilities and the effect on the agency's resources.

The market approach includes the number, type, staging and inter-relationship of proposed contracts and the management structure. It may involve a single or multi-staged tendering process, depending on the nature of the project and the extent to which an innovative approach is required.

3.3 Prepare project procurement plan

A procurement plan outlines the procurement strategy and market approach, the project brief and tender method. It builds on the business case/investment justification previously developed and includes a governance framework for the tender process and contract management.

It proposes how tenderers will be selected, how the tender process will be managed and who will be responsible. It includes the basis for tender evaluation, and a direct negotiations plan (if direct negotiations are involved). The procurement plan will also include key performance indicators for the proposed contract.

A Gateway Review can be undertaken at the completion of this stage to confirm that the procurement strategy is appropriate to deliver the project within its budget and time constraints and that the project is ready to proceed.

Obtain approval to the procurement plan prior to proceeding.

If the project is valued at $10 million or more, or is high risk, the procurement strategy report is to be submitted to Treasury.