Procurement Proposal for a Global Project: One Acre Fund

The analysis of procurement literature review is fundamental to create an understanding of the subject and its application in the contemporary world. The art of purchasing and supply of materials used in the implementation of projects has existed for more than 3,000 years ago. This is illustrated in the history of the trading partnerships between China and Ancient Greece transforming into a full-practice on its own. The paper analyzes five key aspects of the procurement literature review include a) history of procurement, b) selecting the right suppliers for a project, c) evaluation of a supplier’s performance while the contract is being implemented, c) dispute resolution and negotiation, and d) importance in ensuring a good project outcome. Therefore, the implementation of the One Acre Fund procurement project is academically informed by the use of scholarly, peer-reviewed, and journal articles that extensively explain the components and functionalities of purchasing and supply operations.

1.1.0. History of Procurement

The practice of procurement plays a strategic role in enabling businesses and organizations to reduce costs and counter increased competition (Glavee-Geo, 2016). Pinkerton (2002) notes that procurement has undergone various transformations over the years of its evolution. The practice of procurement in international trade can be traced more than 3,000 years ago in the purchasing partnerships between China and Ancient Greece (Achilles, 2020). In its early form, procurement can be traced in the scribes used in the designing of the Egyptian pyramids as early as 3,000 BC, where the amount of labor and materials required for construction were recorded (Achilles, 2020).

Over the years, the industrial revolution gave birth to the massive practice of procurement as a job function on its own rather than just a worker’s skill set. Rüdiger (2015) note that taking shape procurement in the modern era operates cross-functionally with a vast array of activities involved in its application. The application of procurement is fundamental to enhance the sustainability of purchasing and supply of products to various entities. According to Nijboer, Senden, and Telgen (2017), procurement is used as a form of enhancing innovativeness, value for taxpayers’ money, deterrence for corruption, and fraud, among other aspects. Glavee-Geo (2016, p. 379) states that the practice of procurement is applied as a form of “purchasing management in the academic field of study leading to the rise in its awareness.” Thus, it indicates the procurement of the massive development has gone through in its evolution to become the crucial practice it is today in managing the purchasing and supply of materials within a stipulated budget and timeframe.

1.2.0. Selecting the Right Supplier for a Project

The selection of the right supplier for a project is integral to ascertain its success. As the buyer, taking the necessary measures and extensive evaluation of the suppliers is fundamental to ascertain the success of the project (Taherdoost&Brard, 2019). In the procurement of the farm inputs materials, the identification of the supplier follows massive evaluation to determine the financial capacity, supply performance, and capacity to deliver on the purchased products (Aouadni, Aouadni&Rebaï, 2019). The assessment subjects’ different suppliers to determine their competitiveness in completing similar projects successfully. The availability of previous experience in similar projects is integral to winning the procurement contract of such magnitude (Buzzetto, Bauli&Carvallo, 2020).

The buyer has the mandate to ensure the supplier’s reliability, certification, feedback reviews, and develop healthy partnerships (Ristono, Santoso& Tama, 2018). The literature asserts that the capacity of the suppliers to fulfill the aforementioned accreditations is critical to becoming the potential winner of the procurement contract (Buzzetto et al., 2020). The capacity to instill confidence in the buyer is an aspect that is extensively examined in the selection of the right supplier for a project. The culmination of the selection of the right supplier results in quality, timely, and within budget delivery of the procured materials (De Felice, Deldoost&Faizollahi, 2015). Hence, every aspect of assessment must be fulfilled in a professional capacity to ascertain the success of the procurement process in a project.

1.3.0. Evaluation of a Supplier’s Performance while the Contract is Being Implemented

The evaluation of a supplier’s performance is fundamental to ascertain the successful completion of a contract. According to De Felice et al. (2015, p. 7), “the performance of the supplier is a crucial factor for the success or failure of any company.” The selection of the right supplier is vital to the optimization of the costs and quality functionalities in the implementation of a contract (De Felice et al., 2015). In the implementation of a contract, the performance capacity of the supplier is critical for the effective management of the procurement processes. This impacts the competitiveness and development of the organization, following the successful implementation of projects. The contract implementation stage calls for continued review and assessment of the supplier’s performance to ascertain a potentially successful venture.

The evaluation of a supplier’s performance in an ongoing contract implementation can be based on four key components.

Quality, Cost, and Delivery (QCD)

The supplier’s performance must ascertain quality, delivery reliability, and maintenance of costs with the stipulated budget. The evaluation indicates the capacity to continuously implement a contract from the first, achieve the deliverables, and utilize the planed funds. In a fixed price contract, maintaining the costs at the planned level is fundamental to achieve the overall objective (Taherdoost&Brard, 2019). Therefore, the assessment of the supplier’s performance in ongoing contract implementation results in the provision of milestones and deliverables on the stated quality and value. Thus, the supplier can generate their profits and operate within the stipulated standards.

Financial Stability

The financial stability is integral to the supplier’s performance capacity. This presents the availability of the necessary resources that can be utilized in the implementation of the contract. The status of the supplier shows the potential to serve the customer successfully without creating hitches in the delivery of the procured materials (Aouadni et al., 2019). In a time-sensitive procurement contract such as the one used in the purchase and supply of the One Acre Fund farm input materials – evaluation of financial stability is essential for continued assurance to deliver every component in the contract. Therefore, the impact on the general operating efficiency of the company and the realization of the overall objectives.

Long-term Relationships

The capacity to develop long-term relationships with the suppliers is vital to the successful delivery of ongoing contracts. The evaluation of the supplier’s performance based on a long-term relationship is informed by trust and confidence in the supplier’s capacity to deliver (Buzzetto et al., 2020). This is based on past relations and contracts that have been implemented for the company. Consequently, there is a degree of certainty that ongoing contracts will be successfully implemented at every level on time and under the expected quality.

Total Quality Performance and Philosophy

This is based on the supplier certification programs that are maintained through quality capabilities. The performance and philosophy directing quality assurance include factors such as available resources, experience, expertise availability, record-keeping, among others (De Felice et al., 2015). The certification criteria provide realistic goals to which the supply sustains in the ongoing contract implementation.

1.4.0. Dispute Resolution and Negotiation

In procurement contracts, negotiation is an essential feature that enhances dispute resolution and containment. The negotiation provides an opportunity where differences, interests, and objectives can be ironed out to reach a consensus. This is based on a consensus to agree not to disagree. That is, the dispute resolution through negotiation agrees on the terms of conduct, extremes, and damage compensations that should be employed in the contract (Hampson, Peters & Walker, 2001). The use of fixed-price contracts should outline the agreed quality expectations and compromise on their interests. This is critical to ascertain that the buyer is comfortable and contented with the deliverables made by the supplier (Miller, 2006). Also, the supplier must be assured of not being exploited and entangled in a contract that is undeliverable under minimal funds. Therefore, it stipulates the value to agree on terms and reach consensus at different stages of the contract implementation process.

1.5.0. Importance in Ensuring a Good Project Outcome

The assurance of a good project outcome is essential to maintain the overall performance of the organization. The assurance of good project outcomes is based on the management of the expectations and deliverables from various milestones set in the project planning (Mossalam&Arafa, 2016). The success attained through good project outcomes indicates the extensive nature of operating on the project scope. The scope helps the project implementation process and operating with a budget and stipulated time frame (Alshammari, Yahya&Haron, 2020). This is attained through careful assessment of project risks and mitigation approaches. As a result, the project outcomes are assured of high standards and quality. This impacts developing confidence in the supplier. As well, the reputation and competitiveness of both the buyer and the seller are raised, asserting the value of the companies in the industry (Kelly, Sadeghieh&Adeli, 2014). Therefore, overall, the assurance of good project outcomes shows the capacity of the companies to commit to an objective and achieve it under high standards and quality.

2.0. STATEMENT OF WORK (SOW)

2.1.0. Brief Overview

The statement of work report extensively analyzes the operations and projects executed by the One Acre Fund Organization in Africa. One Acre Fund is a non-profit organization with operating bases in Kenya, Rwanda, Tanzania, Uganda, Burundi, Malawi, Zambia, and the United States (One Acre Fund, 2020). The organization provides training and farm input subsidies to smallholder farmers in the African countries mentioned above. This requires continuous procurement and purchase of farm inputs that are distributed to farmers—the provision of the farm inputs aids in the improvement of food production and farm incomes. The procurement of the materials is necessary to assist impoverished communities in Africa, comprising of millions of small scale households break the chains of poverty (One Acre Fund, 2020). As well, sustain food security and surpluses that can be used to generate income. Therefore, a timely and sufficient supply of farm input materials is critical for the realization of the objectives of the organization.

2.2.0. Brief Description Why the Commodity/Service is Necessary

In Africa, millions of farmers consist of small-scale farm holders that rely on the production of food crops as well as cash crops for sustenance. In the years of operations that One Acre Fund organization has been in operations, it has successfully reached over one million smallholder farmers. The provision of the necessary farm inputs has enabled these families to grow enough food for their households and produce surpluses used to earn money (Nigussie, Adisu, Desalegn&Gebreegziabher, 2016). In the one million smallholder farmers, over five million people are relying on them. An addition of five million people is able to access food surpluses, ascertaining a resolve to the problem of hunger. Therefore, One Acre Fund projects go beyond poverty eradication as they complement food productivity leading to food security and elimination of hunger among thousands of households.

2.3.0. Scope

2.3.1. Definition of the Work to be Accomplished

The procurement of farm inputs is critical for the achievement of One Acre Fund’s objectives. The scope outlines the search for the most suitable vendors to supply the company with the necessary materials that can be distributed to smallholder farmers in the third world countries (One Acre Fund, 2020). This is critical to ascertain improved productivity and farm incomes among the small-scale householders. Due to the vast nature of demand of the farm inputs and limitation of resources, careful selection of the vendors is fundamental to the realization of the organization’s objectives.

The vendors’ selection is based on merit and provision of competitive prices on the supplied farm inputs. This is fundamental to ascertain that the organization acquires high standard and quality materials safe for consumption and highly effective for use in farms (Belt et al., 2015). Due to the nature of food crop production, the safety of the farm inputs is a critical measure required for the vendors to ascertain. Vendors with years of experience in selling farm inputs and a history of food production pose a competitive advantage to attain the contract offered by the organization. This is informed by their knowledge of the impacts of the farm inputs and ascertained the productivity and safety of the foodstuffs (Lilleso et al., 2011). Hence, the supply of the farm inputs to One Acre Fund includes materials such as fertilizers, seeds, and seedlings, chemicals such as pesticides, fungicides, among other additional nutrients. Also, storage chemicals and bags for grains are critical resources to be distributed to impoverished communities in Africa.

2.3.2. Outline of Various Phases of Work

The accomplishment of the procurement and supply of the farm input materials to One Acre Fund from the successful vendor is distributed across three phases. This is fundamental to ensure a timely and successful supply of the required materials. Time is a major factor as the materials are destined to be distributed to hundreds of thousands of small-scale farmers in different countries. Also, the distribution of the procurement materials is based on their needed time and utilization requirements during the farm production period (Gebremedhin, Hoekstra &Tegegne, 2006). Therefore, continuous and consistent supply of procurement materials is critical to the success and realization of One Acre Fund’s objectives and expectations.

2.3.2.1. Phase 1:

The first phase entails the supply of the farm subsidies required for the farm preparation and planting period: such including seeds and seedlings, planting fertilizers, and soil nutrients. The timely supply of the procured quantities by the vendor sets a precedent for the planting in the selected regions and small-scale farm holders across Africa.

2.3.2.2. Phase 2:

The second phase involves the supply of fertilizers and chemicals such as pesticides and fungicides used for pest control. The spray chemicals approved by governments and deemed safe for human health are vital supplements to small-scale farm holders (Wittman&Blesh, 2017). These are critical materials that aid in the protection of plants and increase productivity. Better results are fundamental to increase the yields for the small-scale farms crucial to sustaining food security, eradication of poverty, and hunger through surpluses.

2.3.2.3. Phase 3:

The third phase comprises of the final batch of supplies that include storage chemicals and bags for grains. The third phase is the minor supply requirement, as it is used to keep safe the farm produce during transportation to the markets. This is integral to ensure small-scale farmers have sufficient and quality products taken to the markets to generate income. Consequently, the objective of poverty and hunger eradication can be attained.

2.3.3. The Occurrence of the Work//Service

The work is expected to be done off-site across different countries that serve as the destination of the procured supplies. The seven destinations require timely distribution of the farm input materials to ensure the small-scale farmers receive them on time for timely planting, pruning, and harvesting of the farm produce. The supply chain logistics to be considered in the distribution of the farm input materials comprise of transport, warehousing, and reaching respective final destinations to the households (van Bergen, Steeman, Reindorp&Gelsomino, 2019). Therefore, the vendors are required to facilitate the transport logistics of the inventory in the respective country to ensure they reach the expected final destination. Therefore, the vendors have the responsibility of ensuring the safety and timely distribution of the farm inputs.

2.3.4. Schedule/Timeline for Work to Begin

The work is scheduled to be complemented within a three-month timeframe. This is informed by the growth of three-month duration plants to ascertain high yields are realized. Based on phases 1, 2, and 3, the schedules are fulfilled in a one-month interval. The first batch of supply is done one-month prior to planting, and the rest follows the outlined schedule. The supply runs on a strict schedule as a failure to meet the supply objectives undermines any future plans for the project. Therefore, vendors are given the one-month prior duration to ensure the small-scale farmers have received the necessary farm inputs in reading to planting. Hence, this helps set a precedent for farm productivity, poverty eradication, and meeting food security requirements.

2.4.0. Technical Objectives and Special Conditions or Limitations

The technical objectives comprise of logistical and warehousing handling of the procured farm input materials. The vendors are also expected to help in the distribution of the farm inputs to respective small-scale farmers through the guidance of One Acre Fund officials in the region. This is critical to ensure that the supplied materials reach their final destination on time (Ahmed et al., 2016). Subsequently, setting course for the realization of the organization’s overall objectives to help impoverished communities in third world countries.

2.5.0. Documents to Be Supplied or References by the Organization/Entity

2.5.1. Procurement Documents

The procurement documents include procurement and supply contracts awarding the tenders to the vendors. Also, payment contracts that stipulate the agreed payment following completion of each milestone. As well, the transport supplementary contract that requires the vendors to facilitate the transportation of the farm input materials to the final destination – small-scale farmers.

2.6.0. Reports, Data, and Deliverables

2.6.1. Description of What the Vendor is Expected to Deliver

The three phases stipulate the deliverables in which the vendors are expected to meet. The success of One Acre Fund is reliant on the vendors’ success in making the deliverables in the stipulated timeframe. The items of delivery are outlined in each phase that the vendor is expected to complete successfully. The completion of each phase marks the achievement of the respective milestones that inform the payment of the vendor (Nyabera, 2015). Therefore, deliverables are fundamental measures that allow the vendor to request and access the payment from the organization on conducting a prosperous supply of procured farm input materials.

2.6.2. Description of Monthly and Final Reports that May Be Required

The monthly reports indicate the performance of each phase and the vendors’ success in supply the procured farm inputs. The completion of each phase is essential to allow the progression to the next one. The vendors are expected to strictly meet the schedules and timeframes of the procurement and supply of the materials. This is fundamental to ensure the final report is comprehensive and well-articulated in the completion of each phase. Therefore, ascertain the success of the entire project carried out by the organization.

2.7.0. Special Considerations

2.7.1. Provision of a Vendor to Use

The vendors are expected to be outsourced in the respective counties to mitigate the inventory management, procurement, and supplies, as well as transportation and warehousing logistical costs. The vendors are outsourced based on the identification of offering competitive prices and the quality of their materials (Koppmair, Kassie &Qaim, 2017). This is fundamental to limit the costs incurred in the procurement of the required materials and supply to respective destinations. Therefore, this leads to the realization of the One Acre Fund objectives for enhancing the productivity of smallholder farmers as essential features to eradicating poverty and hunger.

2.7.2. Paying of Travel Expenses for the Vendor

The vendors are expected to be paid transport expenses incurred in distributing the farm inputs to respective small-scale farmers in the selected regions. The transport costs incurred on behalf of the company comprises of the movement of farm materials from the local distribution centers in the respective countries to various destinations where the small-scale farmers are located (Nigussie et al., 2016). The costs incurred are maintained to the minimal level based on the contractual terms signed between One Acre Fund and vendors that win the tender for the supply of the farm input materials.

2.7.3. Items of Travel Expenses

The items incurring travel expenses include the farm input materials from the local headquarters or operating bases to the final destination. The final destination comprises of the small-scale farmers expecting to receive the materials necessary to increase farm productivity. As a non-profit organization, the transport expenses incurred by the organization are maintained at minimum levels. With the increase in procurement materials, the vendors are expected to reduce transportation costs. The trucks belong to the vendors that deliver the necessary farm inputs procured by the company.

2.7.4. Payment of the Vendor

The payment of the vendors is based on the completion of each milestone. The milestones comprise of the phases in which the vendors supply the procured materials. The payment is made to the respective vendor in each country that successfully completes each milestone. This is fundamental to maintain a positive relationship between the vendors and the company. A reputation of trust and confidence for each party meeting its obligations are ascertained. Hence, the payment is a complement to the great work done by each party in making food production and poverty eradication in small-scale households in third world countries a victory.

3.0. RISK MODEL

The risk model accounts for the price irregularities of the supplies of construction materials. Also, the irregularities experienced in the high demand for products consumed in large quantities promotes increase in the inventory costs (Okonjo, 2014). The procurement project in the construction industry is integral to mitigate the price fluctuations of required materials.The model is essential to deter suppliers from increasing the pricing and being in control of the supply channels and process (Hasim, Fauzi, Yusof, Endut&Ridzuan, 2018). Therefore, through Economic Order Quantity model, risks are minimized in the inventory costs incurred acquiring vast materials from different suppliers.

3.1.0. Attributes of the Risk Model

The risk model supported by a linear approach and mitigation of the inventory costs is critical to enhance the procurement process in construction projects. Due to the high demand of materials, managing suppliers and being in control of the channels is critical to minimize the inventory costs. The model results in securing of the ongoing supply channels ascertain efficiency in the construction projects (Hasim et al., 2018). Also, shows tendency to control pricing fluctuations to a moderate level that does not induce high costs on the company. The model is informed by facts and data to make wise procurement decisions that impact on smooth functioning of the project (Thunberg, 2016).

3.2.0. Implications of Risk Model

The capacity to maintain effective management and control of the procurement and supply channels in the construction project impacts on: – (Jaśkowski et al., 2018). Reducing the project complexities associated with pricing fluctuations on high materials/components required in the implementation of the construction project. Minimizing the complexities associated with high demand of materials consumed irregularly. Resolve towards improving the pricing and control of the supply channels in the construction project. The reduction of risks in the procurement processes results in the realization of timely and within budget deliverables. Thus, enhance the implication of achieving high objectives and success rate of the construction project implementation.

3.3.0. Recommendations

The management of price fluctuations in procurement projects is critical to minimize the inventory costs. The article notes the need for high concentration on the functioning of the procurement processes to ensure the project remains on course and within budget. Risks posed on the procurement processes in the construction projects undermine the efficiency of completing the project successfully. Potential complexities limit the use of substitutes and costs incurred in the supply and inventory management.Therefore, taking control of the supply channels and positively influencing the suppliers is crucial to managing inventory costs and complexities associated with pricing fluctuations of irregularly consumer materials.

4.0. CONTRACT TYPE AND LIABILITIES

In our project, the limitation of risks incurred by the company is mitigated through the choice of a fixed price contract. The fixed-price contract has gained the status of being favored in the business and governance world as an effective approach to contracting for projects. The fixed-price contract allows the buyer and the seller to agree on a specific cost of the project to be paid on completion. The contract accounts for all entities included in the project in a fixed term. That is, any variations in the market or inflations are not incurred by the contractor (buyer) rather the company that wins the contract (seller) (Kim, Roberts & Brown, 2016).

In the case of One Acre Fund organization contracting for the supply of farm input materials, the use of a fixed-price contract is integral to enhance cost savings. This is critical to mitigating potential charges incurred due to inflation and the performance of the economy. The currency exchange from one country to another does not induce an additional cost to the company as a result of the use of a fixed-price contract (Kim et al., 2016). Hence, as the preferred contract, the organization is bound to ensure maximum benefits are generated as a result of the project cost savings.

Despite the high potential and allowance given to the buyer not to incur additional costs, the use of fixed-price contracts has its own risks. The paper analyzes three key risks associated with the use of fixed-price contracts in the procurement of farm input materials by One Acre Fund. These include high costing (premium pricing) of the procurement project, low pricing of the project, and limited contract modifications.

4.1.0. Fixed Pricing Contract Risks

4.1.1. High Costing (Premium Pricing)

The fixed-price contract enhances the potential of the seller to increase the pricing of the contract to the highest possible value. This is based on the fact that the fixed-price nature posits the additional costs are bound to be incurred by the seller. This price variations, inflation rates, damages, or any other prompting factor that causes the prices to increase leads to additional costs (Mandell& Nilsson, 2010). As a considerable risk, the seller is expected to take all the necessary cover to cushion them from incurring additional costs. Therefore, the buyer is forced to pay more for the same contract that would have otherwise been effectively managed in a different contract.

The need to raise the contract pricing to premium is informed by the unprecedented costs that arise during the project implementation stage. The premium pricing is expected to provide the seller with a backing to account for the price variations during the implementation (Eriksson, 2017). For instance, the purchase of a particular type of fertilizer may be rendered to increase due to the high costs of shipping fees and the currency exchange rates. The impacts of the change increase the potential to generate zero returns. This can be costly to the buyer as they are prompted to pay a premium fee for products that may not reach that amount. Despite avoiding incurring the additional costs during the implementation process, there is a likelihood of paying higher in the first instance (Maxwell, 2020). Thus, the approach proving to be too costly for the organization.

4.1.2. Low Costing/Pricing

The low pricing risk experienced in fixed-price contracts acts as a contradiction of the first risk. The low pricing risk is experienced when the seller lowers their prices to a meager cost of winning the contract. The vendors are left open to potential risks and chances of not generating any return from the contract (Maxwell, 2020). The result of the risk leads to the use of shortcuts characterized by lowered quality and standards on the supply of the procured materials. This is informed by the need to try to generate some profit from the project that has ballooned above the planned budget.

Despite being successful in previous similar projects, there is no assurance that the current project is bound to follow every step the last one followed. There are unplanned costs destined to be experienced during the project implementation process. The occurrence of pricing the lowest below the competitors to win the contract, vendors are subject to massive risks (Kamrad, Ji & Schmidt, 2017). These risks are transferred to the buyer through the subsequent lowering of quality and cutting the requirements to meet the expected standards in the supply of the procured farm input materials.

As the buyer, receiving substandard products is bound to erode the project’s primary objective. That is, to increase farm yields for smallholder families. The capacity to maintain the quality of the farm inputs is integral to the success of the project. The use of a fixed-price contract posits potential risks with severe implications on the company (Aniol, 2017). Therefore, holding the vendors liable to obliging with the terms of the contract, especially in meeting the quality and standards of the farm input materials is paramount. Hence, it enhances the potential to achieve the objective of the company when the vendor adheres to the set terms of the contract.

4.1.3. Limited Contract Modifications

The fixed-price contract leaves no room for future adjustments and changes based on the current market trends. This posits that the buyer (you) is at risk of being forced to pay more based on the agreed contract than the reality on the market. That is, should the prices of the products fall, the buyer is expected to pay the premium price that was agreed when setting the contract (Kamrad et al., 2017). This induces tremendous implications of losses as the products are bound to fall in prices. Therefore, the approach is bound to induce losses in the company.

As well, the variations of the market were positive or negative present challenges for the company at a fixed price contract. In the aspect the vendor fails to deliver, termination of the contract can result in additional penalties (Aniol, 2017). Also, in case of the termination of the project itself, the contract holds the buyer liable to the damages bound to be incurred in the contract. Consequently, marketing mix variables that trigger market changes in favor of the vendor result on the implication of hurting the organization as the buyer.

4.2.0. Legal Implications and Liabilities

The chosen contract type entails the use of a fixed price in the procurement project. The fixed-price contract focuses on the achievement of the service, product, or result as initially defined in the setting of the contract. The buyer sets the predetermined conditions to which the seller commits to deliver based on the agreed terms (Kim, Roberts & Brown, 2016). The resources and time variations during the project implementation do not influence any change to the pricing. The price remained constant under the set and agreed on terms when signing the contract. Therefore, in the provision of substandard product, service, or result – the seller is held accountable and legally liable for the damages experienced in the process.

The use of a fixed price contract transfers the liability and risks to the vendor’s side. The buyer expects specific standards, quality, and deliverables to be made on completing the project. A clear definition of responsibilities and tasks to be delivered by either the buyer or the seller is stipulated in the contract (Kim et al., 2016). The seller has the mandate to price the project before committing to the project. Once the fixed price contract is signed, the seller (vendor) is required to meet all the set conditions and requirements of the procurement project.

4.2.1.Seller’s Liability for Damages

In the occurrence of damages, the seller is liable to cater for the extra costs in the fixed term. In the procurement project, damages are experienced due to the additional costs incurred in meeting the required quality, losses in a project, replacement of product, and impediment to complete the project on time. The level of liability is high, and based on the contract, the legal obligation holds the vendor liable to strictly deliver on the agreed terms (Kim et al., 2016). The functionalities of the procurement project emphasize on value and quality of products and services. The failure to meet this may subject the vendor to incur further costs having to redo the delivery again (Gotanda, 2006). Therefore, to avoid liability for damages, the vendors should focus on delivery to the optimum level of the agreed contract.

4.2.2. Breach of Contract

A breach of contract happens following the failure of one party in a legally binding contract that fails to comply with particular terms agreed upon. A breach of contract culminates in damages that should be covered by the vendor. A breach of contract subjects the buyer to the right of being compensated through monetary value for the damages experienced as a result of the failure to perform as set in the agreement (Ganglmair, 2017). The legal liability requires the seller to perform exemplary as per the agreed terms. A breach of contract sets a precedent of a damaged reputation that is bound to cost the vendor more than the existing contract. As a vendor, – reputation is essential to compete in bidding for different contracts. Thus, in the long-term, a breach of contract is, in the long run, painful to the vendor.

4.2.3. Low Quality

Low quality culminates in the breach of contract that leads to the expansion of damages in the project. In a fixed price contract, liabilities rapidly increase in the delivery of low-quality products or services. This is as a result of the potential replacement of the delivered service or product at the expense of the vendor (Gotanda, 2006). Also, it leads to the likelihood of redoing the entire work to ascertain the expected quality is delivered. The fixed-price contract emphasizes on value and quality. Hence, all liabilities are subjected to the vendor’s side in the failure to meet the required value and quality of the service or products contracted to deliver.

5.0. THEORETICAL FRAMEWORK/MODEL FOR CONTRACT TYPE

5.1.0. Change Management Theories and Models

The paper comprehensively analyzes the importance and significance of different change management theories and models in their support and explanation of the procurement risks. This is the inclusion of unforeseen instances such as nonperformance, risk of quality, change in scope, or time management. The changes trigger potential damage on the outcome of the procurement processes that adversely affect the overall project. Therefore, this paper focuses on five change management theories and models to support and/or explain the procurement risks. These including Lewin’s change management model, Kotter’s theory, the McKinsey 7-S model, Nudge theory, and the Satir change management model.

5.2.0. Change Management Theories and Models in Procurement Risks

5.2.1. Lewin’s Change Management Model

Developed by Kurt Lewin, the model is fundamental in breaking down massive entities of change into small manageable groups. These are based on three key features that include unfreeze, change, and refreeze. In the management of procurement risks, Lewin’s change management model in the first phase of unfreezing the current processes allows all the involved individuals and teams to understand the need for change (Wang, City &Ellinger, 2009). This gives room for every person to be on board the procurement processes minimizing the associated risks associated with the implementation of different steps. The understanding of the need for change leads the procurement process to acquire diverse feedback that informs various approaches to mitigating potential risks (Sanderson, Lonsdale, Mannion&Matharu, 2015). This sets the course for changes to be made in a manner that focuses on supporting the procurement processes and assurance of efficiency.

The refreeze step allows the commencing of the status quo of the adopted changes in the procurement process. The mitigation of procurement risks is based on the sufficient period provided in the adoption of change limiting or eliminating potential resistance (Hussain et al., 2018). Also, there is an extensive amount of time to assess all potential leaks to the procurement processes that enhance the arising risks through the involvement of teams. The existence of strong senior management is integral to strengthen team-wide changes at different points of the procurement processes (Aven, 2016). Hence, it enhances the efficiency and significance of the procurement project.

5.2.2. Kotter’s Theory

Kotter’s theory of change management was developed by Harvard Business School, Professor John P. Kotter. The theory comprises of eight stages that provide extensive opportunities to mitigate risks that may arise in the procurement processes (Pollack & Pollack, 2015). The utilization of Kotter’s theory is crucial to the implementation of changes in the procurement project. The approach builds enthusiasm, morale, and understanding of the importance and needs for change in the procurement project.

Kotter’s theory creates a sense of urgency in adopting changes in a procurement project. This creates room to build a change team responsible for implementing the adopted variations in the procurement processes. This is informed by the intention to achieve the highest benefits of the procurement project. The formation of strategic vision in Kotter’s change theory is crucial to guide and maintain the procurement process focused on the stipulated mechanisms (Pollack & Pollack, 2015). With a combination of the communication of the vision, it significantly minimizes the procurement risks that would otherwise be massive. The confusion experienced with a clear vision and lack of communication amplify the procurement risks. Therefore, Kotter’s theory outlines approaches to remove existing barriers to change.

The capacity to focus on short-term wins gives the procurement team a sense of dedication and motivation to preserve in achieving high goals. This leads to the commitment of maintaining the momentum instituted in the changes in the procurement project (Aven, 2016). Consequently, this theory significantly reduces or eliminates the procurement risks that posit to undermine the procurement project’s efficiency potentially.

5.2.3. The McKinsey 7-S Model

The application of the McKinsey 7-S model works best in the point where the risks of the problem are known, but there is the uncertainty of how to resolve them. The application of the 7-S model in change management to mitigate the procurement risks serves as a guide to resolving the identified procurement problem efficiently (Baishya, 2015). The strategy outlines the approaches in which the procurement risks can be resolved. Based on the problem or risk, the strategy streamlines the actions of the procurement team to adopt changes and maintain balance in the implementation process effectively. The structure helps remain on course and within the stipulated framework. The systems provide the mechanism to which the procurement changes are implemented. The systems support every step and maintain manageable levels.

The procurement team ought to develop shared values to ensure they function and operate towards the same goals. This eliminates the risks of contradicting each other in the implementation of procurement changes (Ravanfar, 2015). The style maintains the culture and conduct of the staff in the procurement process. The determination of the required number of staff and specialization (skills) is fundamental to the elimination of procurement risks. Therefore, the necessary skills matching staff and task distribution impacts the success of the procurement project.

5.2.4. Nudge Theory

The utilization of Nudge theory is based on the available and essential evidence that informs the course to which the procurement changes should take. The determination of the direction of change is integral to the mitigation procurement risks that arise as a result of change implementation. The Nudge theory defines the changes to be adopted in the procurement process (Esposito, Hernandez, van Bavel& Vila, 2017). This ascertains that procurement risks are addressed during the identification of changes as it assesses potential implications. The consideration of the procurement team’s point of view is critical to support their approaches and conduct in the implementation process. Based on the provided evidence, the opinions can be adopted or improved to ascertain high benefits in the procurement process (Esposito et al., 2020). This eliminates procurement risks attributed to the negligence of the professionals involved in the implementation process.

The Nudge theory emphasizes the value of listening to the employees’ views and presentation of different choices. The evaluation of different alternatives creates the opportunity to adopt the best and most effective approach to be utilized in the procurement process (Esposito et al., 2020). The team is motivated by short-term wins, which should be solidified in change management. Thus, it impacts the efficiency of the procurement process.

5.2.5. The Satir Change Management Model

The Satir change management model primarily focuses on the staff involved in the implementation of the procurement project. The elimination of risks can be adequately addressed by the consideration, monitoring, and addressing issues raised by the staff in the implementation process. The model addresses the status quo, resistance, potential chaos, integration of changes, and establishment of a more beneficial status quo (Dias, Hernandez & Oliveira, 2020). The Satir change model adequately prepares the adoption of changes and enhances the efficiency of the implementation of the change. Therefore, the outlined roadmap acts as a reinforcement to proposed changes in a sustained manner that ascertains minimal risks.

6.0. PERSPECTIVE ON ETHICS

The application of ethics is examined in its effects on the fixed price type of a contract.This calls for the application of specific ethical theory to determine its effects on the selected contract. The significance of ethics in contracting and procurement planning process plays an integral role to maintain the operations of both the buyer and the seller within the terms of the contract. Ethics stipulates the need for compliance with legal and moral standards when honoring the contract. Therefore, it is massively important for ethics to be applied in the contracting and procurement planning processes.

6.1.0. Contracting and Procurement Planning Process

Ethics in procurement planning process are highly valued to maintain the quality and high standards of the product and services sourced from the contract (Zitha&Mathebula, 2015). The ground rule for ethics application in procurement planning processes revolve on: –

Exercising integrity.
Treating suppliers equally and fairly.
Respect for all stakeholders involved.
Avoiding conflict of interest and practice of personal enrichment.
Compliance with legal among other obligations.

6.2.0. Application of Ethical Theories

Ethics in procurement planning process seek to promote values of:-

Integrity,
Fairness,
Transparency, and

Application of ethical theories such as Utilitarianism on the contracting and procurement planning process is fundamental to attain the highest benefits (Ndolo&Njagi, 2014). Utilitarian ethics promotes the achievement of the greatest benefit for the greatest number of people (stakeholders). The theory was advanced from the writings of philosophers John Stuart Mill and Jeremy Bentham.The decision-making process and actions selected in the contract seek to maximize the benefits for all the stakeholders in the contract (Makali, 2015). The ethical principles advanced by the theory enhance the results of the fixed price contract selected in the procurement of the farm input materials for One Acre Fund organization.

6.3.0. Significance of Ethics in Contracting and Procurement Process

The significance of ethics application in the contracting and procurement planning process can be analyzed through the following features. Efficiency. Compliance with ethical standards and values ascertains the realization of high efficiency in contract and procurement delivery. Fairness. All vendors are subject to equal and fair treatment in competing for the procurement tenders. Integrity. This promotes honesty and truthfulness in implementing procurement contracts. The required standards are bound to be delivered (Saha, 2014). Transparency. Fundamental to create awareness of every step of the procurement contract implementation. Done through openness and subject to further reviews. Proportionality. Critical to ascertain that the selected fixed price is fair, just, and equal to the task to be completed. Avoids one side taking advantage of the other (Fourie, 2017). Respect for all. This is fundamental to promote good relations and successful completion of the contracts.

7.0. COMMUNICATION PLAN APPROACH

This section outlines the proposed communication plan approach that will be used in the execution of the procurement project. The right selection of communication is fundamental to ascertain the success of the project. The project manager’s role focuses on emphasizing the value of the communication mode selected in reaching all the stakeholders. The implementation of an effective communication plan is crucial to ensure the smooth functioning and running of the project. Therefore, this section analyzes the type of communication, mode of communication, and the rationale for informing the selected channel. Thus, it functions to ensure a smooth and effective flow of information from the top management, project manager, project teams, vendors, and all involved stakeholders. Consequently, it enhances the success rate of the procurement project completion on time and within the stipulated budget.

7.1.0. Type of Communication to Manage

The type of communication is used to manage the context of information delivered to who and for what purposes. This is based on the role of individuals receiving the information from the project manager. Depending on the hierarchical order of functionality in the project, one is made privy to different contexts of information. The involvement of all stakeholders is integral to the effective decision-making process in the project implementation (Olena, 2015). Therefore, based on the determination of the security or management level, the information will be disseminated depending on relevance and usage in the specific department. That is, the logistics should receive extensive information on the storage, transport, and distribution of the farm input materials. Also, the finance depart should conduct procurement and manage all the financial statements and cash flows (Buzzetto, Bauli&Carvalho, 2020). Therefore, the success of the respective department culminates in the overall performance of the project.

The determination of confidential and open information will be used to determine the level of exposure to information the employees are allowed in the procurement project implementation. The confidential information is for the need to see only whose access is limited to a few individuals in the higher management positions (Buzzetto et al., 2020). The open information is prioritized depending on the significance and urgency of the respective stakeholders. For instance, the small household farmers will be made privy of the progress made on the supply of the farm input materials from time to time. The information prioritization is essential to allow preparations on the farms set for planting and other procedures depending on the phase completion. This culminates in the building of trust, confidence, and establish the assurance for quality deliverables and meeting the stakeholders’ expectations (Komevs, Hauge& Meijer, 2018). The departmental heads and project teams are made aware and have access to crucial information, enhancing the project implementation. Therefore, smooth operations are based on information flow and the right information reaching the intended recipient.

7.2.0. Mode of Communication

All information in the procurement project of the farm input materials by One Acre Fund is disseminated through the use of emails and online meetings. The vendors receive all communications through emails and revert through the same platform. The use of emails is convenient to enable continuous communication and sharing of information between the buyer and the seller. The negotiations are done through online meetings between the organization’s top management, project manager, and the vendors. This is critical to creating for high competitiveness and determination of the best vendors to win over the contracts (Zulch, 2014). The use of online meetings gives real-time communication in which virtual conversations are made during the negotiation process. Subsequently, after winning the contract and procurement tender – the vendors use email to communicate with the organization and vis-à-vis. Hence, it provides an avenue for continuous communication between the buyer and the seller – allowing regular updates on the project completion progress.

Other stakeholders use emails as the primary communication platform in which updates, complaints, comments, and suggestions are delivered to the right recipient. The stakeholders will have the right to make enquires on the project’s implementation progress. This is critical to keep them informed and ready to take the next step (Komevs et al., 2018). The cooperation and coordination of information from the vendors, the organization, to the small household farmers create a clear channel of communication. This will be essential to establish essential measures in preparation for receiving the farm input materials. Hence, it ascertains the overall project performance is maintained at the highest level possible for great results.

7.3.0. The Rationale for the Selection of the Communication Mode

The minimal investment requirement informs the use of emails on the necessary technology required to make it a success. Also, the small household farmer’s access to smartphones makes the use of emails a reliable means of communication. This is fundamental to ensure all stakeholders receive the information on time for the continuity of the project (Affare, 2012). The vendors’ use of emails for continued communication and exchanges with the organization provides room for improvements. That is, based on the arising issues, and the organization can cooperate with the vendors to ascertain the success of the project. The use of online meetings is crucial to enable extensive negotiations and debate. This enables us to achieve the best offer for both the buyer and the seller.

7.4.0. Key Considerations in the Communication Plan

7.4.1. Needs of the Seller

The consideration of the needs of the seller in the communication plan includes the determination of the precise quality expected to be delivered. The determination of the quality standards is essential to the seller to ensure the procurement stipulates the expected results (Buzzetto, Bauli&Carvalho, 2020). This is critical to ensure that the stipulated quality is within the provided budget for the fixed-price contract in which the procurement project is executed on the value. This accounts for the needs of the seller for the quality provided to be based on the price and amount offered for the procurement project.

The communication plan articulates the precise risks associated with the fixed price contracts used in the procurement of the farm inputs materials by One Acre Fund. Risks are a fundamental feature that must be well-articulated and exhaustively explained when committing to a fixed price contract in a procurement project. The seller’s needs are based on compliance with the associated risks and the potential outcomes. In the aspect where the communication of risks is not provided to the seller, there is a likelihood of operating blindly. Therefore, positing great dangers to the seller, which must be addressed before committing to the fixed price type of a contract.

The legal liabilities applicable to the seller is a profound concern to determine whether they commit the chosen contract terms. This presents the seller’s needs to outline the potential legal liabilities expected from signing a contract. It informs the level of risks in which the seller should be willing to take in committing to the procurement project (Olena, 2015). Therefore, it is based on competitiveness and capacity to deliver on the stipulated timeframe and budget. Hence, it limits the risks and legal liabilities towards the seller.

7.4.2. Needs of the Buyer

The primary need for the buyer that must be ascertained through effective communication comprises of the assurance and security offered in the procurement projects. The fixed-price contract assures the buyer of not incurring additional costs as a result of price inflations and market changes. The procurement of farm input materials by One Acre Fund using the fixed price contract provides the necessary precautionary measures that ascertain the buyer’s needs are provided on the agreed terms (Kornevs, Hauge& Meijer, 2018). The communication plan, at this point, entails the outlining of the project and details of each phase. The procurement project requires profound commitments and assurance that implementation meets the buyer’s needs.

As well, the procurement project utilizes a communication plan to explain the quality and standards offered for different contracts and prices. The liability shifted to the seller requires the seller to charge a higher price to ascertain safety precautions should there be market inflations. The communication of the costs is essential to ascertain the buyer of what to expect and the extents stipulated in the terms and conditions of the agreement.

The capacity to create a great rapport and relationship between the buyer and the seller is maintained through continuous and effective communication. The communication plan takes into account the need to provide necessary updates on the procurement project’s completion progress (Munyimi, 2019). This is critical in maintaining the time framework provided for the procurement. In the case of One Acre Fund, the capacity to maintain continuous communication is fundamental to allow room for additional preparations on the households receiving the products. Therefore, effective communication between the buyer and the seller is crucial to inducing a positive influence on project performance.

7.4.3. Needs of the Stakeholders

The key stakeholders in the case of the One Acre Fund procurement project comprise of the small household farmers in different countries in Africa. The provisions of effective communication play a significant role in allowing farmers to prepare in advance. The time factor is essential in the growth of plants. Therefore, the procurement project requested by the buyer must meet the stipulated time frames (Munyimi, 2019). This is crucial in maintaining the flow of project implementation in all components. The diverse nature of the One Acre Fund procurement and the connection with the small household farmers as the final recipients of the procurement requires adequate information available to the stakeholders for necessary preparations. Thus, it impacts in increasing the efficiency of the project completion.

Also, the communication plan accounts for the needs and expectations of the stakeholders as the final recipients of the products procured by the buyer from the seller. The buyer has a responsibility to update the small household farmers of the progress and the level of project completion. This is fundamental to give room for advance preparation and assurances of not incurring losses in the failure to provide the procured consignment.

7.5.0. Communication Plan When Selecting Contract Types and Negotiating Specific Needs

The selection of contract types and negotiating for specific needs is an integral part of the procurement projects. The application of effective communication that brings together the buyer and the seller to a consensus is crucial in attaining the project’s objectives. The communication plan informing the selection of contract types and negotiating for specific needs is based on various critical measures.

The first critical measure comprises of the predictability of the project. This allows the seller to determine the most suitable contract type and favorable to generate higher profits. The seller must focus on predictable projects to ensure no additional costs are incurred during fixed price contract implementation. The predictability of projects allows the seller to make adequate plans and follow the project’s implementation plan to the latter (Čulo&Skendrović, 2012). The communication plan on the predictability of the project involves providing the flexibility of the price adjustment from the start to cater for the unexpected developments.

Second, price competitiveness is a crucial aspect of the communication plan. This accounts for the negotiation of the costs of specific needs included in the procurement project. That is the determination of the quality and standards of products required to be supplied by the vendors to the company (Larsson & Larsson, 2020). The price competitiveness opens room for negotiation between the buyer and different vendors resulting in the selection of the best of them all. The quality of project completion and success rate informs the decision to select the most viable and effective vendor with higher achievement in completing similar procurement projects. Thus, it culminates in achieving higher quality and standards for the company.

The third measure comprises of the importance of meeting the scheduled milestone dates. The procurement of farm input materials by the One Acre Fund is distributed in three phases. Successful completion of each phase in the stipulated timeframe is fundamental to ascertain the success of the overall project (Čulo&Skendrović, 2012). The operations of the vendors utilize communication to the negotiation of scheduled dates allowance. That is an allowance of three to seven days after the stipulated delivery dates. The negotiation allows the vendor to cover for the delays in clearance, supply, and transport logistics. Therefore, it leads to the potential of eliminating potentials costs and loss of contract in the failure to deliver on the agreed milestone dates.

7.6.0. Communication Plan in the Overall Deliverables of the Procurement Project

The communication plan involving all the deliverables accounts for various aspects of the project. Communication of the scope of the project allows the vendors to share in the vision of the buyer. This is fundamental to induce positive influence in the commitment to meeting the deliverables scheduled milestone dates and overall project deliverables (Larsson & Larsson, 2020). The work breakdown structure allows the communication to agree on the terms of the implementation of various parts of the project. The work breakdown structure brings the buyer, the vendors, and the stakeholders to a consensus that finds a compromise agreeable to all parties. Thus, it ascertains efficiency in the project completion and meeting of the deliverables on time.

Therefore, communication enables the flow of the project from one phase to the next. The provision of the progress report gives room to determine the need, capacity, and urgency to proceed to the next phase. This is critical to avoid unnecessary bias and overreliance on one aspect of the project. As a result, the communication helps maintain the project within the budget and on the stipulated time frame. The success of the project is attained through successful completion of all the deliverables provided by the continuous communication and updates on the progress of the procurement project.

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