Research On Procurement Risk Management Of ABC Overseas General Contracting Project

Due to the increas ingly keen competition in the inter national project general contracting field and divers ification of project financ ing products in the current international financing market as well as a more tolerant trend revealed in the Chinese concessional loan policy execution in recent years, the dominant position of Chinese governmental companies among the Chinese project contractors in the project contracting filed of third-world counties is directly threatened. In order to i mprove competitiveness in the projec t contracting market, maintain and exten d the m arket volume growth of overseas general cont racting, these Chinese governm ental contracting companies began to try som e new project management methods, such as fine-grained purchasing management,so as to improve its resource-integration ability and realize integration econom y through procurement costs reduction, which is the prevailing factor among all of the cost related factors in project management.Technically, the adoption of fine-grained purchase management should have a positive impact on project profitability improvement through squeezing on possible profit and administration fees added in the pu rchasing process, which will, further more, reveal the actual procurement cost and help deduct the overall direct costs of the project in a more efficient way. However, practically, certain procurement risks will follow this kind of procurement method and calls for a higher level of resource-integration ability and risk management ability of the project m anagement team, since a finer arranged purchasing schedule will recover the risks orig inally shifted to the su ppliers or the subcontractors under the traditional complete set of subcontracting mode. In addition, this new kind of proc urement method will also increase the com bination and coordination process, w hich will also incr ease the overall procurem ent risk of th e project.Based on the background introduction above m entioned, this articl e, firstly, give a review and summary of the re lated researches and papers as well as m onographs on the procurement risk analysis and risk management for engineering projects and in the meantime, discussing, based on the com prehensive risk management philosophy and whole process risk analysis m ethod, and qualitatively analyzing the procurement risk effecting factors for the case of ABC international general contracting project, pointing out the fundam ental effects of fine proc urement management team allocation and preliminary planning of the procurement arrangement. Then, main effecting factors of the procurement risk, the ranking order of these factors as well as the overall risk assessment outcome of the Project were conc luded from the first-hand data collected through a com bination of expert intervie w method and questionnaire m ethod, the analysis of which is based on the eq ual risk curve analyzing method, and accordingly concluded that, in the aspect of risk af fecting degree, procurement risk factors related to the contract execu tion stage dominant th e procurement costs effecting factors and accordingly demonstrated the conclusion drawn from the qualitative analysis abov e. And then, this article proposed som e practical procurement risk m anagement measures regarding the procurem ent risk factors of the ABC Project based on the quantitative analysis and qualitative anal ysis above, including but not lim ited to organization structure adjustm ent, procedure reorganize, information management, separation of duties and tasks and target management and incentive mechanism. Finally, this article concluded that the procurement management model selection will affect the procurement risk management method, reminding companies of the similar field to comprehensively consider the risk management cost compared to the overall project cost when selecting procurement management model and em phasizing hereafter the im portance of m anagement team coordination and inform ation management for procurement risk prevention and m anagement. In the meantime, the deficiency of this article was analyzed and concluded regarding study m ethod and materials which this study based on and the study direction and study m ethod were discussed in a further more step.