Project Risk and Procurement

Management

Unit 5
Sustainable
Procurement Processes
Sustainability

Sustainability - defined as the merger of 3 areas –

environmental, social/ethical and economic – into
an integrated single perspective

General definition of sustainable development

provided by the World Commission on
Environment and Development (WCED, 1987),
also known as the Brundtland Commission –
‘development that meets the needs of the present
without compromising the ability of future
generations to meet their own needs’
Sustainable procurement - definitions
There is no single definition of sustainable
• ,
procurement but, in its simplest terms, it is the
ability to purchase products and services,
usually on a large scale, without compromising
resources for future generations.

Sustainable procurement – a management

process used to secure the acquisition of goods
and services in a way that ensures that there is
the least impact on society and the environment
throughout the full life cycle of the product.
 Environmental Issues
Natural resource use

Emissions

Waste (waste hierarchy – resource reduction, reuse, recycle, disposal

with energy recovery, disposal in landfill)

Hazardous substances

Energy use

Loss of biodiversity and deforestation

Nuclear radiation

Ozone depletion

Global warming
Ethical Issues
Labour practices
– child labour
– discrimination (race, sex, religion)
– wage (fair pay)
– unions (the right to collective bargaining)
– working hours
– workplace health and safety issues
– employee privacy

Irresponsible marketing (marketing to children, misrepresentation

etc.)

Supporting oppressive regimes

Honesty, trust, respect and fairness in corporate or organisational

relations

Bribery and corruption

Social Issues

The role and relationship of the

company to the local community

Direct and indirect employment in

developing countries

Investment in education and training

ISO 14001
Structured, internationally recognized
standard
ISO 14001
– “enables an organization to establish, and assess the effectiveness
of, procedures to set an environmental policy and objectives,
achieve conformance with them, and demonstrate such
conformance to others. The overall aim … is to support
environmental protection and prevention of pollution in balance
with socioeconomic needs.”
 ISO 14001 )

• Initiative to go beyond compliance

– Not command and control model
– Positive motivation
– Reach is much further than regulatory
requirements
• Seeks culture shift
– Challenge
• Diffusion of environmental responsibility from environmental to
all employees

• Continual improvement of the EMS

ISO 14001 EMS Model i

Continual Improvement

Management review
Environmental policy

Planning
Checking and
Implementation
corrective action and operation
 Fairtrade
Fairtrade is a system monitored and operated by the Fairtrade
Labelling Organisation, which sets working and social standards
that must be complied with before companies are awarded a
Fairtrade mark. It aims to change the way we trade, creating
fairer working conditions, greater opportunities in the
marketplace and social development for producer partners.
Sourcing principles from Fair Trade are:
• Engage with stakeholders.
• Understand the supplier country context.
• Transparent communication.
• Price to cover cost of labour and capital employed.
• Develop partnering relationships.
• Integrate social objectives with other buying functions.
 Contract management
Contract management can be defined as:
‘The activities of a buyer during a contract period to ensure that
all parties to the contract fulfill their contractual obligations.’
An important aspect of this is managing the relationships
between all parties in the most effective way so as to ensure
the contract meets the optimum combination of cost, time and
quality. Contract activities can be split into two distinct but
interdependent phases: ‘upstream’ (pre-award), ‘downstream’
(post-award). Contract management is a downstream activity
but can only be effective if upstream activities are properly
carried out.
Contract management applies to the whole of procurements
from a simple order to a complex construction or service
contract.
Table 19.2 Some commonly used measures of operational procurement performance
Figure 10.1 The basic phases of negotiation
Figure 10.4 Ranges of possibility