Procurement is hardly an interesting topic for most people. In fact, the average person probably doesn’t even know what ‘procurement’ actually means. Most project managers understand that procurement is one of the ten knowledge areas in the Project Management Body of Knowledge. Depending on the industry you work in or the company you work for, you may have little or no day-to-day involvement in any procurement or contract management activities. As the project manager, you are actively involved in all parts of the procurement process.
So how did we get here?
Government organizations have quite strict rules and processes when it comes to procurement. When you are spending taxpayers’ money, there is an expectation that it is spent appropriately. Not-for-profits and commercial businesses also have policies that must be followed. Donors and shareholders also have expectations about how their money should be spent or invested.
Over the last few years, there has been a shift in these policies to include a focus on the environment and addressing particular social issues. Governments in numerous countries have led a push to identify instances of and reduce the risks of modern slavery. They have called for suppliers to have methods that eliminate waste, promote recycling, or promote the use of local suppliers. This shift has borne specific social procurement and sustainable procurement policies.
As most organizations move towards a net-zero future, energy efficiency, embedded energy, and CO2 emissions come more into focus, further expanding what is required under these policies.
So what has this got to do with project management?
As a project manager, you are required to engage suppliers and hire resources for your projects.
While the process and policies may already be set by the client or organization you work for, you often can prioritize certain requirements or shape the selection criteria used when selecting suppliers. When engaging suppliers, we have a unique opportunity to ‘raise the bar’, take the lead, and make a difference in the world.
For those who are members of professional or peak bodies, we are also expected to adhere to a code of ethics or conduct. PMI, for example, identifies several key expectations in their Code of Ethics and Professional Conduct, including “showing high regard for ourselves, others, and resources entrusted,” including “…the safety of others, natural or environmental resources.” There is also an aspirational responsibility to “…make decisions based on best interests society public safety & environment.”
The International Project Management Association (IPMA) in their Code of Ethics & Professional Conduct, makes commitments to wider society & minimizing impacts on the environment.
At GPM, we have a code of ethics as well as a supplier code of conduct.
So from a professional ethics perspective, this is something we must do.
So what do you do as a project manager?
Several years ago, I was working with government clients with policy responsibilities for environmental protection. I was managing a large technology program that involved replacing thousands of computers & laptops. Each device was delivered with individual boxes containing styrofoam packaging & lots of plastic – hundreds of cubic meters of styrofoam & hundreds of kilograms of plastic potentially needed disposal. Managing this would be time-consuming and the impact large.
The easiest solution was to eliminate this problem entirely, which not only would make life a little easier for the project team but, most importantly, it would eliminate a huge amount of waste going into landfill.
So what did we do?
When the requirement was drafted in the contract for the purchase and delivery of the new IT equipment, we specified that there was to be no styrofoam or plastic packaging. This seemed quite radical at the time, and we received a lot of enquires and comments about this.
In essence we had asked suppliers to step up and innovate. They had to work with their suppliers – the packaging company – to come up with a solution, which they did. The supplier provided PCs and monitors in a large cardboard box, with cardboard separating each item. There was no plastic wrapping. There was no styrofoam packaging. And importantly, there was no higher rate of damage or breakage.
At the end of the project, we asked for feedback about the requirement we imposed. The CEO of the company said that this is how they will do business moving forward. When we asked what benefits did it deliver, his first comment was: “it saved us tends of thousands of dollars because we were shipping smaller volumes and not paying to ship plastic and styrofoam around the country”.
Through this process we were not only able to reduce the impact for a specific project, but importantly were able to influence the future approach taken by suppliers, with the net result being less waste being generated, less plastic and styrofoam going into landfill, and cost savings being made in transportation.
As the clients we deliver to and the organisations we work for pursue sustainability objectives, and in particular as they sign on to a net zero target, project managers will be expected to play their part and make a contribution to these goals.
At GPM we have heard similar stories from project managers around the world. Project managers assess the impact through the P5 Impact Analysis.
By identifying potential negative impacts a project manager can modify the project approach, or in our example here supplier requirements, to take an alternative approach which is lower impact. Once this impact has been assessed a sustainability management plan is created to address any impacts.
In our new P5 Standard Version 3.0, we recommend the following practices:
The project team should:
- Include the environmental, economic, and social impact of the product or service as a factor in all purchasing decisions.
- Evaluate the environmental and social performance of all suppliers.
- Prioritize products and services with reputable sustainability certifications such as Energy Star, Forest Stewardship Council (FSC), and Leadership in Energy and Environmental Design (LEED).
- Encourage the use of eco-efficient products and services that use less energy, less water, have a longer life span, and are made from recycled or reused materials.
- Train relevant project workers on sustainable procurement.
- Pay suppliers in accordance with their contracts and hold them to the same standards and practices for sustainable procurement used by the project.
Sustainable procurement practices and contracts can help to achieve the following sustainable project outcomes:
- Cost savings through the use of more energy and resource-efficient products and services.
- Reduced waste and increased recycling.
- Enhanced brand image, making it more attractive to customers and investors, who prioritize sustainability.
- Increased innovation, as suppliers are encouraged to develop more sustainable products and services.
As we can now see, there is far more to procurement than ticking boxes (no pun intended) on an RFP. As sustainable project managers we have the ability to directly effect our organisations corporate net zero targets as well as transform our supply chain into an environmentally sustainable value chain. In doing so, we will continue to make our profession more valuable and strategic while moving up the ladder to the C suite.