Story: The Mining Project without Rail Capacity
An Australian coal mining company were expanding their mine and required additional rail capacity to meet the production of their expansion.
Something went wrong in the procurement process and they ended up securing a take-or-pay arrangement for capacity less than planned. There were no provisions for variability of production.
The result was that they were stuck with a expensive choice:
a) Stop coal mining for a whole month of the year (at a cost of $1M / day) or
b) Negotiate with the rail company with them knowing full well that you don’t have any other choice.
What went wrong? A lack of alignment between procurement decisions and the project’s operational realities.
When delivering large infrastructure projects, success hinges on more than just engineering and execution—it’s about making smart procurement decisions. Yet many project teams hesitate to invest in experienced procurement support, often citing common objections. Here’s why hiring procurement expertise is critical and how it delivers significant value.
Procurement Isn’t My Responsibility
Some leaders see procurement as a secondary concern, assuming it doesn’t fall within their remit. However, procurement decisions impact every key project performance indicator:
- Time: Poor procurement can cause delays through supply chain failures or misaligned contracts.
- Cost: Overpriced agreements or cost overruns drain project budgets.
- Quality: Rushed or poorly negotiated contracts can lead to subpar materials or supplier disputes.
Ignoring procurement is like ignoring the foundation of a building—it may hold up initially, but cracks will soon appear. Experienced procurement professionals ensure the project is built on solid ground, driving KPIs in the right direction.
Experienced Staff Are Too Expensive
One of the most common objections is the perceived cost of hiring experienced procurement support. However, the cost of expertise is minimal compared to the losses from poor procurement decisions:
- Avoid Costly Disputes: Experienced professionals draft contracts that protect both parties, avoiding expensive litigation.
- Negotiate Better Terms: They secure favorable pricing, delivery schedules, and risk-sharing mechanisms.
- Prevent Delays: Expertise ensures critical materials and services arrive when needed, keeping projects on schedule.
Example: On a dam project, an additional $50,000 investment in an experienced procurement lead saved $5 million by avoiding contractual disputes and delays. The ROI of expertise far outweighs the upfront cost.
Can’t the Project Managers Just Do the Procurement Work? How Hard Is It?
It’s a common misconception that project managers can easily handle procurement. While they excel in delivery and operations, procurement requires specialized skills, including:
- Commercial Acumen: Navigating contracts, pricing structures, and risk-sharing terms requires expertise.
- Market Knowledge: Understanding supplier capabilities, lead times, and pricing trends ensures better decisions.
- Strategic Thinking: Procurement professionals challenge assumptions and find optimal solutions—not just the quickest or easiest.
When project managers take on procurement tasks, they often lack the time, tools, or expertise to deliver the best outcomes, leading to oversights and costly mistakes.
We Already Have a Procurement Team
Having a procurement team doesn’t mean the right expertise is in place. Many teams focus on administration rather than strategic, commercially driven procurement.
Ask yourself:
- “Can my current team anticipate risks before they escalate?”
- “Are they equipped to challenge assumptions and drive smarter decisions?”
- “Do they have the commercial acumen to negotiate optimal outcomes?”
Experienced procurement specialists bring strategic thinking, risk mitigation, and commercial insight—skills often lacking in admin-driven teams. They complement existing resources, driving better outcomes without replacing internal teams.
Conclusion
Hiring experienced procurement support isn’t an added cost—it’s an investment that safeguards time, cost, and quality for your infrastructure project.
By addressing risks, optimizing decisions, and driving commercial value, experienced professionals ensure your project delivers success while avoiding costly detours and disputes.
Procurement: The Missing Link to Project Success
Every year, Australian infrastructure projects lose millions to preventable procurement mistakes—are you at risk?
For senior project managers, the hidden danger isn’t just in unforeseen delays or cost blowouts. It often lies in a poorly equipped procurement function.
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