Red: PPT

Blue: Script
Hello everyone! Today, we'll be discussing some key aspects of procurement, focusing on
the differences between government and private sectors, common challenges, and the
wider social and economic impact. As future architects, understanding these points is
crucial for navigating the construction industry effectively.
X. Key Comparisons: Government vs. Private Procurement (lei)
Let's start by looking at how government and private sector procurement differ, especially
in the context of construction projects.
First is that, let’s tackle the meaning of these words when in comes to procurement:
Speed, structure, transparency, cost-efficiency
Speed:
How quickly the procurement process can be completed, from identifying the need to
receiving the goods or services.
Structure:
The framework of rules, procedures, and organizational hierarchy that governs the
procurement process.
Transparency:
The degree to which the procurement process is open, visible, and understandable to all
involved parties and the public (in the case of government projects).
Cost-efficiency:
Achieving the desired quality of goods or services at the lowest possible cost, considering
the entire lifecycle cost, not just the initial price.
Government Procurement: Tends to be slower due to stringent regulations, multiple layers
of approval, and a focus on minimizing risk and ensuring public accountability. The
structure is highly formalized and often hierarchical. Transparency is paramount, with
public bidding, detailed documentation, and audit trails. While aiming for cost-efficiency,
the process itself can sometimes lead to higher overall costs due to delays and
administrative overhead.
This is for public projects (schools, roads, government buildings). It's slower because
there are many rules to follow, a very strict structure, and everything is very transparent
to avoid corruption. The goal is cost-efficiency, but the process can add to the cost.
For example: Think about a government building project, like a new public school or a
national hospital. The design, bidding process, contractor selection, and project execution
will all follow very specific government guidelines, often published publicly. Every
change order needs strict justification and approval.
Private Procurement: Generally much faster and more agile. The structure can be more
flexible, adapting to specific project needs. While still valuing transparency, it's often
more focused on internal accountability and proprietary information. Cost-efficiency is a
primary driver, with decisions often made based on best value and project timelines.
 This is for projects by companies or individuals (houses, offices, malls). It's much faster
and more flexible. Companies can choose who they want to work with more easily. Cost-
efficiency is a big priority, to maximize profits.
Consider a private developer building a condominium complex or a shopping mall. They
can quickly choose a preferred contractor based on track record, negotiate terms, and
make faster design changes to meet market demands.

Next is how regulation and flexibility differ in government and private procurement:
Regulation vs. flexibility
When we say : Regulation: The extent to which the procurement process is governed by
rules and laws.
Flexibility: The ability to adapt the procurement process to specific needs.
In Government Procurement: Heavily regulated by laws, circulars, and specific
procurement policies (like the Government Procurement Reform Act in the Philippines).
This is to prevent corruption and ensure fair competition, but it can limit flexibility.
While Private Procurement: Offers much greater flexibility. Companies can set their own
procurement policies, negotiate directly, and adapt quickly to market changes or project
demands.

Here are the real world examples:

Real-world examples
Government: Major infrastructure projects like highways, bridges, public transit systems,
and government office buildings.
Private: Residential developments, commercial high-rises, industrial facilities, and
private resorts.

Procurement, whether government or private, isn't without its hurdles. These challenges can
significantly impact construction projects. So let’s talk about these challenges in
procurement:
XI. Challenges in Procurement (Both Sectors) (lei)
 Corruption, inefficiency, and bureaucracy
This is a significant problem, especially in public sectors, where large budgets and
complex processes can create opportunities for illicit activities. Inefficiency and
bureaucracy (excessive rules and procedures) can lead to project delays, cost overruns,
and frustration for all parties involved, including architectural firms waiting for
approvals.
 Corruption can lead to projects costing way too much or being poorly done. Inefficiency
and bureaucracy can cause delays and frustration.
Example: A contractor paying a bribe to get a project, or a design change taking months
to get approved.
 Supplier issues, delays, and quality concerns
Finding reliable suppliers, ensuring timely delivery of materials, and maintaining quality
standards are universal challenges. In construction, a delay in one material delivery can
halt an entire project.
If materials arrive late or are defective, the whole project can be delayed and cost more.
Example (Construction): A project might face delays because of an unreliable steel
supplier, or a batch of concrete might not meet the specified strength, leading to rework
and financial losses.
 Risk management and red flags
Identifying and mitigating risks is crucial. This includes financial risks, contractual risks,
and even reputational risks. "Red flags" are warning signs, such as unusually low bids,
repeated changes in specifications, or a lack of transparency, that can indicate potential
problems.
We need to watch out for red flags like unusually low bids or suppliers with bad
reputations. Risk management means planning for these problems and having backup
plans.
Example (Construction): An architect needs to be aware of contractors consistently
bidding significantly lower than market rate, as this could indicate cutting corners on
quality or labor, or potential financial instability.

Finally, let's look at how procurement, especially in construction, has a broader impact on
society and the economy.
XII. Social and Economic Impact (lei)
Let’s tacle about Procurement’s effect on communities and local businesses
Government Procurement: Public projects aim to benefit communities. Government
procurement often encourages local hiring and sourcing, injecting capital into the local
economy and fostering goodwill. Architects should consider local materials to support
these industries.
Private Procurement: While profit-driven, private developers increasingly value positive
community relations. Local sourcing can reduce costs and build brand loyalty. Architects
can advise on local sourcing to incorporate it into designs.
 Both government and private procurement significantly impact local communities and
businesses. Government procurement for public projects inherently aims to benefit
communities by encouraging local hiring and sourcing, thereby injecting capital and
fostering goodwill, with architects playing a role in specifying local materials. Private
procurement, though profit-driven, increasingly values local sourcing for cost reduction,
brand loyalty, and smoother processes, but may prioritize cost savings; architects can
advise clients on these benefits and integrate local materials into designs.
Next is Job creation, inclusivity, and sustainability
Job creation
Government Procurement: Large public infrastructure projects are significant job
creators, often with local hiring requirements.
Private Procurement: Private construction also generates many jobs, varying with project
scale. Architects' designs influence the types of skills and labor needed.
Both government and private construction procurement are significant job creators.
Government procurement, particularly for large public infrastructure, generates numerous
jobs across all skill levels, often including mandates for local hiring or specific
employment targets. Private construction also provides substantial employment for
various roles, with the scope of job creation depending on the individual project's size and
complexity.

Inclusivity
Government Procurement: Public procurement often mandates or incentivizes contracts
for minority-owned, women-owned, or veteran-owned businesses to ensure equitable
economic access.
Private Procurement: Many private companies adopt diversity and inclusion policies,
seeking diverse suppliers and promoting inclusive hiring, often as part of CSR. Architects
can advocate for these practices.
Inclusivity: Government procurement often mandates or incentivizes contracts for diverse
businesses (e.g., minority-owned, women-owned) to ensure equitable economic
opportunities. Private companies are increasingly adopting diversity and inclusion
policies as part of their corporate social responsibility. Architects can advocate for
inclusive practices.
Sustainability:
Government Procurement: Governments increasingly integrate sustainability criteria into
policies, requiring green certifications and eco-friendly materials for public projects,
driving the market for sustainable products.
Private Procurement: Private clients also demand sustainable solutions, driven by market
demand, cost savings, and public image. Architects are crucial in designing sustainable
buildings and specifying materials.
Sustainability: Both government and private clients are increasingly demanding
sustainable solutions. Governments integrate green building certifications and eco-
friendly materials into policies, while private clients are driven by market demand and
positive image. Architects are crucial in designing sustainable buildings and specifying
appropriate materials and methods.

Promoting MSME participation and ethical sourcing

Promoting MSME Participation:
Government Procurement: Governments often have policies to support Micro, Small, and
Medium Enterprises (MSMEs) through set-asides, simplified bidding, or training,
fostering local economic growth.
Private Procurement: Private companies may engage MSMEs for specialized services or
local sourcing due to their agility, though this is often business-driven. Architects can
facilitate MSME participation by designing for smaller contracts.
Both government and private procurement play a role in promoting Micro, Small, and
Medium Enterprise (MSME) participation. Governments actively support MSMEs
through policies like contract set-asides, simplified bidding, and training, which fosters
local economic growth and resilience. Private companies also engage with MSMEs for
specialized services or local sourcing, recognizing their agility and potential for
innovation, although this engagement is typically driven by strategic business decisions
rather than mandates.

Ethical Sourcing:
Government Procurement: Public procurement increasingly focuses on ethical sourcing,
ensuring materials are free from human rights abuses and meet environmental standards.
Private Procurement: Consumer awareness and brand reputation drive private companies
towards ethical sourcing, involving due diligence on suppliers for fair labor and
environmental practices. Architects' material specifications are vital for verifying ethical
and sustainable production.
Government Procurement: Public procurement is increasingly concerned with ethical
sourcing, ensuring that materials are not linked to human rights abuses (e.g., forced labor,
child labor) and that environmental standards are met throughout the supply chain. This
reflects a commitment to responsible public spending.
Private Procurement: Growing consumer awareness and brand reputation concerns are
pushing private companies towards more ethical sourcing. This involves due diligence on
suppliers to ensure fair labor practices, safe working conditions, and environmentally
sound production.