Is Risk Management a Relevant Factor in Public Procurement : How procurement manuals describe risk management
Iloranta, Kalle (2021)
Iloranta, Kalle
2021
Master's Programme in Security and Safety Management
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
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Hyväksymispäivämäärä
2021-05-03
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202104223279
https://urn.fi/URN:NBN:fi:tuni-202104223279
Tiivistelmä
The Finnish public sector is an extensive procurer on a Finnish scale. In the public sector context, the legality of the procurements and securing services to citizens, whereas the efficiency of the public fund usage is essential targets. The potentiality of procurement as a strategic instrument through government or municipalities and cities' operational units has not been identified, while the fast-growing societal change raises new risks. Overall, the public procurement process is complex, which may lead to the realisation of risks due to a simple error. These risk may concern the procurement process itself or risks to the public organisation, procurement object or even citizens or the state. There is a legal obligation for risk management in public organisations. However, there is a shortcoming in outsourcing services, and contractual risk management procedures, lack of knowledge of risk management and proper procedures, together with project-based employees, and resource scarcity are significant challenges.
This research aims to study the public organisation procurement manuals and guides, describe the risk management of procurements and their necessity. This research aims to gain a comprehensive understanding of the risk management perspective that these guides and manuals contain for this topic and is the risk management presented as a relevant factor in the procurement process. This study is also expected to help to provide better guidance for public procurement risk management
This research is a qualitative research conducted by a constructivist grounded theory approach. The constructivist grounded theory approach is a straightforward interpretative research approach with flexible guidelines, focusing on the theory or phenomena. Researched material are the procurement manuals or guides from different public sector operators, governmental level, cities and municipalities from public sources due to the public nature of thesis research. The data gathering and formatting procedure for the analysis followed the constructivist grounded theory approach, with coding data with ad hoc codes supported by the theoretical framework through the steps of initial coding, creating concepts and simple categories through coding and wrote memos by comparing them with similar ones, followed by focused coding, integrating codes to develop core categories that are the basis of phenomenon findings.
The findings of this research are the six core categories that are perspectives towards public procurement risk management. These categories are “A comprehensive description of procurement risk management” that set such guidance that the connection should be apparent to those who are not risk management experts. “Risk management is recognised as a key part of procurements”, suggesting that risk management is a crucial part of procurement or that risk management is a continuing process ongoing with public procurement. No description or guidance included. “Recognised risk management”; however, the link between procurement management and risk management as a key part of procurements is not recognised or set clearly in this category. “Supplier as a risk” category considers that possible risks are supplier based issues that may complicate the contract's implementation between the supplier and a public organisation. “Contract as a risk” category perspective is that the procurement risks are contract-based, meaning that the contract made with the supplier is not desirable, binding the organisation to an unfavourable contract. The collected data also included manuals with “no recognised connection to risk management”, which are handled as the sixth category.
The relevancy of risk management in public procurements is unquestioned through 13 procurement manuals and guides. There is a total lack of risk management as a relevant factor in 6 of the researched manuals. The rest of the material has a shortage in risk management descriptions, or descriptions are interpretive. The research suggests that the public procurement manuals should provide more comprehensive and coherent coverage of all key phases of the procurement process and its complexity.
This research aims to study the public organisation procurement manuals and guides, describe the risk management of procurements and their necessity. This research aims to gain a comprehensive understanding of the risk management perspective that these guides and manuals contain for this topic and is the risk management presented as a relevant factor in the procurement process. This study is also expected to help to provide better guidance for public procurement risk management
This research is a qualitative research conducted by a constructivist grounded theory approach. The constructivist grounded theory approach is a straightforward interpretative research approach with flexible guidelines, focusing on the theory or phenomena. Researched material are the procurement manuals or guides from different public sector operators, governmental level, cities and municipalities from public sources due to the public nature of thesis research. The data gathering and formatting procedure for the analysis followed the constructivist grounded theory approach, with coding data with ad hoc codes supported by the theoretical framework through the steps of initial coding, creating concepts and simple categories through coding and wrote memos by comparing them with similar ones, followed by focused coding, integrating codes to develop core categories that are the basis of phenomenon findings.
The findings of this research are the six core categories that are perspectives towards public procurement risk management. These categories are “A comprehensive description of procurement risk management” that set such guidance that the connection should be apparent to those who are not risk management experts. “Risk management is recognised as a key part of procurements”, suggesting that risk management is a crucial part of procurement or that risk management is a continuing process ongoing with public procurement. No description or guidance included. “Recognised risk management”; however, the link between procurement management and risk management as a key part of procurements is not recognised or set clearly in this category. “Supplier as a risk” category considers that possible risks are supplier based issues that may complicate the contract's implementation between the supplier and a public organisation. “Contract as a risk” category perspective is that the procurement risks are contract-based, meaning that the contract made with the supplier is not desirable, binding the organisation to an unfavourable contract. The collected data also included manuals with “no recognised connection to risk management”, which are handled as the sixth category.
The relevancy of risk management in public procurements is unquestioned through 13 procurement manuals and guides. There is a total lack of risk management as a relevant factor in 6 of the researched manuals. The rest of the material has a shortage in risk management descriptions, or descriptions are interpretive. The research suggests that the public procurement manuals should provide more comprehensive and coherent coverage of all key phases of the procurement process and its complexity.