Investigation into procurement risk management in the Nigeria oil and gas industry

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Risk management is probably the most difficult aspect of project management. This translates that, the use of risk management at the pre contract stage is essential to mitigate and control the risk barriers to the successful completion of a project. This study aimed to investigate the challenges associated with pre-contract procurement risk management and document measures adopted by the Nigeria National Petroleum Corporation (NNPC). A descriptive research design involving administration of questionnaires was conducted with workers of NNPC in Nigeria. The study used a purposive sampling to select 70 workers within the various divisions. Data analysis involved descriptive and inferential statistics using SPSS software. Findings showed that, the pre-contract procurement risk management adopted by NPPC are characterized by risk identification, brainstorming and meetings as well as involvement of NNPC‘s top managers‘ in the process. Findings showed challenges in the planning; understatement and overstatement of need, impractical timeframe and insufficient fund, sourcing; failure to identify potential sources, inadequate statement of requirement and some level of biased specifications, negotiation and evaluation; failure to follow effective evaluation procedures and offers failing to meet the needs. Findings suggested that analysing needs accurately, improving consultation with users, obtaining clear statement of work and definition of need, obtaining appropriate approvals before undertaking process, improved forecasting, planning and consultation with users, implement a control mechanism to review specification before release and using expression of interest or request for information to clarify requirements could be used to overcome the challenges associated with procurement risk management. vi The study concludes that strengthening current pre-contract procurement risk management would further mitigate risk at NNPC and encourages future research to focus much on the subject within other public institutions in Nigeria.
A Thesis Submitted to the Department of Building Technology, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the award of a degree of Master of Science in Procurement Management.