Running head: PROJECT PROCUREMENT MANAGEMENT IN SIIP

Group Assignment 1:
Project Procurement Management in the Springfield Interchange Improvement Project
Gabrielle Cugini, Orrin Foster, Nicky Fournier, Malcolm Joseph, and Derrick Gardner
PMAN 641 Project Procurement Management
Dr. Michael Belak
University of Maryland University College
March 22, 2015

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Project Procurement Management in the Springfield Interchange Improvement Project

The Springfield Interchange Improvement Project (SIIP) was a megaproject managed by
the Virginia Department of Transportation (VDOT) to ease traffic flow and reduce traffic safety
issues with a highway interchange south of Washington, D.C. This major construction project ran
from 1999 to 2007 and cost $676 million (Weiss, 2007). This paper assesses and analyzes the
four major project phasesinception, development, implementation, and closeoutas they
pertain to project procurement management.
The Inception Phase
As one of the largest scale projects ever undertaken by the VDOT, the SIIP required
expertise, planning, and, above all else, excellence in the area of procurement management.
Unfortunately, the inception phase of the SIIP, as seen through the lens of project procurement,
had decidedly negative results. In the assessment and analysis for this phase, the procurement
management area receives a three (3).
There are two factors that lead to this rating. First, VDOT permitted construction to get
underway on several areas of the SIIP before funding was even approved (Kwak, Doherty,
Mambelli, Mourad, & Speranzo, 2004). This has two identifiable issues: 1) if funding did not
come through for certain areas, it could lead to severe time and cost slip when considering
procurement for those and other areas of the project, and 2) this meant that a complete and wellrounded procurement plan could not have been completed (PMI, 2013). Add to this that the
VDOT team grossly underestimated the cost of the project due to lack of experience, and the
result is a major roadwork construction project with no conceivable project procurement plan
(Kwak et al., 2004). Second, and conversely, the project planners finally realized that they knew
very little about that sheer size and scope of the project and thus, brought in subject matter

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experts, including consultants and large professional firms (PMI, 2013). This action alone likely
meant the difference between a successful and failed project at the inception stage. While the
procurement effort certainly got off to a rocky start as managers attempted to start work before
funding was in place, realizing a gap in knowledge as the VDOT team did was pivotal.
The project procurement process benefited from a few strengths of the VDOT group.
First, the teams realization that they simply could not do the SIIP without expert guidance was a
very positive step. Second, despite many technological drawbacks like antiquated computer
systems, the VDOT teams communication was exemplary. Including all the stakeholders
ultimately saved time and money on later procurements (PMI, 2013). Sound advice from VDOT
professionals also helped, despite a lack of teamwork from government officials and other
bureaucratic members. Finally, a cohesive project scope helped forecast procurements as far out
as possible even considering the fact that construction began before funding was finalized.
Certainly, the inception phase of the SIIP presented some opportunities. First, funding
and budgeting should have been finalized before any construction began. This would have
ensured that a cohesive project procurement management plan and appropriate estimate could be
made on each of the project phases or its entirety (PMI, 2013). Secondly, risk management
planning should have taken a much higher priority, particularly with respect to procurement
(PMI, 2013). MacDonald (2015) notes the importance of risk mitigation strategies to control cost
and schedule, both of which were issues with SIIP. If a risk management planincluding
register, ranking and other critical toolswere used in the procurement process, none of this
would have occurred (Fleming, 2003). Finally, greater communication was a necessity between
the SIIP team and political leaders. This is a tough nut to crack, but policy makers must be made
to understand the gravity of missteps in the procurement process.

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The Development Phase

Initial development of the SIIP started off fairly well. However, with VDOT having no
prior experience in developing projects of such magnitude, major issues began to arise midway
through the project's development, consequently having a moderate effect on the project's
procurement management. For this phase, the procurement management area receives a three (3).
Procurement management was executed fairly well throughout the entire development
phase of the project. However, the project team was not as successful with implementing certain
procurement methods, specifically in stage 1. The SIIP project team had decided to use
contracting incentives to motivate construction companies. However, these incentives were not
thoroughly planned and therefore ineffective (Kwak et al., 2004). Before stage 1 was completed,
changes to the project's scope were made based on the lessons learned early on during the
project's development. Following these changes, the contractual incentives were also changed for
Stages 2 and 3, which completed six months ahead of schedule (Kwak et al., 2004). Since VDOT
had no previous experience with developing projects of such a large scale, it is unlikely that this
issue could have been avoided during the initial phases. The state of Virginia had experience
utilizing incentive contracts to motivate construction companies, however, no projects at that
time were found to be similar to the development of the SIIP (Shear, 2002).
VDOT had several major strengths in the development phase. Using contracting
incentives inspire construction companies was highly effective once the incentives were betterplanned. Despite the lack of a risk management plan, VDOT began incorporating elements of
risk management at the project level (Kwak et al., 2004). Finally, VDOT showed its willingness
to incorporate lessons learned as the project progressed, which continued throughout and became
one of the projects overall strengths.

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There were also several areas of opportunity. While the incorporation of risk management
at the project level was a start, VDOT was unwilling to incorporate risk mitigation strategies,
which would have impacted cost inflation and incentive planning. The project had no quality
assurance (QA) program, but VDOTs selection of experienced contractors saved the project in
this area (Kwak et al., 2004). VDOT was not yet using formal project management techniques,
and the lack of communication across procurement areas made coordination difficult.
The Implementation Phase
The procurement management area for the implementation phase scores a three (3) of out
five (5). The score accounts for the ability of the project team to manage schedules well, but also
accounts for the project teams inability to take advantage of opportunities that could have helped
lower procurement cost. During the implementation phase, efficient use of incentives resulted in
early completion of stages 2 and 3 due to the reworked contract incentives (Kwak et al., 2004).
VDOT benefited from the stages being completed early and some of the contracting companies
benefited as well. One Contracting company received US$10 million bonus check from VDOT
for the early completion of these stages (Jones, 2002). VDOT created a win-win situation
between themselves and their contractors. However, there were several cost overruns. The SIIP
experienced increased expenditures for raw materials and skilled labor due to a lack of
inflationary factors in the original estimates (Kwak et al., 2014, p. 9). Despite the cost overrun,
the inception phase went relatively well due to the strengths exhibited by the project team.
VDOT displayed strengths in this phase across many disciplines that impact procurement
management. The project performed well in cost management because VDOT was willing to
listen to the project management team and change its procedures to accommodate megaprojects
(Kwak et al., 2004). VDOT identified scope changes in the procurement process early on, such

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as the elimination of carpool lane exit and entrance ramps because of uncertainty of expansions
(Kwak et al., 2004). Recognizing scope changes earlier in the project plan is less costly and has
less of an impact on project schedule. VDOT underwent organizational changes resulting in the
use of formal project management procedures and the implementation of risk management.
Many of the opportunities in this phase resulted from earlier mistakes. VDOT could have
lowered cost by negotiating long term pricing contracts to secure a raw material supply for the
long term, balancing cost of doing so with availability requirements (Kache, Bettermann,
Magerle, 2011, p. 3). Alternatively, a fixed price contract may have been appropriate given that
the project requirements were well-defined (Reynolds, 2015). Additionally, VDOT could have
placed aside contingency funds for land procurement, as the potential for landowners disagreeing
with the assessments should have been documented as a procurement risk. VDOT could have
used categorized risk, as placing project procurements into broad but distinct generic categories
can help a PM properly manage procured items (Foster, 2015). By categorizing risks, VDOT
could have been prepared and had a contingency in place to mitigate the negative cost impacts of
the raw material and land purchases. The unseized opportunities in the inception phase had a
negative impact, but not enough to substantially derail the inception phase.
The Closeout Phase
The procurement closeout process is VDOTs formal method of accepting the products
and services from the vendors and closing the project (Heldman, 2013). In this process the work
completed throughout the life cycle of the project is verified and analyzed for accuracy and
satisfaction which results in the completion and closure of procurements, and the SIIP satisfied
the key stakeholders. For this phase, the procurement management area receives a five (5).
VDOT maintained ownership and oversight responsibility for all phases of the project to

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warrant compliance with the contract scope and other substantial documents. VDOT ensured that
all items were completed before the contract was affirmed complete. Upon completion of all
phases VDOT accepted the project the projects completion. In the closeout phase, the project
team enhanced efforts and performance. The final operational phases of the SIIP were successful
due to lessons learned by VDOT from preceding phases.
The major areas of strength in the procurement management of this phase resulted from
the incorporation of lessons learned. Fleming (2003) notes that procurement closeout should be
performed in an orderly systematic way to best protect the interests of the project owner,
which VDOT did (p. 235). VDOT used automated punchlists for contract closeout to ensure that
nothing was missed (Jones, 2002). By project closeout, VDOT had implemented new cost
estimation and forecast techniques and risk management into the later stages of the project,
which helped ensure that procurements were in order so that procurement closeout could run
smoothly. VDOTs lacks of engagement in earlier phases of the project lead to a shift in the
project teams procurement planning. VDOT generated procurement closeout documents where
project information was archived and indexed for use in future projects.
The major area of opportunity for this phase was the lack of a modern computerized
knowledge management system that could be used to share lessons learned (Kwak et al., 2004,
p. 11). Although lessons learned were effectively implemented throughout the course of this
project, it is important that VDOT apply them to subsequent projects, and the technology to
communicate them effectively was not yet in place at project closeout.
Lessons Learned
Although the SIIP had a difficult beginning, VDOT continually incorporated lessons
learned as the project progressed, ultimately resulting in project success. Many of the inputs into

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the plan procurements phase were either missing or inaccurate. VDOT failed to conduct risk
management planning and did not accurately estimate cost due to lack of significant historical
data and failure to account for inflation (Kwak et al., 2004). Selection of incentive-type contracts
was a good choice, but the initial incentives themselves were poorly planned. VDOT reworked
the contract incentives after the first stage, resulting in the early completion of stages two and
three. (Kwak et al., 2004). The project scope was well-defined during the planning phase and
changed little over the course of the project, but scope changes were well-managed.
VDOT did an excellent job with seller selection, which made up for many of their own
shortcomings. VDOT understood both their own limitations and the magnitude of work, and they
selected large, experienced companies to conduct heavy construction and management. (Kwak et
al., 2004). VDOT did not have a formal QA program and did not use formal project management
techniques, but their selection of sellers that did significantly reduced project risk. In 2002,
VDOT began using contract monitoring software and adopting formal project management
procures including risk management (Mayes, 2003).
By the end of the project, VDOT learned how to manage its contractors. During the final
stage of the project, VDOT had difficulties with primary contractor Archer Western Contractors
Ltd., so VDOT issued a formal default letter and negotiated with the contractor and get the
project back on schedule (Weiss, 2007). The incorporation of formal processes, such as the use of
an automated punchlist during the closeout phase, ensured that procurement closeout ran
smoothly (Kwak et al., 2004). The SIIP was considered to be a successful project, as it came in
on time and budget per revised cost estimates, and stakeholders were pleased with the new, safe
interchange system.

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References
Fleming, Q. W. (2003). Project procurement management: Contracting, subcontracting,
teaming. Tustin, CA: FMC Press.
Foster, O. (2015, February 22). Foster- Discussion 2 [main post]. Discussion posted in
University of Maryland University College PMAN 641 9041 online classroom, archived
at: http://learn.umuc.edu
Heldman, K. (2013). PMP: Final exam study guide review (7th ed.). San Francisco, IN: John
Wiley & Sons, Inc.
Jones, B. (2002). VDOT mixes in big check. Retrieved from http://www.timescommunity.com
Kache, F., Bettermann, L., & Magerle, R., (2011). Gaining effective advantage through more
effective direct material sourcing. Retrieved from
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-GainingCompetitive-Advantage-through-More-Effective-Direct-Material-Sourcing.pdf
Kwak, Y. H., Doherty, J., Mambelli, A., Mourad, A., & Speranzo, J. (2004). Springfield
Interchange Improvement Project. Newtown Square, PA: Project Management Institute.
MacDonald, R. (2015, February 9). Session 2-MacDonald [main post]. Discussion posted in
University of Maryland University College PMAN 641 9041 online classroom, archived
at: http://learn.umuc.edu .
Mayes, D. P. (2003). Virginia gains public trust. Public Roads, 67(3). Retrieved from
http://www.fhwa.dot.gov/publications/publicroads/03nov/10.cfm
Project Management Institute (2013). A Guide to the project management body of knowledge
(PMBOK Guide) (5th ed.). Newtown Square, PA: PMI.
Reynolds, T. (2015, February 28). Shaun Piazza - session 4 [response to main post]. Discussion

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posted in University of Maryland University College PMAN 641 9041 online classroom,
archived at: http://learn.umuc.edu
Shear, M. D. (2002, October 20). VDOT crisis worsened even as Gilmore boasted. The
Washington Post. Retrieved from http://www.highbeam.com/doc/1P2-405609.html
Weiss, E. M. (2007, July 18). Celebrating Mixing Bowls big makeover. The Washington Post.
Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2007/07/17/
AR2007071701649.html