The Importance of Project Governance Framework in Project Procurement Planning

Abstract

Project Procurement is a ‘great’ environment for ethical issues with its low-price state of mind and competition. It has many opportunities that could contribute to illegal activities or unethical behavior especially in the construction industry. In 2006 alone, 17.3% of 417 Malaysian government contract projects were considered sick due to the poor performance by the contractors. Therefore it is important to govern the project procurement, especially the plan procurement stage to ensure the accountability and transparency of the decision made in awarding the right contract to the best contractor. This is where project governance framework (PGF) is really needed in project procurement planning. Project governance is a subset of corporate governance focusing on the areas of corporate governance related to project activities, including: portfolio direction, project sponsorship, project and program management and efficiency and disclosure and reporting. This paper highlights the importance of implementing project governance framework (PGF) to ensure that the decision makers are answerable and accountable to the stakeholders, and the decision making is transparent to avoid any ethical issues arises. A comprehensive preliminary literature is carried out to discover the importance of executing PGF in project procurement in Malaysian public sector. By understanding the important of PGF, it is hoped that this will bring a signal to other developing countries to implement the similar method in ensuring the transparency of the decision making in project procurement planning in their countries.