A strategy towards integrating sustainability into the procurement practices in projects

Abstract

Sustainability is seen as one of the most important challenges faced by the world today (Silvius, 2017). Within EPC companies, there are quite some ambitions at the strategic level to integrate sustainability into project procurement, but implementation at the project level is still quite limited. Additionally, existing literature focusing on sustainable procurement or sustainability within supply chains (i.e., suppliers/(sub-)contractors), in the domain of EPC companies in the oil, gas and petrochemical industry is also quite limited. This research study thus aims to develop a strategy on how EPC companies in the Energy & Chemicals (E&C)/Process industry can integrate sustainability into their project procurement practices, thereby adding to academic literature and practice. To achieve this objective, this research study was conducted in three main phases. In phase one, a thorough literature and document review was conducted, resulting in a conceptual sustainability framework that could be integrated into an EPC company’s project procurement practices such as prequalification and supplier/(sub-)contractor selection. The sustainability framework consisted of a set of sustainability criteria and performance indicators which can be used to assess the sustainability level of an EPC company’s suppliers/(sub-)contractors. In the second phase, semi structured interviews were conducted to understand views from practice regarding the topic of sustainable procurement. Main insights gathered included understanding the enablers and barriers encountered by EPC companies during implementation of sustainability into procurement, the prioritization of the identified performance indicators, incentives to stimulate sustainable procurement and suggestions for improvement. The third and final phase synthesized all the findings gathered so far, to propose a strategy or solution for EPC companies to integrate sustainability into their project procurement practices. This research study concluded by providing a holistic set of recommendations to all actors involved in executing a project, such as clients, EPC companies and supply chain actors on how sustainability can be effectively and efficiently integrated into project procurement practices.