Project Procurement Management


For the project to meet all of its objectives without little to fewer issues throughout its life cycle requires a proper supply of all the resources, products, services it needs to carry the majority of its functions well. procurement process includes the management and control process required to develop contracts, purchase orders, memoranda of agreements, internal services level agreements. Any member of the project team will have the authority to procure goods or services that are needed for the project.

The procurement process covers plan procurement management, conduct procurement, and control procurement. Each of the processes helps the overall procurement management to create flow in the workplace. From the process of documenting the project procurement decision to the managing procurement relationship and monitoring contract performance, each one of the processes has a role to play in making sure the project procurement management process runs in smooth order.

In terms of design, the procurement process will be a bit more complex but they are presented as a discrete process with defined interfaces. But in practice, the procurement process is known to be complex to execute.

Key Concept for project procurement management #

It is the job of project management to know most of the obligations attachments that come with each process. The project procurement process has its own share of legal obligations and penalties all tied to the procurement processes. While it is not necessary for the project manager to be aware of all the laws regarding the procurement system. But they should be familiar enough with the procurement process to make intelligent decisions regarding contracts and contractual relationships.

The project manager does not have any right to sign legal agreements binding the organization. It is reserved for the people who have the authority to do so. The procurement process involves various types of agreement that often describes the relationship between both buyer and seller. Agreements can be as simple as the number of labor hours to complicated as international construction contracts. Everything that gets written in the contract from the simplicity of the deliverables required effort, all of them should be written in a manner that complies with the local, national, and international laws.

The contract should include all the terms and conditions and other species of what the seller is to perform for the project. The project management team also makes sure procurements meet the needs of the project while working with the procurement office to ensure everything runs with the procurement policies.

Most organizations have procurement rules and determine who has the authority to sign and administer agreements on behalf of the organizations. Normally more departments get created under different names to deal with procurement processes such as purchasing, contracting, procurement, acquisitions. The placing of different departments currently makes the work a bit easier and the documentation process far more informative. As each department will get to handle specific parts of the production. They will have to create their own record that does not get mixed in with the others. The responsibilities of each of the departments are more likely to be similar than different.

The complexity of the project will bring in multiple contracts and most of the documentation related to contact will need review and approval for it to get accepted. For smaller companies that don’t have any purchasing, contracting, or procurement department, the project manager will be seen as the lead authority role to negotiate and sign contracts directly. Many organizations will have separate departments with a specific role to purchase, negotiate, and sign contractors.

Trends and Emerging Practices in Procurement Management #

The advancement in technology has led to the creation of new techniques and tools for implementation. Each one of these tools has varieties of new features that can make the work much more efficient. Overall efficiency will lead to more successful project creation in the end. This is why all the organizations pay top priority to the newly emerging techniques and tools, all of them have a significant role to play in the development of the new projects while minimizing the problems drastically.

All the tools and techniques will differ from one to another but the target of each of these new emerging techniques will be the same. Adoption of all the new techniques and tools is necessary for the creation of the project. Trends in software have been having a positive effect on risk, process, logistics, and technology with different industries all raising the success rate of projects. Here are some of the trends that get implemented in the procurement manager to make it more efficient.

  • Advances in tools

Online tools for procurement now made the work much easier. In the construction field, the increasing use of building information models in software tools is saving a lot of time and money for the project. The use of modern tools to carry out the basic functions and complex work of the project has made the work more effective.

  • Advanced Risk management

Accurately allocating specific risks to the entities who are capable of managing them is how risk management is growing in the organization. Now buyers must accept the risk that contractors do not have any control over.

  • Changing contracting process

Multi-Billion dollar projects were considered very rare but now they are common. The contractor gets to work closely with the client in the procurement process to take advantage of discounts through purchases and other considerations.

  • Logistics and supply chain management

The flow of material is crucial for the successful completion of the project. Here long lead items need to get delivered to the project site within the appropriate time. In the IT field, the long lead item should be ordered 2 to 3 months in advance. If the project is complex in nature, then they will need to order the material 1 to 2 years in advance or longer.

  • Technology and stakeholder relations

Communication between stakeholders is important to maintain relations. The use of the internet will allow all the object stakeholders to beware of all the things that are happening on the site. The use of web cameras or webcams will help build solid communications between all the stakeholders involved in the project.

  • Trial Engagements

Organizational environments will not be fit for all the sellers who are providing materials or services to the project. Some projects may engage several candidates, sellers, for initial deliveries and products without making them part of the organization. In short, an evaluation process gets set to see the efficiency of the seller to the organization.

It is very important for the organization to follow all the trends and practices to better its practices of project handling. Since newer models allow for greater efficiency while eradicating all the issues from the old model.

Plan Procurement Management #

This process handles documenting project procurement decisions, directing approach and identifying potential sellers. The key benefit of having this process is that it determines whether to acquire goods and services from outside projects to meet the project’s demand for it. It also helps with the timing of acquiring goods and services from outside. This process only gets performed at predefined points in the project.

Plan procurement management tackles the roles and responsibilities of the procurement as early as possible. Procurement expertise must be present at all levels for the project. It is the job of the project manager to ensure that the project team is staffed with qualified employees who have experience in procurement systems. As they will have to:

  • Prepare the procurement statement of work
  • Prepare high-level cost estimate to set the budget
  • Making a list of qualified sellers
  • Prepare and issue bid documents
  • Develop submit proposals by the seller
  • Peromfring quality and technical evaluation
  • Peromfring cost evaluation of all the proposals.
  • Finalizing negotiation between seller and buyer.

The requirement of the project schedule will influence the strategy during the planned procurement management process. Decisions made in the procurement management plan will influence the project schedule and schedule process, activity resources process attached to the project.

Characteristics of Plan procurement Management #

The plan contains all the activities that will be undertaken during the procurement process. The document must cover internal competitive bidding, national competitive bidding, and local bidding. If the project is being financed by an external client or an organization, then every financed source and availability of funding should be aligned with the procurement management plan.

Procurement strategy #

Cheating a strategy will determine the project delivery method, type of legally binding agreements, and procurement methods. It contains delivery methods, contract payment types, procurement phases.

Bid document #

Bid documents get used to solicit proposals from prospective sellers.  Bidding documents will include requests for information, requests for quotations, requests for proposals, and other appropriate procurement documents.

Procurement statement of work #

Each procurement will need a statement of work from the project scope baseline. The statement of work describes the procurement item in sufficient detail to allow prospective sellers whether they are capable of providing products, services, or results. SOW includes information such as specifications, quantity desired, quality levels, performance data, period of performance, work location, and other requirements.

Project Document updates #

The documents will get updated as new information makes its way to the management. The changes can happen to register, milestone list, requirements documentation, requirements traceability matrix, risk register, stakeholder register.

Conduct Procurements #

This is the process of obtaining seller responses, awarding the contract, and picking the right seller. Leaving the work in the hands of a qualified seller will result in less disruption for the project when it comes to acquiring material or services for the job. This process is performed periodically throughout the project as needed. Here are some key elements of the conduct procurements:

Characteristics of conduct procurement #

Procurement Documentation #

A written record of legal agreements and older documents will help lay out the information much better. The documentation should cover bid documents, procurement statement of work, independent cost estimates, source selection criteria.

Advertising #

This technique gets used to communicate with users or potential users of a product, service, or result. Placing advertisements in general circulation publications will expand the market for the project.

Bidder conferences #

It is also known as contractor conferences, vendor conferences, or pre-bid conferences; they all act as a meeting that takes place between a buyer and a prospective seller.

Project Management plan updates #

Changes can happen to the project management plan, all the changes will have to go through the organization’s change control process via Change Request. Changes can be made to the requirements management plan, quality management plan, communication management plan, risk management plan, procurement management plan, scope baseline, schedule baseline, cost baseline.

Project Documents updates #

The project document will have to get updated as the new information changes things dramatically. The change process can implement a lesson learned register, requirement documentation, requirement traceability matrix, resource calendars, risk register, and stakeholder register.

Control Procurement #

Control procurement handles managing procurement relationships, monitoring contract performance, and making changes, corrections as appropriate, and closing out contracts. Project requirements should meet the seller’s and buyer’s performance. As control procurement gets performed throughout the project. Both buyer and seller must be required to ensure they should meet their contractual obligations and their legal rights protected.

On larger projects the key of communication gets paid with high priority, here the contract administration will manage communication between the various providers. Control procurement consists of the application of the appropriate project management process into the overall management project. The quality of control gets judged by the independence and credibility of procurement audits which is very critical to the reliability of the procurement system. Porper procurement controls will also take the organization’s code of ethics, legal counsel, and external legal advisory arrangement.

Control procurement also monitors payments to the seller. This ensures the terms that have been set for payment are defined within the contract. A contract that requires payment linked to the project output rather than input is considered as a better approach as the contract has better control over the project.

Characteristics of control procurement #

Documentation #

Keeping a record of anything is valuable for the later stages in the development and on other projects. The same motto is followed here, as procurement documentation contains complete supporting records for administration. It includes details such as a statement of work, payment information, contractor work performance information, plans, drawing, and other correspondence. These data will be valuable for the later stages of the development of the project.

Change Request #

Modifications to the terms and conditions of the contract are possible, change request is the process that allows for this to happen without any issue. All the changes that will take place in the procurement field will need to be formally documented in the form of writing. If the project is considered complex, then the change request may come from sellers involved in the project. The project should have the capability of communicating, identifying, and resolving changes and their impact on the sellers.

A change request can impact project management plans, subsidiary plans, cost baseline, schedule baseline, and procurement management plans. Perform integrated change control process handles change request and put it through a review and disposition.

Claims Administration #

When a buyer and seller can not reach an agreement on compensation for the potential or contest change. then the changes will be called claims. Claims are documented, processed, monitored, and managed throughout the contract’s life cycle.

Closed Procurements #

The buyer uses an authorized procurement administrator to provide the seller a formal written notice about the contract progress. Procurement closures are defined in the terms and conditions of the contract, they are also included in the procurement management plan.

Work performance information #

This piece of information will include seller performance by comparing the deliverables that have, technical performance, and the cost is received.

Procurement documentation updates #

Updates can happen to support schedules, unapproved contract changes, approved change requests. The document will also feature seller-developed technical documentation and other work performance information such as deliverables, seller performance reports, and warranties.

Project management and document updates #

Change request handles all the update process, as any changes that do happen to the project management plan goes through the organization’s change control process via a change request. Changes can happen to the risk management plan, procurement magnet plan, schedule baseline, and cost baseline. On the side of the documents, updates may cover lesson learned register, resource requirements, requirement traceability matrix, risk register, stakeholder register. All the changes will go through a change request before getting approved or accepted.

Conclusion #

A successful project depends on all of its branches. Project procurement management is one of the significant parts of the entire project system that helps the project flow smoother in its life cycle. Procuring the materials and making sure each one of them gets implemented well in the project is how procurement management systems have been helpful for the project. The main goal has always been to create a perfect workflow for the project for a smoother direction without any problem rising in the middle.

Powered by BetterDocs