Project Procurement Management

 

Procurement Management Process Flow

- Procurement management is the knowledge area that deals with the process to purchase the products or services from outside the project team to perform the work.
- It includes internal structure following the pattern of plan, execute and control.

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Steps in procurement management

1. Determine what to purchase; when and how
2. Documents service requirements and identify potential sellers.
3. Requests for seller response.
4. Selects a seller
5. Administrates the contract
6. Organizes the contract closure

 

Plan purchase
       |
       |
       -----> Plan contract
                           |
                           |
                           --------> Request seller response
                                                          |
                                                          |
                                                          -----------> Select seller
                                                                                          |
                                                                                          |
                                                                                          -----------> Contract administration
                                                                                                                                |
                                                                                                                                |
                                                                                                                                ----------> Contract closure

 

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Plan Purchase and Acquisition Process

- It is the process of determining what to purchase when and how.
- The proper project needs should be identified and procured properly.

 

Input	Tools and techniques	Output
Project scope statement WBS WBS Dictionary Project management plan Enterprise environmental factors Organizational process asset	Make or buy analysis Expert judgement Time and material contract Contract types	Procurement management plan Contract statement of work Make or buy decision Requested changes

 

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Contract Types

1. Fixed price contract:
- Purchase order for a specified item to be delivered by a specified date for a specified time.
- This can not manage scope changes.

2. Cost reimbursable contract:
- Buyer pays all real costs of the seller plus a fee.
- It can manage scope changes.

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Plan Contracting Process

- It is the process of documenting service requirements and identifying potential sellers.
- It aims to generate procurement documents and establish evaluation criteria.

 

Input	Tools and techniques	Output
Procurement management plan Contract statement of work Make or buy decisions Project management plans	Standard forms Expert judgement	Procurement documents Evaluation criteria Updated contract statement of work

 

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Standard Forms : Tools

- Standard contracts
- Standard descriptions of procurement items
- Non-disclosure agreements
- Proposal evaluation criteria checklists

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Procurement Documents

- It is a document which describes target and process of selecting a seller.
- It is used to seek proposals from prospective sellers.

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Evaluation Criteria

- It is the set of conditions which must be fulfilled by the bidder for being able to be selected.
- It focuses on how well can the seller able to fulfill the statement of work and how low is the price the seller wants to have.

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Request Seller Response Process

- It is the process of obtaining information, quotations, bids or proposals from the sellers on how project requirements can be met.

 

Input	Tools and techniques	Output
Procurement management plan Procurement documents	Bidder conference Advertising Develop qualified seller list	Qualified seller list Procurement document package Proposals

 

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Select Seller Process

- It is the process of reviewing offers, choosing among potential sellers and negotiating written contract with each other.

 

Input	Tools and techniques	Output
Procurement management plan Evaluation criteria Procurement document package Proposals Qualified seller lists Risk register	Weighting system Independent estimate Screening system Contract negotiation Seller rating system Expert judgement Proposal evaluation technique	Selected seller Contract Contract management plan Resource availability Updated procurement management plans

 

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Contract Administration Process

- It is the process to manage contract and relationship between buyer and seller, reviewing and documenting how a seller is performing.
- It ensures buyers and sellers both perform as per the contract.

 

Input	Tools and techniques	Output
Contract Contract management plan Selected seller Performance report Work performance information	Contract change control system Buyer conducted performance review Inspection and audit Payment system Claim administration Record management system	Contract documentation Requested changes Recommended corrective actions Updated procurement management plan Updated contract management plan

 

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Contract Closure Process

- It is the process responsible to complete and settle each contract.
- It also verifies that all work and deliverables are acceptable.

 

Input	Tools and techniques	Output
Procurement management plan Contract management plan Contract documentation Contract closure procedure	Procurement audits Record management system	Closed contract Updated organizational process asset