project procurement

This is a guest post by Ryan Sauer.

No two projects are ever the same in business.

It would be nice if every task required the same resources, but that’s not going to happen. Sometimes additional manpower is needed; other projects require additional goods and services from outside vendors to complete the job.

As a result, it’s necessary to have an understanding of the procurement process—or the business of going beyond the confines of your company’s everyday capabilities.

This is a big responsibility for the project managers, as well as a tremendous opportunity to showcase their skills and prove they can accomplish tasks requiring external resources.

Although there are numerous variables in the project procurement management, there are four specific phases that can help ensure the job is accomplished on time and within the budget.

Plan Procurements

This initial step involves a complete analysis of the scope of the job and what it will require to ensure that all needs were addressed. How much outsourcing will be required? What quantity of material will be needed from outside vendors and when? Get precise numbers so that project bidders can provide accurate estimates of their costs.

Refer constantly to the original business objective to ensure that estimates are in line with the projected budgets. Also, the old saying that “time is money” is essential during this stage. Know the project timetable and make sure adequate resources are available to meet the deadlines.

What type of contract will be utilized with vendors? Would a fixed-price or a cost-reimbursable contract work best? Regardless of the contract type, the terms must be clearly stated to avoid any confusion with vendors over expectations, performance, or compensation.

Conduct Procurements

With the planning stage complete, it’s time to evaluate responses and bids from vendors, narrow down the list of choices, and ultimately award a contract. Attention to detail is a critical aspect of this part of the process. Not everyone interprets a request for proposal (RFP) the same way, so it’s vital that potential vendors understand the work involved. Now is the time to clarify any misconceptions about the project. Scheduling a conference with all interested vendors can help resolve questions and issues in advance of the bidding process.

Research the performance and financial history of the bidders. Have they handled similar projects? If so, what were the results? Then it’s a case of matching the RFP criteria against the bidders’ qualifications and proposals.

Administer Procurements

The project pieces are in place—now, it’s time to make sure work is running smoothly and progressing at a rate that will meet deadlines. This phase is all about monitoring success, evaluating performance and, making changes or corrections when necessary.

Routine audits, performance reviews, and inspections can all be incorporated into this phase; making it the equivalent of a periodic report card. It’s better to discover problems or shortcomings at this point rather than when deadlines are looming. Vendor payments can be dependent upon completion of specified portions of the project within budget and on time.

Close Procurements

As the name implies, during this phase the project has been completed, and it’s time to verify that work has been done to the satisfaction of all involved parties before closing the contract. Were deadlines met? Did the vendor have any cost overruns? It’s common for inspectors to be on-hand during this process to resolve any technical issues.

The final audit is also the opportunity to discuss any shortcomings and gather the information that could improve future procurement projects.

A project manager shoulders many responsibilities throughout the procurement process, from determining who will create the request for proposal (RFP) to developing a timeline for project milestones and verifying the receipt of materials. As a consequence, project managers must maintain regular communications with vendors, team members, supervisors, and, in some cases, regulatory agencies.

This is where this blog post ends. Should you have anything to share or any questions, you can do so in the comments section below.

Article author, Ryan Sauer is a writer and editor for Bisk Education in association with University Alliance. His writing includes topics in project management such as online PMP certification that helps prepare professionals interested in project management to succeed. Through the University Alliance, Ryan writes to help enable professionals to obtain project management certification.

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Speak Your Mind

  • Hi Fahad, I have recently joined PMSTUDYCIRCLE and I find the information provided on your blogs.It is quite easy to understand and you back the explaination with relevant info which makes concepts very clear to me.

    • Project procurement plan is a project document and till the project ends it is under custody of project management team and once the project completes it becomes a part of the organizational process assets.

  • Hi Fahad, I have recently joined PMSTUDYCIRCLE and I find the information provided on your blogs quite easy to understand and you back the explaination with relevant info which makes concepts very clear to me. As per what Faisalg mentioned above, would you be able to tell us when your blog on “types of contracts” will be out. We are eagerly waiting since the types are quite confusing. Thanks again for all the good help provided.

    Regards,
    -Amit.

  • Bro,

    Would you please go further about the type of contract and provide more explanation and example for each type?

    I do appreciate your effort/assistance.

    Many Thanks.

  • in the “Close Procurement” it is mentioned “during this phase the project has been completed ” this will depends if the the Procurement has been The Whole Project, if not then maybe there are several other procurements to close before closing the project.
    Thanks

  • There is a gap I think between the “conduct” and administer Procurement, I could not tell when the choosing a vendor / award to a vendor took place, at the end of Conduct or the begining of “Adminster” …Thanks

    • The PMBOK Guide 4th edition – page 328, Point 12.2 says that

      Conduct procurement is the process of obtaining seller responses, selecting seller, and awarding a contract.

      I hope gap is filled now.
      🙂

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