RESEARCH REPORT: “PROJECT PROCUREMENT MANAGEMENT”

BY UJJWAL POUDEL (38860)

INTRODUCTION:

Figure 1: Project Procurement Management: Buying Project Scope

Procurement management is a concept that is familiar to just about anyone who has worked in the
business environment. Procurement Management is one of the ten knowledge areas of project
management. Procurement Management plan involves managing the process of acquiring outside
project resources to produce project deliverables. procurement comprises all activities and processes
involved in acquiring needed goods and services from external parties. This may include everything
from office supplies, furniture, and facilities to heavy equipment, consulting services, and testing and
training. Failing to plan the procurement schedule or process is one of the most-costly mistakes that
can be made because the entire project can be brought to a halt if products or materials aren’t
available when needed. Successful projects required detailed scheduling and excellent timing to
maximize efficiency. The project manager will need to oversee the procurement planning process to
ensure that a purchasing failure isn’t responsible for harming the project.

PROCUREMENT PROCESS:

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 Figure 2: Project Procurement Management: Six Distinct Processes

Project management for procurement purposes is an essential part of supply chain management. The
key steps for a successful process involve are listed below:

 Specification and planning —

Before anything, companies must put together a cohesive procurement plan and specify what
services and goods will be needed, whether internally and externally. A detailed list should be
made, which will help in establishing a budget. Staying organized from the start is key to
ensuring that the next steps go as smoothly as possible.

 Identifying and selecting suppliers —

A Next, it is necessary to investigate and identify potential suppliers. Care should be taken to
ensure that these suppliers can exactly meet the needs of your company, and comparisons
should be made to analyze specific benefits and disadvantages of the supplier. Seller selection
criteria — such as cost, delivery times, social and environmental responsibility, security,
service and support, and quality control — should all be appropriate. Next, it is necessary to
investigate and identify potential suppliers.

 Proposal Requesting, Negotiating, and Contracting —

Once potential suppliers have been narrowed down, you can begin requesting proposals and
negotiating as needed. The negotiation process can shed light on potential suppliers’
dependability and trustworthiness. Take care during this step to clearly communicate your
requirements — delivery timelines, payment details, and so on. Well-thought-out delivery
schedules should be established as well. When all terms are agreed upon, a contract can be
signed.

 Control and Delivery —

After you enter into a contract with a supplier, it’s up to your purchasing department to
properly control all deliveries and payments. Regular meetings with vendors, careful delivery
tracking, and review of all orders against established specifications and quality standards are
necessary for ensuring smooth procurement processes. Over time, it may become necessary
to makes changes to procurement contracts as your needs shift.

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  Measurement and analysis —
Finally, the entire procurement process must be analyzed using an established system of key
performance indicators. This will help in assessing the efficacy, cost efficiency, speed, and
overall success of the whole process. Now is the time to identify any areas for improvement
and note any changes that should be made. This, of course, will help in securing the success
of future projects. Observations should be shared with management or stakeholders and key
findings should be discussed in detail.

PROJECT PROCUREMENTS TYPES

To properly manage the procured items, some firms have found it beneficial to categorize their project
procurements into broad but distinct "generic families." This helps management better focus their
attention on the unique problems and issues peculiar to each category of procurement. One such
grouping of project procurements would create three generic categories, plus two special
relationships as follows:
 Major (high risk) complexity procurements, the purchase of something which does not exist,
tailored to the project's unique specification. These would be considered critical sub-projects.
 Minor (low risk) complexity procurements, will often represent large monetary values, but the
commodities exist and will conform to the sellers existing product specification
 Routine buys of COTS (Commercial Off-The Shelf) commodities or purchased services.
 Special procurements: done under corporate teaming arrangements.
 Special procurements: to other segments of the project's company, typically called
interdivisional work.

PROJECT MANGER IN PROCUREMENT

Project manager is involved in this procurement, same as other aspect they control in project
management process. However, this is a process they might not own with the same authority as other
parts of the project.
While the project manager does have the authority to make agreements with contractors on behalf
of the company, the project manager is often not the person who administers that contract once in
place. Regardless, it’s important that the project manager is in the loop. That implies knowing the six
procedures with the project procurement management knowledge areas as outlined in the Project
Management Body of Knowledge (PMBOK).

THE WORKING OF PROCUREMENT:

The company don’t usually buy all goods and services from outside parties. The management of the
firm needs to check if the purchase decision will be cost effective in ling run basis and prove to be
quite beneficial for the company.
It is critical to understand and figure out on the exact requirements and after that seek and consider
upon the different choices and alternate choices. There are quite many suppliers in the market
catering to the needs and requirements but there must be a clear yardstick on which one to select
based on thorough market research and understanding. There is an alternative of calling some sort of
bidding for the goods or products requirements by the vendors in the market and use choice criteria
to select the best one from the lot.

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The next step involves calling for bids and the different suppliers will provide their respective quotes.
This stage is quite like choosing projects, as the company needs to consider various and different
criteria’s, apart from just the cost, to finally select the supplier for the requirement of the goods and
products.

Aftermath the evaluation process, the company management can select and shortlist the best supplier
followed the next step of discussing the exact nature of the requirements and the related terms and
conditions such as payments, delivery timelines, and other crucial ones to avoid any sort of
discrepancies in the future.
It is important to maintain good relationship with supplier and formulate the agreement that meets
requirements and satisfaction levels of both parties. This step helps in the sustainability factor of the
businesses of both the parties involved.

PROCUREMENT METHODS
There are six procurement methods used by the procurement team in a company. The actual names
of these could vary depending on your company and industry, but the process remains the same. The
six times of procurement are open tendering, restricted tendering, request for proposal, two-stage
tendering, request for quotations and single-source procurement.
 OPEN TENDERING:
Open tendering is shorthand for competitive bidding. It allows companies to bid on goods in
an open competition or open solicitation manner. This method encourages effective
competition to good value on money.
 RESTRICTED TENDERING:
Unlike open tendering, restricted tendering only places a limit on the amount of request for
tenders that can be sent by a supplier or service provider. Because of this selective process,
restricted tendering is also sometimes referred to as selective tendering.
 REQUEST FOR PROPOSALS (RFP):
Request for proposal is the term which is common in business world. Managers receive the
RFP from potential clients all the time when client is seeking a new position to be filled.
Similarly, in the procurement world, an RFP is a method used when suppliers or service
providers are proposing their good or service to a procurement team for review. If you’re a
supplier, understanding the ins and outs of quality service management is key to winning your
bid.
 TWO STAGE TENDERING:
Two stage tendering are done under two process. Each one of the procurements has two stage
process. The first procedure is very similar to RFP method as discussed above. The
procurement team receives a proposal with two envelopes- one with proposal itself and one
with associated financial information.
The second type of procedure is also similar but instead of the bidder submitting a fully-
completed technical proposal, a partial proposal is submitted. the highest qualified bidder is
selected, they will be invited to submit a thorough technical proposal along with a financial
proposal. The technical proposal will be evaluated, and only then will the financial proposal
be opened. The combined score of both the technical proposal and the financial proposal are
the grounds on which a bidder is contracted.
 REQUEST FOR QUOTATIONS:
This is a least complex procurement method which is used for small-valued goods or services.
There is no proposal or draft needed which makes it fast procurement process. In this method
a procurement entity chooses three minimum suppliers or service providers they wish to get
a quote from. A comparison is of quotes is analyzed and best selection is determined.

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  SINGLE -SOURCE:
Single source procurement is a non-competitive method that should only be used under
specific circumstances. This process occurs when entity intends to acquire goods or services
form a sole provider. The circumstances which call for this method are:

a) Emergencies
b) If only one supplier is available and qualified to fulfill the requirements
c) If the advantages of using a certain supplier are abundantly clear
d) If the procurer requires a certain product or service that is only available from one
supplier
e) For the continuation of work that cannot be reproduced by another supplier.

CONTRACTS
An agre

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