e-Procurement: Developing, Implementing & Managing the Complete Process
Module 9 - Managing Project Procurement - PowerPoint Presentation Rev 2
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Transcript of Module 9 - Managing Project Procurement - PowerPoint Presentation Rev 2
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Welcome to Worley Parsons Project Management
Process (WPMP) Training
Module 9 – Managing Project Procurement
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Managing Project Procurement
Introduction
Overview of Procurement
Responsibilities for Procurement
Commencing the Procurement Process \Procurement Planning
SmartPlant Materials
Procurement Reports
Procurement Initiation
Procurement Execution
Procurement Close-out
About this training session
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Learning Objectives
On completion of this module, you will be able to:
Identify and understand the procurement methodologies and tools
available to Project Managers for the management of EPCM
projects
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Learning Outcomes
Early involvement of the Procurement function in project planning
is essential
The project’s procurement strategy and procurement plan must
align with the overall project strategy
Clear definition of the objectives of the Procurement Process is
critical for the project team
On completion of this module, you will be able to demonstrate an
understanding that:
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Procurement is an integral part of the WorleyParsons’ growth
strategy
Procurement shall support the company to compete more
successfully as a leading provider of professional services
worldwide
Procurement in WorleyParsons
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Overview of Procurement
Procurement is the process by which materials, equipment and third-party services are acquired for projects
Key procurement interfaces include:
• Project Management
• Engineering
• HSE
• Quality
• Cost Estimation
• Project Controls
• Construction Management
• Legal & Risk
What is procurement?
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Overview of Procurement
At the best possible total cost of ownership
In the right quantity and quality
At the right time
In the right place
For the direct benefit of the customer
What does procurement involve?
…the acquisition of materials, equipment or third-party services:
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Procurement and Capex
The Capital Expenditure (Capex) of a Project can be split into a
few elements:
• Engineering and design – approx. 10% of Capex
• Procurement:
− Materials and equipment – approx. 30 to 45% of Capex
− Contracts – approx. 30 to 45% of Capex
• Balance is owners’ costs, insurance, land purchases etc
The above is indicative only and dependent on the type and
location of a project. However, on average the Capex element
managed by procurement ranges between 60% and 90% of the
overall project value
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Overview of Procurement
Procurement is the bridge between Engineering (design) and
Construction (execution)
What is the role of procurement in a project?
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Overview of Procurement
Materials Management
• Purchasing, Expediting, Materials Control, Coordination of
Inspection (liaising with Quality), Traffic/Logistics, Warehousing/
Inventory Control etc
• Legal agreement used is a Purchase Order
Contracts
• Acquisition and management of third-party services
• Legal agreement used is a Contract
Both Purchase Orders and Contracts are written and binding legal
agreements between relevant parties to supply either goods or
services against agreed conditions
Procurement is divided into 2 functions
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Procurement Executive Directive
To minimise risk exposure, procurement services are usually
provided for and on behalf of Customers, in the Customer’s name
or “on Customer paper” – this is the company’s preferred position
However, this does not preclude provision of procurement services
in WorleyParsons’ name or on “WorleyParsons’ paper” – requires
CEO to proceed in any event where additional supplier-related
risks and liabilities are assumed (eg warranty obligations, delivery
commitments, product liability, etc)
In most instances, procurement services are provided on behalf of
the Customer, requiring active interaction with the Customer and
their various approvals to proceed
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EMS Workflows and Procedures 1/2
Contracts services cover the provision of third-party services such as
construction labor, inspection services, painting and sand blasting
The provision of contract services is governed by the Contracts
Workflow in EMS containing a number of procedures, guidelines,
forms and templates
Preferred Terminology:
• ITT = Invitation to Tender
• Contract = legal agreement for the provision of services
Contracts
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EMS Workflows and Procedures 2/2
Materials Management includes the purchasing of goods and
equipment, subsequent expediting, inspection and receipt.
The provision of Materials Management services is governed by the
Materials Workflow in EMS containing a number of procedures,
guidelines, forms and templates
Materials Management activities are managed and tracked through
SmartPlant Materials, WorleyParsons’ Materials Management system
which starts from creation of the requisition through to final material
reconciliation on site
Preferred Terminology:
• RFQ = Request for Quotation
• Purchase Order (PO) = legal agreement for the supply of goods
Materials Management
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Overview of Procurement
WorleyParsons procurement process
Pre - award Activities
* Materials Management * Contracts
Obtain quotations
Select the preferred suppliers
Project Procurement Plan Determine procurement
requirements
Procurement Initiation Identify potential
suppliers
Post - award Activities Manage the supplier
Administer POs and contracts
Manage POs / contract variation
Expediting / Inspection
Materials Field Administration
Activities Field Purchasing
Transport / Logistics
Receipt on site
Warehousing
Close - out Activities Conclude the engagement of the
suppliers
Record the performance against
each order & contract
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Responsibilities for Procurement
As Project Manager, you are responsible for the overall
management of procurement activities associated with the project
You are not responsible for the execution of procurement activities
That is the responsibility of your Project Procurement Manager
To fulfill your responsibilities, you should work closely with the
Procurement Manager
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Responsibilities for Procurement
Procurement specialists in each region
Detailed procurement procedures, guidelines and associated
documentation
Deployment of SmartPlant Materials as the company-wide materials
control system to record, track and report on procurement activity
Global supplier database for materials, equipment and services
Global Sourcing initiatives
Supply arrangements with key suppliers
WorleyParsons’ procurement capability
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Procurement staff managing the Materials Management and Contracts activities usually:
• Work either from a core Procurement group in a key company location or
• Form a part of a dedicated project procurement team
Procurement activities on the project are usually led by an experienced Project Procurement Manager
Where warehousing staff are required for specific customers or projects, they are usually located on site
Inspection may involve in-house or third-party inspectors, depending on the location of the inspection activities
Procurement resourcing
Responsibilities for Procurement
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Procurement Process
Establish exactly what the customer requirements are and what WorleyParsons has committed to do
Establish your procurement team and set out their responsibilities
Procurement to participate in the Project Risk Assessment and ensure that risk mitigation is included in the Procurement Plan to be developed
Procurement to incorporate appropriate flow-down conditions from the Prime contract (the agreement between Customer and WorleyParsons) in the Project Conditions to ensure compliance and alignment (e.g. including customer’s confidentiality requirements, alignment of warranty periods etc.)
Procurement to develop the project procurement procedures, based on EMS but incorporating as appropriate Customer’s requirements (e.g. approval interfaces)
Arrange to have the project set up on SmartPlant Materials
Ensure WBS is established
Commencing the procurement process for a project
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Procurement Planning
Planning is at the crux of all project activities
Procurement is no exception
The aim of procurement planning is to:
• Know what needs to be procured, when, where and how
• Identify critical long lead items and services
• Establish order and consistency in the way the procurement activities are performed
• Understand the risks involved in the project environment and identify mitigating actions
The Project Procurement Plan is part of the Project Execution Plan
Planning
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Procurement & Risk Management
Procurement is an integral part of risk management on the project
• Develop appropriate procurement/ contracts/ materials management
strategies, identifying the various risks (market, forex, local content
requirements, taxation and importation issues, logistics complexities,
etc. to be managed)
• Use EMS procurement procedures to the largest extent, however,
recognize Customer requirements in the project specific procedure.
• Ensure that the project specific procurement procedures are
approved by the customer and shared with the project procurement
team
• Develop the procurement schedule early, in line with the overall
project schedule, resulting in correct priorities to achieve the
Required on Site Dates
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Procurement Planning
What you need to plan for
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Procurement Planning
When planning occurs
Identify Evaluate Define Execute Operate 1 2 3 4
Procurement Strategy
Procurement Plan
Materials Management Plan , if required
Purchasing and Contracts Initiation
Materials Management Plan, if required
Contracts Plan, if required
Materials Field Administration
Contracts Plan , if required
Materials Management and Contracts Close-out
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Procurement Planning
Project Procurement Strategy (PPS) is the:
• Process for identifying and documenting the procurement
opportunities applicable to the project
• First step in developing the Project Procurement Plan
Typically, the PPS is first developed during the scoping stages of a
project
Sometimes the customer provides the initial procurement strategy for
further development in the Project Procurement Plan
Project Procurement Strategy
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Procurement Planning
Purchasing activities can involve long lead times
Certain materials and equipment may be particularly critical to a
project’s success
Purchasing activities usually involve multiple countries (infrastructure
and logistics, local legislation etc.)
Market and technology developments can impact on the success of a
project and therefore need to be monitored on an ongoing basis
During the development of the PPS, the following factors need to be
considered:
Project Procurement Strategy
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Procurement Planning
The PPS is a hierarchical matrix covering the entire work scope of a
project, broken down into separate ‘work packages’
Only the major critical items are separately identified as work packages
These packages are created and identified according to:
• Unique technical and commercial attributes of the work activities
they comprise
• Methods by which they are to be executed
Project Procurement Strategy
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Procurement Planning
Example of a PPS matrix
Components
Physical
Discipline
Special
Equipment Item A
Special
Equipment Item B Balance of Plant Civil Works
Project
Management
Project Management Services Contractor – Reimbursable Costs with
Incentives Fee – $ 70m total
Design Design Contract – Lump Sum – $10m Facilities E & P Contract –
Reimbursable Costs with Fixed Fee –
$30m total Procurement Specialist
Supplier A – Lump
Sum Purchase
Order – $200m
total
Specialist
Supplier B –
Lump Sum
Purchase Order –
$100m total
Fabrication Construction Contract –
Reimbursable Cost and Equipment
Rates with Incentives Fee - $100M
total
Materials Control
Construction /
Erection Services
Installation Contract – Lump Sum –
$10m
Quality Inspection Specialist Quality Contract – All-in
rates – $10m
Part of Project Management Services
Commissioning /
Start-up
Assistance
Part of Supplier A
Purchase Order
Part of Supplier B
Purchase Order
Contract
N/A
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Procurement Planning
The structure of the PPS depends on the:
• Scope of work
• Nature and complexity of the project
• Requirements of the customer
The PPS assists in:
• Administrative and commercial planning
• Cost/schedule control functions of a project
Project Procurement Strategy
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Procurement Planning
Allows a concise, high-level overview of how procurement activities
relate to the execution strategy of the project
Illustrates alternative ways of executing the project procurement
activities
Identifies where:
• Consolidation (or further break-down) of work scopes can work to
the project’s advantage
• Gaps may occur in hand-offs during execution
A Procurement Strategy is a deliverable that can be provided for
projects in Identify and Evaluate phase
Benefits of a PPS
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Procurement Planning
When planning occurs
Identify Evaluate Define Execute Operate 1 2 3 4
Procurement Strategy
Procurement Plan
Materials Management Plan , if required
Purchasing and Contracts Initiation
Materials Management Plan, if required
Contracts Plan, if required
Materials Field Administration
Contracts Plan , if required
Materials Management and Contracts Close-out
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Procurement Planning
Projects in Identify and Evaluate phases:
• While you might not be able to fully identify these requirements, you
should be able to identify them in broad scope
Concentrate on Procurement Strategy approach
Projects in Define phase:
• The procurement needs of the project should be sufficiently identified to
support the Customer’s overall project schedule
Full fledged procurement plan can be developed
Projects in Execute phase:
• The procurement needs are clearly identified and a procurement plan
shall be developed to achieve the timely delivery of the project
Full fledged procurement plan must be developed
Planning in the various WMPM project phases
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Procurement Planning
Documents the basis for obtaining and managing materials, equipment and third-party services required for project execution
Addresses relevant aspects of both materials management and contracts for the project
Maps out the various anticipated risks and constraints and identified mitigating actions
Identifies critical supplies (see also Procurement Strategy) and outlines general strategy
Ensures that the procurement activities align with the overall project schedule
Project Procurement Plan
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Procurement Planning
The Project Procurement Plan:
• Must clearly define the deliverables of the procurement process
• Needs to be ‘fit for its purpose’
Project Procurement Plan
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Procurement Planning
The Project Procurement Plan
may also include details about
the targeting of procurement
efforts
The Project Procurement
Manager will consider the
assessment in the strategy
development
Criticality-Value Assessment
Project Procurement Plan
Bottleneck, e.g. special alloy steel grade
Ensure continuity
Develop alternatives
Revise specifications
Critical, e.g. turbine compressor
Form closer relationships
Direct negotiations
Routine, e.g. piping bulk blanket orders
Simplify procurement process
Automate
Rationalise supplier base
Leverage, e.g. customer’s standard agreement
Maximise commercial advantage
Competitive tender
Standardisation
Criticality
Low
Low High
Value Potential
High
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Procurement Planning
Project Procurement Plan
Where the complexity and / or size of the project warrant it, the Project
Procurement Plan may be further developed in separate plans:
• A detailed Project Materials Management Plan
• Separate detailed Project Contracts Plan for major contract
packages
• Separate detailed Procurement Plans for key procurement
packages
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Procurement Planning
The various elements of the Procurement Plan are further defined in the
Materials Management Plan, including:
Specific strategies for buying materials and equipment
Associated activities for managing the expediting, traffic/logistics etc
The materials control and reporting systems
Prioritization of procurement activities and associated engineering
deliverables in line with the ROS (Required on Site dates) as defined
in the project schedule
Materials Management planning
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Procurement Planning
Level of procurement effort based on cost, schedule, criticality, and
other relevant factors
POs/activities already executed and/or underway prior to
engagement of WorleyParsons
Transition of early purchase agreements from the customer
Material control systems
Quality management, verification and inspection, which includes an
outline of inspection to be undertaken
Site materials management plans
Materials Management planning (cont’d)
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Procurement Planning
Subsets of the Material Management Plan
Engineered equipment planning
Bulk materials planning
Prefabrication planning and modularization
Materials Management planning
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Procurement Planning
The primary objective is to ensure that items are acquired and
released in time to meet the overall project schedule
The dates on which items are required on site to meet construction
needs drive the engineering and procurement planning and activity
for engineered equipment
A major equipment list for the project needs to be developed early
Engineered equipment planning
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Procurement Planning
Planning for bulk materials can be more complex than planning for
engineered equipment
Bulk materials control starts with an examination of the project
schedule to assess:
• What bulk materials are required over time
• Critical required on site (ROS) dates
Bulk material planning
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Procurement Planning
Procurement planning:
• Is usually very complex for extensive prefabrication
• modularization often involving multiple sites
An extensive prefabrication program demands an early procurement
planning effort that addresses the interfaces between vendors,
fabricators and site construction
Prefabrication planning and modularization
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Procurement Planning
The Contracts Plan can be:
• Subset of the Project Procurement Plan or
• Separate plans—complex projects
The main focus of project contracts planning is the selection the best
contractor under the best available terms and conditions
Needs to:
• Analyze the options and the marketplace for the required
services
• Define the number, type, scope, timing, interfaces, compensation
basis, etc of major contracts to be developed for the project from
early planning through start-up
Contracts planning
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Procurement Planning
For Projects in the Define phase the Project Contracts Plan needs to
document:
• Critical contracting issues (e.g. labour resource constraints,
market constraints) for the major contracts
• How will the impact be managed and the risk mitigated?
• What is the schedule to meet timely completion of the Project?
Contracts Planning in Define Phase
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Procurement Planning
For Projects in the Execute phase, the Project Contracts Plan
review the constraints and identify mitigation measures similar to
the Define phase projects but not just for major contracts.
• All anticipated contracts are identified.
• If the project is a continuation of a Define phase project, the
Contracts Plan developed for the Define phase will be
reviewed and updated by the Project Procurement Manager to
reflect project progress and significant new developments
A list of matters that typically need to be considered are listed on
page 32 of the participants manual
Contracts Planning in Execute Phase
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Procurement Planning
The customer must approve the Project Procurement Plan as part of
the Project Execution Plan
Approving the Project Procurement Plan
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SmartPlant Materials
WorleyParsons uses a suite of project management systems to
record, track, control and report on projects
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SmartPlant Materials
SmartPlant Materials is used to:
• Identify
• Record
• Track
materials and equipment required and purchased for a project
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SmartPlant Materials
SmartPlant Materials has four integrated modules, which are described on
page 36 of the workbook
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SmartPlant Materials
Maintains the Material Stock Code catalogue
Generates bulk requisitions via interface to design systems (e.g. PDS)
Generates equipment and services requisitions
Preparation of RFQs
Supports bid evaluations
Creates and, if required, amends POs
Facilitates expediting
Facilitates Traffic/Logistics
Facilitates stores management
Can undertake invoice reconciliation via Invoice Matching Interface module
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SmartPlant Materials
SmartPlant Materials imports bills of materials from 2-D/3-D engineering design software and other sources
SmartPlant Materials supports better material planning on site and material reconciliation through the ability to track imported bills of materials from Requisition to Material Issue
Materials are identified as being in any of the following phases:
• Requisition
• RFQ
• Purchasing
• Expediting
• Shipping
• Warehouse receipt
• Storage
• Material Issue
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SmartPlant Materials
SmartPlant Materials was designed as a system for controlling
materials and equipment, not for administering contracts
SmartPlant Materials can, however, be used to record basic
information about contracts
Using SmartPlant Materials for recording and tracking contracts
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SmartPlant Materials
Each individual project needs to be set up in SmartPlant Materials so
that its procurement activities can be recorded, monitored and
reported
SmartPlant Materials should be set up as soon as the Project
Procurement Plan or Materials Management Plan has been approved
You are responsible for ensuring that SmartPlant Materials is set up
properly
You work with the project Procurement Manager to identify and
obtain the information for the set up
Setting up SmartPlant Materials for a project
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SmartPlant Materials—Training
When you need to start using SmartPlant Materials, you will receive
specific training on how to use it
Contact the Business Systems Group to arrange the training
Training in SmartPlant Materials
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Procurement Reports
Procurement activities are monitored and reviewed regularly
SmartPlant Materials generates a range of reports which you use to
monitor progress and identify actions to be taken to address issues
Two particularly important reports for the management of
procurement activities are the:
• Procurement Status Report
• Procurement Expediting Report
Procurement reports
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Procurement Initiation
The Project Procurement Manager is responsible for completing the activities
that enable purchasing and contracts to be initiated
The initiation activities should be completed during the early stages of the
project
The initiation activities are:
• Purchasing initiation
• Contracts initiation and formulation
Part of the initiation activities is the development of the Project terms and
conditions for purchase orders and contracts.
• These may be provided by the Customer as we will typically be acting on
their behalf.
• The conditions shall be checked for alignment with the Prime contract.
Overview of procurement initiation
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Purchasing initiation involves setting up the project base for the
Purchasing documentation and databases
The main activities are:
• Identifying PO provisions (including standard Terms and
Conditions)
• Preparing standard documentation, including Instructions to
Bidders, master Request for Quotation, master purchase order
document
• Carrying out vendor pre-qualification
• Establishing a project vendor list
Overview of purchasing initiation (Materials Management)
Procurement Initiation
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Contract initiation and formulation involves:
• Setting up the project base for contracts documentation (including standard Terms and Conditions)
• Establishing the contracts system for the project
The main activities are:
• Establishing the contract types, sites conditions, HSE etc
• Preparing common enquiry requirements and special contract provisions
• Carrying out contractor pre-qualifications
• Establishing the contractor list
Overview of Contracts initiation and formulation
Procurement Initiation
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Procurement Execution
All procurement execution activities are undertaken by the Project
Procurement Manager and the Procurement team
You are responsible for ensuring that the procurement activities are
executed in accordance with the Project Procurement Plan
You and your Project Procurement Manager need to hold regular
meetings to:
• Review the status of procurement activities
• Identify issues early and determine the action required to
minimize any adverse impact
Overview of procurement execution
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Procurement Execution
The purpose of the Purchasing Pre-award Process is to award the POs under
which the project’s materials and equipment are obtained
The pre-award process ensures that all bidders are treated fairly and
equitable, that the confidentiality of the information is maintained and that the
recommendation to award is in accordance with the agreed evaluation criteria
• Agreed evaluation criteria may be as simple as ‘Technically acceptable,
lowest cost’ or more complex ‘Total Cost of Ownership’ (TCO). Consider
that TCO often requires Customer input as well.
• Competitive bidding is indicated. However, if single source is considered
for purchase orders, justification must be provided. This may include
proprietary technology or customer’s standardisation preference.
Project Purchasing pre-award activities occur predominantly during the
Execution phase
For long-lead items some activities may occur in the Define phase
Materials Management execution—purchasing pre-award process
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Procurement Execution
Preparing enquiry packages, including special terms and requirements (for example, supplier data, support, spares)
Issuing the enquiry packages and managing bid preparation and receipt process
Managing all communications with bidders during bidding and evaluation
Evaluating the bids
Preparing recommendations for award, conducting post-bid negotiation and facilitating final issue
Entering all data related to the purchases into SmartPlant Materials
Materials Management execution—purchasing pre-award process
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Procurement Execution
Maintains the required level of confidentiality of information
Ensures that engineering deliverables are aligned to support timely procurement activities
Maintains the interfaces between Engineering, Quality and Construction
Involves the Project Procurement Manager in the regular team progress meetings
Undertakes and completes procurement activities in accordance with the Project Procurement Plan
Materials Management execution—purchasing pre-award process
As Project Manager, you will need to ensure that the procurement
team:
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Procurement Execution
Purchase Order documents are to be prepared by Engineering and
Procurement on receipt of the approved Award Recommendation
Kick-off meetings are arranged as required
Post-award activities are initiated by the project procurement team
Once internal and other approvals have been obtained to place a
contract or a PO the Procurement Manager is the only person with
the authority to confirm the commitment for the contract or PO with
the supplier on behalf of WorleyParsons and/or our customers
Materials Management execution—purchasing award process
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Procurement Execution
Confirm that the cost of the awarded POs is within the project budget
Provide relevant information to the project’s Cost Controls Manager
Materials Management execution—purchasing award process
You are responsible for ensuring that the award process is
properly undertaken
You need to:
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Procurement Execution
This process covers award of a PO through to receipt at site and financial close-out
The purpose of the Purchasing Post-award Process is to:
• Administer the POs to obtain the project’s materials and equipment on schedule and in accordance with specifications
• Provide cost and schedule information to Project Services
• Identify PO issues for Risk Management activities
• Liaise with Inspection to ensure compliance to specifications
The Purchasing Post-award Process covers the technical and commercial activities in the manufacture and delivery of materials and equipment
Ensure all meetings and vendor contact are coordinated by Procurement.
Materials Management execution—purchasing post-award process
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Procurement Execution
The main activities in the Purchasing Post-award Process are:
Expediting (including Supplier documentation)
Inspection coordination
Traffic/Logistics
Receiving on site, warehousing and preservation
Change/Claim administration
Invoice payment
Materials Management execution—purchasing post-award process
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Procurement Execution
Effective procurement performance requires:
Use of SmartPlant Materials
Monitoring the vendor’s engineering and manufacturing processes
Meeting documentation obligations
Measuring and assuring conformance to the technical specification
Administering delivery of the materials and equipment
Managing any changes to the PO technical and commercial
provisions
Managing any claims by the vendor for additional payment or
schedule time
Materials Management execution—purchasing post-award process
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Procurement Execution
The Construction Manager involves the Project Procurement Manager in construction progress review meeting
Materials Management execution—purchasing post-award process
As Project Manager you are responsible for ensuring that:
For most items, weekly status meetings are sufficient
For critical items, daily review meetings between the Construction and Procurement Managers may be required
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Procurement Execution
The Materials Field Administration Process governs the day-to-day
procurement activities on site
The actual administration is the responsibility of your Project
Procurement Manager
Materials Field Administration may include site administration,
purchasing and contracting
Materials Management execution—purchasing materials field
administration process
You are responsible for ensuring that the requirements for
materials field administration are included in the Project
Procurement Plan
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Procurement Execution
The purpose of the Contracts Pre-award Process is the contracting of
third-party services
Project Contracts pre-award activities predominantly occur during the
Execution phase
For early contracts, some activities may occur in the Define phase
The deliverables of the Contracts Pre-award Process are:
• Bidders lists
• Enquiry packages
• Approved recommendations for award
• Contract documents
Cost and schedule information provided to Project Services and
contracts issues input into Risk Management activities
Contracts execution—contract pre-award process
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Procurement Execution
Contractor selection
A thorough prequalification process will normally be executed for major contracts, e.g. fabrication contracts. This will involve multiple disciplines to prepare the questionnaire for the relevant work scope, typically including construction, engineering, quality, HSE as well as project controls and procurement.
Competitive, sealed bids are indicated for major contracts
If single source is considered for service contracts, justification must be provided. This may include proprietary technology (e.g. software) or customer’s preference.
Once internal and other approvals have been obtained to place a contract or a PO the Procurement Manager is the only person with the authority to confirm the commitment for the contract or PO with the supplier on behalf of WorleyParsons and/or our customers
Contracts execution—contract award process
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Procurement Execution
The Contracts Post-award Process covers the technical and
commercial activities
The main activities are:
• Awarding contracts
• Administering and monitoring the contractors
• Managing any changes to the contract
• Managing any claims
• Processing any payments and back charges, reconciling
quantities and finalizing all contract obligations
• Providing cost and schedule information to Project Services
• Identifying any contracts issues for Risk Management activities
Contracts execution—contracts post-award process
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Procurement Execution
PO and contract variation must be processed in accordance with the
Management of Project Change Process
You and the Procurement Manager must sign-off any variances
before they can take effect
Purchase order and contracts variation
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The scenario for the case study is on page 55 of your workbooks
Discussion topics:
What would you say are the key procurement issues on the project?
What can be done to remedy the situation?
Case study—group discussion
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Procurement Close-out
The Procurement team completes the procurement close-out tasks
You are responsible for ensuring that the Project Procurement
Manager and the procurement team do this
Responsibilities for procurement close-out
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Procurement Close-out
Project Materials Management close-out activities generally occur
late in the Execution phase
Close-out must follow the requirements for finalization of supply as
set out in the Project Procurement Plan
The main objectives of materials close-out are:
• Materials reconciliation
• Surplus management
• Final inspection (this is a Quality activity)
• Receipt Final Vendor Documentation
• Claims resolution
• Closing out of all PDs
Materials Management close-out
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Procurement Close-out
Close-out must follow the requirements for finalization of supply as
set out in the Project Procurement Plan
The main objectives of contracts close-out are:
• Provision of acceptance certificates
• Confirmation of warranties
• Handover of documentation
• Final inspections (Quality activity)
• Claims resolution and payment reconciliation
Demobilization of the site by WorleyParsons and the contractor does
not necessarily indicate final close-out of the project
Contracts close-out
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Summary and Feedback
Review learning objectives and outcomes
Summary
• Overview of Procurement
• Responsibilities for Procurement
• Commencing the Procurement Process \Procurement Planning
• SmartPlant Materials
• Procurement Reports
• Procurement Initiation
• Procurement Execution
• Procurement Close-out
Questions
Evaluation
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Module 9 Managing Project Procurement
Thank you for your participation