Project ManagementBy:Dr Madhu Fernando

Project Procurement Management

Project Procurement Management

The project procurement management process involves the procurement activities from the decision to purchase the material or service through to the payment of bills, setting claims, and closing of procurement contracts.

Procurement Management Process

Plan Procurement

Planning to acquire goods and services from outside the organization.

The process involves deciding to ‘make or buy’, and preparing procurement document package.

Procurement Package include Procurement Documents like RFP, RFQ and Statement of Work.

Contract types and evaluation criteria also need to be finalized during this stage.

Procurement Documents

RFP – Request for Proposals : when the buyer requesting a detailed proposal from the seller

RFQ – Request for Quotations : when the buyer knows about the requirements, they might only ask for a quotation

IFB – Invitation for Bid – A detailed proposal, specially used in public/government tender process

Contract Types

A contract is a formal agreement. It is a legal document biding to both seller and buyer

Main contract types are:

Fixed Price / Lump-sum / Firm Fixed Price

Cost Reimbursable

Time and Material ( T & M)

Other / mix : contracts with incentives for completing early or achieving targets

Discuss : Different contract types and risk –sharing between buyer and seller

Conduct Procurement

After all the procurement planning activities are completed,

Conduct Procurement involves

Sending the procurement packages,

receiving proposals,

Evaluating proposals and ,

entering in to the contract with the selected parties.

Control Procurement

After entering in to the Contract or the agreement, buyer must make sure contract is managed according to its terms.

Control procurement involves procurement audits and managing changes to the contract.

Changes to contract must be in writing and formally controlled, And must be carefully managed with contract change control system.

Close Procurements

Close Procurements includes closing all the contracts related to the project.

Activities at Close Procurement:

Procurement audits & apprasials Negotiates settlements Update record management system.