Procurement Management - the Process

Contents

Introduction

Plan Purchases and Acquisitions
Inputs to the Plan and Acquisition Process
The Tools and Techniques of the Plan Purchases and Acquisition Process
The Output of the Purchases and Acquisition Process

Plan Contracting
The Inputs to Plan Contracting Process
The Tools and Techniques of the Plan Contracting Process
Standard Forms
The Output of the Plan Contracting Process

Request Sellers Responses
The Inputs into the Process of Request Seller Responses
The Tools and Techniques of the Request Seller Responses
The Outputs of Request Seller Responses Process

Select Sellers
The Inputs into the Process of Select Seller
The Tools and Techniques of the Select Seller Process
The Outputs of the Select Seller Process

Contract Administration
The inputs of the Contracts Administration Process
The Tools and Techniques of the Contract Administration Process
The Output of the Contract Administration Process

Contract Closure
The Inputs of the Contract Closure Process
The Tools and Techniques of the Contract Closure Process
The Outputs of the Contract Closure Process

References

Introduction

Procurement Management refers to efforts, processes and procedures undertaken by an organization in order to deal with purchase of goods and services from external suppliers. There are several phases and activities that comprise a complete procurement system for an organization. The major issues concerning these phases and activities in the procurement of goods and services from their suppliers include: issuance of Purchase Orders, receiving and approval of deliveries, review and approval of items from suppliers, payments to supplier, suppliers management in the light of the contracts . Procurement Management also manages relationships with suppliers to ensure a high level of service. In essence, procurement management helps buyers to get what they have paid for.

It goes without saying that the performance of procurement managers often determines the success of the whole project. It is, therefore, imperative that the project management team and the team leader implement in the various stages of the project’s life cycle an effective plan which ensures maximum value in terms of cost savings and efficiency in time. This takes place when the procurement team forms relationships with the suppliers by ascertaining that the deliverables meet the requirements of procurement (PMBOK, 2009).

There are numerous pre -requisites for an efficient and effective procurement but at the outset e ffective implementation of procurement management requires changes in technology, in personnel, and in attitude. In addition to the change in the mindset and the resources, a positive sourcing methodology needs to be adopted that stresses upon forming satisfying relationships with the valued suppliers. As the sup pliers are critical components of the success of a project ; organizational relationships with them make a big difference in the availability of resources when needed . In addition, t raining employees in procurement management and hiring experts relating to the field create great difference in the performance of a project . Nonetheless, in case of large scale projects procurement is at the heart of successful completion and thus s pecialization in various areas of procurement is another necessity for successful procurement (PMBOK, 2009).

There are several processes involved in the Procurement Management. These processes require preparation of certain documents to be used as inputs as well as tools and techniques to convert these inputs into valuable outputs. The processes are outlined below and then discussed along with the commonly used inputs, tools and techniques and outputs in details in the following section s. The processes in the management of procurements are:

1. Plan Purchases and Acquisitions
2. Plan Contracting
3. Request Seller Responses
4. Select Sellers
5. Contract Administration
6. Contract Closure

Plan Purchases and Acquisitions

Planning is the most important activity in every business and in fact good planning always results in improved performance of the business; procurement management is not an exception. Planning purchasing and acquisitions are acts and efforts to create a co mplete and thorough determination of items to be purchases or acquired in order to complete a project. As a matter of fact, t he project management concept of planning purchases and acquisitions helps the project management team to complete the project in a timely manner. If the project team looses their grip over timely receipt of purchases for the planned phase of the project, the overall projects gets late.

Therefore, Plan Purchases and Acquisition Process is also referred to as making a careful and accu rate determination of the time to purchase and acquire items in the course of the project management (PMBOK, 2009). This process provides the most suitable methods to determine the utmost needs and inputs (Elyse, PMP, & CPHIMS, April, 2007).

Inputs to the Plan and Acquisition Process

There are certain inputs to the Plan Purchases and Acquisitions Process. First of all are the enterprise environmental factors which c oncern the availability, acceptability and terms and conditions of products and the responsibility of the procurement team. Secondly, organizational process assets express the formality, like purchase requisition etc., of the procurement process in the organization. The project Scope Statement outlines the projects boundaries, requirements, constraints, and assumptions. Besides these, A Work Breakdown Structure (WBS) illustrates the interdependency between the project packages. To supplement the WBS, WBS Dictionary details the required work to complete each WBS package and check out the contract info rmation. Project Management Plan is another input which checks out risk related agreements, activity resource requirement, the schedule of the project and cost estimates.

The Tools and Techniques of the Plan Purchases and Acquisition Process

Some tools and techniques are commonly used to describe the procurement need, the time and the method . The very first of the tools used in the plan purchases and acquisition process are Make-or-buy Decisions which confirm whether a product must be bought or produced using inOhouse resources. Expert Judgment, another tool, is the specialized advice regarding buying decisions. Whereas Contract Types involve the type of contracts. Generally there are three main categories of the types of available contracts - fixed price contracts, cost- reimbursement contracts, and time and material contracts.

The Output of the Purchases and Acquisition Process

When these tools and techniques are used with the inputs to meet the required goods and services in plan purchases and acquisitions process, certain output are yielded. These outputs include procurement management plan, contract statement of work, make or buy decisions and the requested changes.

A Procurement Management Plan details the process of managing the purchases and acquisitions . It also describes the types of contracts used, the estimates accountability, the guidelines for the build or buy decision , the lead times and the format of the statement of work. Contract Statement of Work (SOW) explains with enough detail and clarifications for every party to an agreement about the goods and products being purchased. Make-or-buy Decisions are a document of the justification for the decision and responsible party. Requested Changes are the changes to the plan (Elyse, PMP, & CPHIMS, April, 2007).

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