PROJECT PROCUREMENT MANAGEMENT

It is a section of the Implementation Plan to determine how ―the ordered products necessary for producing deliverables can be delivered on time and within the allocated budget‖. Note that the ―Procurement Management‖ section of the Implementation Plan will be necessary only for projects that have to deal with substantial buy-in of expertise or capital items.

For any other projects where there is no high level of procurement expenditure it is enough to include a procurement item list and a vendors list in the project implementation plan. ***Project Procurement Process [also called ―Project Procurement Management Process‖] is a method for establishing relationships between an organization‘s purchasing department and external suppliers to order, receive, review and approve all the procurement items necessary for project execution. The supplier relationships are managed on a contractual basis. The process aims to ensure timely delivery of the purchased items which are selected and acquired according to the specifications and requirements set up by the purchasing department and approved by the project manager.

The procurement process includes five major steps, as follows:

  • Specification. This step involves the purchasing department in communicating with the project manager to develop and approve a list of procurement items necessary for project implementation. The department must specify the approved items to external
    vendors.
  • Selection. This step of the project procurement process requires the department to find potential suppliers which can procure the necessary items, according to the specifications. For this purpose the department needs to set vendor selection criteria,
    which may include such measures as Delivery, Service Quality, Cost, and Part Performance.
  • Contracting. The department must communicate with the suppliers on delivery dates and payment conditions in order to ensure ―on-time‖ delivery of the ordered items within the stated project budget. All the conditions should be listed in a procurement
    contract. Also a detailed delivery schedule should be negotiated with the procurers and approved by the purchasing department.
  • Control. Success of the procurement management process depends on how the purchasing department controls the delivery and payment processes. Through arranging regular meetings with the vendors, tracking delivery progress, reviewing the
    ordered items against the approved product specifications, and making necessary changes to the procurement contract, the department can control the process and ensure successful accomplishment.
  • Measurement. The final step of the project procurement management process refers to using a system of performance indicators and measures for assessing the effectiveness and success of the entire process. The project manager needs to set up such a system and the purchasing department needs to use it in measuring the process. Special meetings and workshops can be conducted to view KPIs, intermediate results of staged delivery, performance of procurers, adherence to product specifications,
    communications with suppliers, and the like. In case any deviations or gaps are revealed the department should notify the project manager and make necessary changes to the procurement plan.
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