| Online PMP® Training and Preparation: Administer Procurement Process in Project Procurement Management Show
Trending nowHow to Create a Job-Winning Project Manager Resume in 2023?ArticleProject Management Learning Series: Fast Tracking Versus CrashingArticleFree Mind-map: PMP CertificationEbookBest Project Management Books You Should Read in 2023 (Top 10 Books Included)ArticleTips To Write a Good Cover Letter in 2022ArticleTop 7 Tips for PMP Exam PreparationVideo TutorialFeasibility Study and Its Importance in Project ManagementArticleProject Scope Management and Its Importance in 2023Article30+ Top Formulas to Memorize Before Your PMP® ExamArticleFinancial Risk and Its TypesArticleOnline PMP® Training and Preparation: Administer Procurement Process in Project Procurement Management Last updated on Aug 30, 20199280 Table of ContentsView MoreThis is the process of managing procurement relationships, monitoring contract performance and making changes and corrections as needed. The key inputs to this process are a contract, other procurement documents, and work performance information. Work performance Information basically has the information about the progress of the work, i.e. how much work is completed and what's the cost incurred to complete that work. In this case, it has information like how much work is completed as per the contract and money spent to get that work completed as per the contract. There are various techniques used for administering procurement. Lets first look at, Contract Change Control System. This is similar to a normal change control system but used specifically for managing changes to the contract. Usually, the process of making changes to the contract, i.e. Contract Change Control System is listed in the contract document itself. The next technique is Procurement Performance reviews this is the process of formally reviewing the seller deliverables. Usually, this is also documented in the contract document. In many large contracts, the procurement performance reviews are done once a month. Sometimes unscheduled inspection and audits can also be performed by the buyer to ensure that seller is following the processes that they claim they do. Many a time this is done to ensure compliance. For example, as a buyer, you can have a policy that all your seller should comply with ISO 9001:2008 standards. You can do your own audit on the seller to check whether they really comply with that standard or not. Releasing the payment of the work performed by the seller is also part of this process. Sometimes buyer and seller may get into a dispute regarding a change. The seller may ask for additional money for the change and the buyer may claim that it's the part of the original scope. Such contested changes are also called claims or dispute. The contracts usually have claims administration process to settle such disputes. The best way to settle such dispute for the buyer and the seller is to seat across a table negotiate and agree on a midway. A procurement plan -- also called a procurement management plan -- is a document that is used to manage the process of finding and selecting a vendor. The plan justifies the need for an external supplier and explains how the process of finding a supplier will be performed -- from identifying the project requirements to closing the contract. The goal of a procurement plan is to increase the efficiency, effectiveness and transparency of the procurement process. The document specifically describes how products or services will be acquired and how vendors will be managed during the project. It includes information such as the types of contracts that will be used, the planned delivery or implementation dates for the contracted products or services, the types of metrics that will be used to evaluate the vendor's performance and an explanation of how the procurement process will be performed. Creating a procurement plan helps an organization avoid surprises and last-minute considerations. The document helps leaders decide what to buy, when to buy it and what sources to purchase from. A procurement plan also allows project planners to determine if their expectations and requirements are realistic and can be completed in the proposed project timeline. Many organizations use procurement software to automate and accelerate the procurement processes and optimize their workflow. What is included in a procurement plan?Procurement plans can be created for specific technical requirements and projects or for multiple requirements related to different systems. While the details will vary, successful procurement plans will include the following components:
How to write a procurement planFollow these steps to create an effective procurement plan: Explain the procurement process. This section of the procurement plan provides an overview of the steps that must be taken to acquire products or services from a supplier, as well as an explanation of what must be done to manage the process. Identify roles and responsibilities. This section of the procurement plan identifies the different people working on the project and all stakeholders who will be affected by the project. The different roles involved in the procurement process include:
Identify the procurement needs and requirements. The first section of the procurement plan describes the products or services the organization is looking to acquire and offers an explanation and justification for why the products or services must be bought from an external supplier instead of internally sourced. Define the project timeline. This section proposes a timeline for the project and describes the timeframe in which the products or services are needed. Including this section helps project teams better understand when the procurement process should be started and when it needs to be completed by. Define change approval processes. This section describes the organization's change management processes -- specifically, how changes can be made to the procurement process and documentation. The section includes an explanation of how to ensure the changes are necessary, understood and approved by all appropriate people. Identify vendor management techniques. This section of the procurement plan explains the techniques that will be used to manage vendors once they have signed the contract. The goal of this section is to ensure vendors fulfill their side of the deal and provide the organization with the products or services they've requested at the quality they expect. Vendor management techniques include:
Define relevant legal jurisdiction. All legal requirements for the project should be identified to ensure the company and vendor comply with the laws. For example, companies need to consider if they are affected by legislation such as the California Consumer Privacy Act (CCPA) or General Data Protection Regulation (GDPR) and whether the product or service they are considering offers regulatory compliance with the relevant laws. The legal requirements should also be clearly identified to ensure all stakeholders are aware of them and do not violate the legislation. Identify payment methods. This section identifies the different payment methods and currencies that will be used and accepted during the procurement process. If payments are to be made periodically -- such as monthly or annually -- then the terms for these payments must be detailed to ensure there is no conflict between the organization and vendor regarding how much money is owed. Explain risk management processes. Working with an external supplier introduces new risks to a project that would not be relevant if the project was internally sourced. This section of the procurement plan details the risk profile of the project, including:
The statement of work is an essential element of an organization's risk management processes. The SOW defines the necessary project activities, deliverables and timelines that the vendor must follow to fulfill their half of the deal. Providing vendors with a SOW reduces risk by ensuring the supplier knows exactly what is expected of them and when it is expected by. Identify project constraints and limitations. This section of the procurement plan explains all the constraints and limitations that the project team and vendor must deal with. This can include:
Benefits of procurement planningProcurement plans provide many benefits to organizations that are looking to acquire new products or services from external suppliers. Most notable is the document's help with the management of the procurement process. Other benefits include:
Procurement softwareProcurement software is a computer program or suite that automates the purchasing and inventory recording processes. Using procurement software, organizations can create purchase orders, pay bills, execute online ordering processes and match invoices to the materials that have been received. Procurement software is grouped into four major categories:
Some of the top P2P software options include:
Tradeshift, SAP Ariba, BuyerQuest and Coupa Software are also among the top purchasing software options. Other popular offerings include Certify by Emburse and ProcurementExpress.com. What are the outputs of the plan procurement management process?Outputs. Procurement management plan.. Procurement strategy.. Bid documents.. Procurement statement of work.. Source selection criteria.. Make-or-buy decisions.. Independent cost estimates.. Change requests.. Which of the following is an output of the conduct procurements process?The outputs for this process should be obvious given the tools and techniques such as Bidder Conferences and Proposal Evaluation discussed in the last post: the list of selected sellers as a result, and of course the agreements themselves.
What are some of the outputs of the conduct procurements process?Conduct Procurements. Which of the following is an input to the plan procurement management process?Inputs. The key inputs to this process are a contract, other procurement documents, and work performance information. Work performance Information basically has the information about the progress of the work, i.e. how much work is completed and what's the cost incurred to complete that work.
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Which of these are an output from the plan procurement management process and input to the conduct procurement process?
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