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Week 12 - Project Procurement Management

Here are the key points about procurement documents and subcontracting from the document: 1. Procurement documents are used to solicit proposals from prospective sellers. They include issuing a procurement request to potential sellers to submit a proposal or bid. 2. It may be better for a contractor to subcontract work when (1) the work is specialized and the contractor does not have the required expertise, (2) the work requires resources (people, equipment, facilities) that the contractor does not have, (3) subcontracting allows the general contractor to complete the project faster by delegating some tasks to subcontractors.

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Sơn Tùng Nguyễn Khương
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172 views

Week 12 - Project Procurement Management

Here are the key points about procurement documents and subcontracting from the document: 1. Procurement documents are used to solicit proposals from prospective sellers. They include issuing a procurement request to potential sellers to submit a proposal or bid. 2. It may be better for a contractor to subcontract work when (1) the work is specialized and the contractor does not have the required expertise, (2) the work requires resources (people, equipment, facilities) that the contractor does not have, (3) subcontracting allows the general contractor to complete the project faster by delegating some tasks to subcontractors.

Uploaded by

Sơn Tùng Nguyễn Khương
Copyright
© © All Rights Reserved
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Project Management

Lesson 12: Project


Procurement Management

Tran Van Ly
Industrial Engineering and Management
International University
22/03/05 1
Email: [email protected]
Review
Team
Team Project
Function Presentation
Job description (11st & 12nd)
Matrix of responsibilities
Performance Appraisal
Power vs. Authority
Leadership
After conducting project……..
2
Learning Objectives

3
Steps In Procurement Process

4
MAIN CONTRACTS USED IN
INDUSTRIAL PROJECTS

5
Ethics in Procurement

6
Project Procurement Management

A collaboration with outside suppliers in order


to obtain or purchase goods and services for
projects

Technical &
Commercial/financial 7
Project Procurement Management

• Procurements are first identified during the


planning phase of the project
• Purchase, rent or contract with some external
resource to meet your project goal
• For every external contractor, there needs to
be a statement of work (SOW) to serve as a
document outlining the work being
contracted

8
Project Procurement Management

• (1) costs too much or (2) takes too long

9
Plan Procurement Management

The process of documenting project


procurement decisions, specifying the approach,
and identifying potential sellers. 

Bills of Quantities; Man-hour rate; Markup


Specification; Terms & Conditions
10
Plan Procurement Management

• Collecting of requirement documents, 


risk register, activity resource requirements,
project schedule, activity cost estimates
• Seeking help from experts, doing market
research and meeting with stakeholders for
make or buy/rent decision
• requesting for proposal in which multiple
contractors get to bid on the job

11
Quality, Cost, and Delivery (QCD)

12
Delivery – INCOTERMS

13
Plan Procurement Management
Components of a Procurement
Management Plan
• Roles and Responsibilities
• Project scheduling
• Vendor control
• Estimating
• Prequalified Vendors
• Risk management
• Legal jurisdiction
• Payment
• Constraints and Assumptions
Supplier Relationship Management

 Price is what you pay, value is what you get


Conduct Procurement

• Conduct Procurement is the process of obtaining


seller responses, selecting a seller, and awarding a
contract.
• The project team will receive bids or proposals and
will apply selection criteria
Terms to select one or more
& Conditions
sellers who are qualified to perform the work and
acceptable as a seller.
Key criteria of supplier evaluation
Conduct Procurement

Conduct procurement data flow diagram


Conduct procurement – Inputs (1)
• Procurement management plan
• Describes how the procurement processes will be
managed for development procurement documents
through contract closure
• Can be formal or informal, highly detailed or broadly
i
framed, based upon the needs of each project
• Procurement documents
• Used to solicit proposals from prospective sellers.
• Issuing a procurement request to potential sellers to
submit a proposal or bid is normally done.
• Publication of the request in public newspapers, in trade
journals, in public registries or in internet.
Conduct procurement – Inputs (2)
• Source selection criteria:
• Capabilities, capacity, delivery dates, product cost, life-
cycle cost, technical expertise, and the approach to the
contract
• Qualified seller list i
• A list of sellers who have been pre-screened for their
qualification and past experience
• Seller proposals
• Prepared in response to a procurement document
package
• Project document: risk register and risk-related
contract decision
Conduct procurement
Tools and techniques
• Bidder conferences (sometimes called contractor
conferences, vendor conferences, and pre-bid
conferences).
• Meeting between the buyer and all prospective sellers
prior to submittal of a bid
i or proposal
• Proposal evaluation techniques
• A formal evaluation review process will be defined by the
buyer’s procurement policies.
• Evaluation committee will make their selection for
approval by management prior to the award
Conduct procurement
Tools and techniques (2)
• Independent estimates
• Procuring organization may elect to either prepare own
independent estimate, or have an estimate of cost
prepared by an outside professional estimator
• Significant differences in cost estimation may lead to be
deficient, ambiguous, and i or failed to respond fully to the
procurement statement of work
• Expert judgment
• Used in evaluating seller proposals
• Procurement negotiations
• Clarify the structure, requirements and other term of the
purchases
• Mutual agreement can be reached prior to signing the
contract
Conduct procurement
Outputs
• Selected sellers
• The sellers selected are those sellers who have been
judged to be in a competitive range based upon the out
come of the proposal or bid evaluation, who have
negotiated a draft contract that will be come an actual
contract i

• Procurement contract award


• A procurement contract is awarded to each selected seller
Conduct procurement
Outputs (2)
• Resource calendars
• Change requests
• Project management plan updates
• Cost baseline
i
• Scope baseline
• Schedule baseline
• Procurement management plan
Control Procurements
• Contractors can have negative impact on budgets and
schedules, which can lead to a project going off-track
or worse
• The management of those contractors must be
folded into the overall management responsibilities;
regular procurement performance reviews
(inspections and audits)
• Contractors are experts in what they do, but still need
to monitor and track their work to make sure it’s
proceeding as planned

26
Control Procurements
• CO/CQ
• Supervise when:
– Designing
– Manufacturing
– Constructing

Compliance: Improving
control to ensure buying
from preferred or
contracted suppliers

27
Control Procurements
The process of managing procurement
relationships, monitoring contract
performance, making changes and
corrections as appropriate, and closing
out contract

28
Control Procurements

29
Close Procurements
• To finalize as required for a formal release of
liability
• Make sure there are no outstanding changes
related to the value and completion date of
the contract:
– Procurement audits
– Paperwork the procurement process.

30
Close Procurements

31
HW
1. What are procurement documents
about?
2. Under what circumstances is it better
for a contractor to subcontract?

32

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