13.

Project Procurement Management

a) What do you mean by project procurement management?
Project Procurement Management is part of the project management process in which
products or services are acquired or purchased from outside the existing employee base
(which would work on the project) in order to complete the task or project.

b) Sketch procurement management process flow

The project procurement management process can be divided into four phases:

 Plan Procurements
 Conduct/Control Procurements
 Administer/Execute Procurements
 Closing Procurements

Plan Conduct Administer Close

Procurement Procurement Procurement Procurement
c) Explain role of enterprise environmental factors & organizational process
assets.

Enterprise Environmental Factors (EEFs) :

The Enterprise Environment Factors (EEF) include all policies, practices, procedures and
legislation that exist, both inside and outside of the organization that will impact the way
we manage a project. This ranges from environmental, anti-discrimination and
occupational health and safety legislation to the choice of project management system
used by the organization, its personnel management policies and PMI’s Code of Ethics.
Some elements of the EEF are mandatory, some represent good practice others cultural
norms; regardless of the nature of the factor, you have to work within the physical and
cultural environment to be effective. Below are some examples of the enterprise
environmental factors:

 Organizational culture, processes, and infra-structure

 Product standards (as a project manager you should know this obviously)
 Quality standards – important one to know
 Government standards
 Market standards and conditions
 Codes of conduct
 Staffing guidelines
 Reviews and training records
 Work authorization systems
 Political unrest
 Organizational communication channels
 Risk databases
 Project management information systems (PMIS) – Automation tools like
schedule tool

Enterprise environment factors are so important that they can enhance or reduce the
project management options and positively or negatively impact the project success.

Organizational Process Assets (OPAs) :

Most organizations have developed a range of templates, contracts, registers and

assessment tools to assist in the management of the project. Organizations have also
acquired knowledge in the form of lessons learned and the organization’s knowledge base
that can be very useful. Therefore, Organizational Process Assets would include virtually
anything the organization has acquired that we can use in the management of the project.
They are formal and informal plans, policies, procedures, and guidelines. These really are
very important inputs for a planning stage. We can’t even start planning without
organizational process assets on our table. Irrespective of the nature of the project,
 whether it is long term or short term project, we have to consider the OPA as an
important input for the planning phase. Some of the examples of OPA may include:

 Standardized guidelines
 Proposal evaluation criteria
 Work breakdown structure templates
 Project schedule network diagram templates
 Risk templates
 Organizational standard processes
 Project closure guidelines
 Defect management processes
 Lessons learned and historical databases
 Change control procedures
 Financial control procedures
 Project files

OPA is so important to be considered otherwise the project success can be affected if we

ignore the same. An ideal project manager will always include all these information in
their project planning. He or she can seek the help of PMO (Project Management Office)
to get all these information. He or she can seek the advice of the identified key
stakeholders as well.

d) Explain role of standard forms & evaluation criteria in plan contracting

process.

The Plan Contracting process involves documenting the products, services, and results
requirements and identifying the potential sellers. The documents needed to support the
request seller responses process and select sellers process are written in this process area.

Standard forms include standard contracts, standard descriptions of procurement items,

non-disclosure agreements, proposal evaluation criteria checklists, or standardized
versions of all parts of the needed bid documents. Organizations that perform substantial
amounts of procurement can have many of these documents standardized. Buyer and
seller organizations performing intellectual property transactions ensure that non-
disclosure agreements are approved and accepted before disclosing any project specific
intellectual property information to the other party.
 Ideally, the project team has a set of criteria used to measure the responses to the
procurement documents. In many cases, the seller will not even be eligible for
consideration unless a fixed set of criteria is met. (The seller must be able to post a
million dollar bond, for example.) In very simple procurement situations, the only factor
may be the price if the material or service is easily available from several sources.

Evaluation criteria are developed and used to rate or score proposals. They can be
objective (e.g.; "The proposed project manager needs to be a certified Project
Management Professional, PMP") or subjective (e.g.; "The proposed project manager
needs to have documented previous experience with similar projects"). Evaluation criteria
are often included as part of the procurement documents.

Evaluation criteria can be limited to purchase price if the procurement item is readily
available from a number of acceptable sellers. Purchase price in this context includes
both the cost of the item and ancillary expenses such as delivery.

Other selection criteria can include technical capability of the seller, technical approach
to the project, financial capability, business size, references, intellectual property rights
and so on.

e) Explain role of bidder conferences & advertising in request seller response

process.

Request Seller Response is the process where bids and proposals are obtained from the
prospective sellers. The sellers are responsible for these responses and are the ones
putting forth the time and effort to respond. The tools and techniques of requesting bidder
responses are bidder conferences, advertising, and developing a qualified sellers list.

Bidder conferences (also called contractor conferences, vendor conferences, and pre-bid
conferences) are meetings with prospective sellers prior to preparation of a bid or
proposal. They are used to ensure that all prospective sellers have a clear, common
understanding of the procurement (e.g., technical requirements and contract
requirements). Responses to questions can be incorporated into the procurement
documents as amendments. All potential sellers are given equal standing during this
initial buyer and seller interaction to produce the best bid.

Advertising can build the number of potential sellers by getting information out to a
large number of vendors. In some government jurisdictions, certain types of procurement
items must be advertised publicly. Some government jurisdictions require that any
pending government contracts be made public, usually through newspapers, but more and
more through websites on which sellers may search for all current open projects.
f) What do you mean by contract? Explain it with contract negotiation.

A contract is any agreement between two or more parties where one party agrees to
provide certain deliveries or services, and the other party agrees to pay for those
deliveries or services. A contract has to involve an exchange of something of value. A
contract is also known as:

 a Memorandum of Agreement
 a Memorandum of Understanding
 an Agreement (Confidentiality, Non-Disclosure and Joint Venture among others.)
 a Purchase Order (An accepted legal principle that this is a contract.)

A contract negotiation is any discussion, either in person or through electronic means,

that has as its primary goal to come to a written agreement concerning a business matter.
Such a contract can be for nearly anything, though the term most often applies to labor
contracts, or contracts for services that need to be agreed upon before the work is
performed. Often, the contract negotiation handles issues such as cost, timeframe, and
whether there are any special considerations to take into account.

g) What do you mean by contract administration process?

The Contract Administration process enables management of the contract and buyer and
seller relationship, monitoring of seller performance, as well as management of the
contract with external buyers if necessary. It's a process which both parties have to do for
their own purposes: "The Contract Administration process ensures that the seller's
performance meets contractual requirements and that the buyer performs according to the
terms of contract".

h) What do you mean by contract procurement performance review?

A contract procurement performance review is a structured review of the seller’s progress

to deliver project scope and quality, within cost and on schedule, as compared to the
contract. It can include a review of seller-prepared documentation and buyer inspections,
as well as quality audits conducted during seller’s execution of the work. The objective of
a performance review is to identify performance successes or failures, progress with
respect to the procurement statement of work, and contract non-compliance, which allow
the buyer to quantify the seller’s demonstrated ability or inability to perform work. Such
reviews may take place as a part of project status reviews which would include key
suppliers.
i) What do you mean by procurement audits?

A procurement audit is a formal evaluation of both suppliers’ performance of the

contract, as well as the effectiveness of the procurement process itself. The audit can be
used to establish a record that may be used to shape procurement practices in other
contracts for this project or for other projects. Inspections and audits required by the
buyer and supported by the seller as specified in the procurement contract can be
conducted during execution of the project to verify compliance in the seller’s work
processes or deliverables.

Submitted by

Sulav Kafley

066/BCT/541