BURYAGUMAHO MARK

2020/BIT/004/F
Project Management
Assignment3
1.Explain the importance of project
procurement management and the increasing
use of outsourcing for information
technology(IT) projects.
 Importance of project procurement management
1.Procurement management helps the company to get the best decision
making in purchasing. Basically procurement management is related in
supply chain management. Because procurement management also do
the direct purchasing like supply. That helps company to reduce time to
do the purchasing manually.
2. it helps to reduce the costs, times, and resources that will take much
costs, longer times, and many resources, if it is done manually rather
than automatically.
3. On the other hand, procurement management also handle the
indirect purchasing that know as operational in company.
Explain the importance of increasing outsourcing
of Information Technology(IT) projects.
1. • Access skills and technologies. Organizations can gain access to specific skills
and technologies when they are required by using outside resources.
2. • Reduce both fixed and recurrent costs. Outsourcing suppliers often can use
economies of scale that may not be available to the client alone, especially for
hardware and software.
3. • Allow the client organization to focus on its core business. Most organizations
are not in business to provide IT services, yet many have spent valuable time
and resources on IT functions when they should have focused on core
competencies such as marketing, customer service, and new product design.
4. • Provide flexibility. Outsourcing to provide extra staff during periods of peak
workloads can be much more economical than trying to staff entire projects
with internal resources. Many companies cite better flexibility in staffing as a key
reason for outsourcing.
5. • Increase accountability. A well-written contract – a mutually binding
agreement that obligates the seller to provide specified products or services and
obligates the buyer to pay for them – can clarify responsibilities and sharpen focus
on key deliverables of a project. Because contracts are legally binding, there is more
accountability for delivering the work as stated in the contract.
2.Explain the work involved in project procurement planning for
projects.
1. . Planning procurement
Planning procurement involves a series of steps that help determine which resources an
organization needs for project completion and the extent of its budget. Project procurement
managers often consider the following aspects when planning for procurement:
 The materials and resources required to complete the project

 The materials and resources they already have and which need to be outsourced

 Contract requirements for outside purchases

 Delivery date requirements

 Key project milestones and their deadlines

 Legal terms and conditions

 Industry safety standards of materials and resources

 Researching providers and vendors

 Criteria for partnerships

Most often, managers use a written document as a
project procurement plan that addresses the above
considerations and details any other important
information, such as how to handle changes in
delivery dates or contract terms.
2. Conducting procurement

After planning for procurement, project procurement managers assess bids from
vendors and select partnerships based on their project needs. Any vendor
negotiations often take place during this phase of procurement and all involved
parties sign the agreed-upon contracts. Project procurement managers may also
make payments for products and services at this time.

3. . Controlling procurement
Once contracts become active, procurement control and management are
important parts of maintaining partnerships with vendors and ensuring the services
and products function as they're intended throughout the course of the project.
Controlling procurement often includes:
Evaluating regular internal status updates
Reviewing contractor agreements
Reviewing progress and performance updates from vendors
Conducting inspections and audits
Assessing work orders
Issuing additional payment as necessary
 4. Closing procurement
Closing procurement involves all necessary steps in ending a partnership or
contract. This often involves a review of the work or services completed,
renegotiation of any changes to original contract terms and confirmation of
payments issued and received. Organizations may also file a formal release of
liability upon procurement closing. This contract confirms that the vendor has
fulfilled the terms of the original contract and is no longer responsible for any
additional involvement in the project.
3.Discuss how to conduct procurements and strategies for obtaining
seller response, selecting sellers, and awarding contracts.
1. conduct procurements.
This refers to the process of receiving goods and services from an external seller.
It includes everything that happens during, before and after receiving the goods
and services.
The item’s value is more important than the cost.
The process aims to identify and fulfill specific needs.
The process includes identifying needs, sourcing and closing contracts.
Proactively identifies and fulfills needs.
Focuses on building long-term relationships with vendors.
2.strategies for obtaining seller response
Seller’s submitted proposals
These are the responses from sellers (or bidders) for the RFP request you have sent out.
Make-or-buy decisions
This refers to the list of products, services or results that you decide to get from outside
and the justifications for this decision. Main factors that influence this decision are
capabilities of your organization (whether the produce, service or result can be created
internally), value that a potential seller can provide (can someone do this work better
than your organization), and risks associated with this work (is someone else in better
shape to assume risk and deliver the product than your organization).
Procurement statement of work (SOW)
When you took up project work from your customer you started off with a project
statement of work, remember? Refer to Create Project Charter process. Similarly, when
you contract out the work to a seller the first thing you need to give them is the
statement of work you need them to deliver you.
3.selecting sellers
i. Bidder conferences
These are also called as contractor conferences, vendor conferences or pre-bid conferences.
These are conducted after RFPs are sent out and before decision on seller is made. All the bidders
(sellers) are called into a meeting to answer their questions, clarifications and concerns.
ii. Proposal evaluation techniques
Some contracts can be complex and involve different types of work and specialized skills. There
would be several factors to be judged before finalizing the seller. The seller evaluation committee
lists certain methods, techniques and procedure to ensure that best of the sellers are selected for
procurement. This committee judges the responses objectively to make right choice about a seller.
iii. Independent estimates
The seller who gives lowest estimates may have overlooked some aspects of work involved, or just
plainly does not know how to carry out the work. Irrespective of who does the work you need to
know what it takes to do the work. This includes what types of skills are necessary, what kind of
schedule needs to be in place and what is going to be the overall estimate.
These can be prepared by you, your company, or an expert hired from outside. Once these are in
place, they act as a benchmark to evaluate seller responses.
iv. Expert judgment
Though there are evaluation-criteria in place, seller proposal must be
reviewed by experts. For one, they can figure out the ability of seller by
not only their bids but also by the questions they asked while seeking
clarity on the bids. Two, they can assess whether proposal details are
genuine, and whether seller has the ability to deliver the work successfully.
v. Advertising
This is definitely one of the ways to increase potential seller list. For certain
type of contract (such as government work) or industry (such as
infrastructure) advertising may be a legal requirement.
4.Awarding contracts
Contract awarding is the method used during a procurement in order to evaluate
the proposals(tender offers) taking part and award the relevant contract.
In other words award of contract means the decision of the purchaser to enter into
a contract with the supplier for supply and delivery of the specified goods,
including any related services.
5 Key Stages in Awarding a Contract
The five critical stages in awarding a contract that we
will be exploring in this blog include:
• fulfilling a contract request.
• engaging in contract authoring.
• taking part in contract negotiations.
• contract approval routing.
• and contract signature processes.
4. Understand the process of controlling procurements by
managing procurement relationships and monitoring
contract performance.
Control Procurement.
Control Procurements is the process of managing procurement relationships,
monitoring contract performance, and making changes and corrections as needed. Both
the buyer and the seller will administer the procurement contract for similar purposes.
Control Procurements includes application of the appropriate project management
processes to the contractual relationship(s) and integration of the outputs from these
processes into the overall management of the project.
Control Procurements also has a financial management component that involves
monitoring payments to the seller. This ensures that payment terms defined within the
contract are met and that seller compensation is linked to seller progress, as defined in
the contract. One of the principal concerns when making payments to suppliers is that
there is a close relationship of payments made to the work accomplished
 Inputs Tools & Techniques Outputs

 Project Management plan  Contract change control system

Procurement performance reviews  Work performance information
 Procurement documents 
Inspection and audits  Change requests
 Agreements 
Performance reporting  Project management plan updates
 Approved change request 
Payment systems  Project documents updates
 Work performance 
reports Claim administration  Organizational process assets
 updates
 Work performance data  Records management system
5.Describe the process of closing procurements
Procurements are closed when a contract is completed OR when a contract is
terminated before the work is completed.
The Close Procurements is a part of Closing Process Group.
All procurements must be closed out, no matter the circumstances under which
they stop, are terminated, or are completed.
Procurements are closed when a contract is completed OR when a contract is
terminated before the work is completed.
The Close Procurements is a part of Closing Process Group.
All procurements must be closed out, no matter the circumstances under which
they stop, are terminated, or are completed.
Work that must be performed during Close
Procurement phase:
Product verification: Involves checking to see if all the work is done correctly and
satisfactorily.
Negotiated settlement: Final settlement of all claims, invoices and other issues.
Financial closure: Involves making final payments and completing cost records.
Procurement audit: Structured review of only the procurements process.
Updates to records: Making sure all of the records of the project are complete and
are accessible in the records management system.
Final contract performance reporting: This is creating a final report.
Lessons learned: Lessons learned from everyone including the seller are
documented for the project.
Procurement file: The file includes contract, changes, submittals from the seller,
financial information, inspection results, lessons learnt.