Definition of Procurement Management

There are many reasons why it is a sound business practice to buy some part of a project's
scope from another firm. MCI's Dick Liebhaber cites one of the more important reasons to
buy scope: to quickly expand the intellectual base at his company. MCI finds that it is easier
to obtain technical brainpower from other companies, than to attempt to recruit and add
permanent employees. And there is also the opposite advantage: to be able to quickly
downsize the company should that unpleasant task become a necessity. Companies can
cancel contracts much easier than to lay off a workforce. But there are also other valid
reasons for companies to follow such a policy. In addition to adding to its intellectual base,
firms often find that relationships with suppliers will bring them resources, facilities,
investments and equipment, which would not otherwise be available to a project utilizing its
own limited company assets. The addition of suppliers to a project will often reduce the risks
of a new venture by sharing the costs of the venture, and enhancing their chances of
success. This book is about project management. However, its primary focus is on that
portion of the project which will be performed by another company. It deals with the project
work which is contractually procured and performed by people working for another company.
Such transactions are sometimes called contracts, sometimes subcontracts, and sometimes
teaming agreements. The key distinguishing ingredient: they are all procured under some
type of a legal relationship. (quentin 1)
Purchasing and Procurement
Procurement Definition

To define procurement broadly, Procurement is the overarching function that describes the
activities and processes to acquire goods and services. Importantly, and distinct from
purchasing, procurement involves the activities involved in establishing fundamental
requirements, sourcing activities such as market research and vendor evaluation and
negotiation of contracts. It can also include the purchasing activities required to order and
receive goods
Purchasing
The term Purchasing refers to the process of ordering and receiving goods and services. It
is a subset of the wider procurement process. Generally, purchasing refers to the process
involved in ordering goods such as request, approval, creation of a purchase order record (a
Purchase Order or P.O.) and the receipting of goods.

(http://purchasinginsight.com/resources/what-is/definition-of-procurement-procurement-vspurchasing/)
Procurement Authority

The project team will be supported

by a procurement professional, a person loaned into the project team by an
organization which exists under the title of purchasing, procurement,
material, materiel, supply management, etc. This procurement professional must have
procurement authority. This is described by the chief executive of a major design
construction management firm in USA;
"I would never give procurement authority to a project manager.
There is just too much at stake, too many non-technical matters
to know, which most project managers are typically not prepared
to handle. Procurement authority must be restricted to people who
are familiar with contracting terms, procurement regulations,
funding and contractual compliance issues. We delegate procurement
authority to only procurement people, but who are assigned
to support the project manager."
New Product development
Rapid changes in technology, the emergence of global industrial and consumer markets,
increasing market fragmentation and product differentiation, and the increasing options for
developing and producing products have increased the pressure on all firms to more
effectively and efficiently develop new products. In many progressive firms, the design of
new products is conducted by a team representing a number of functional areas. Marketing,
product planning, design engineering, reliability engineering, supply management,
manufacturing engineering, quality, finance, field support, and, frequently, carefully selected
suppliers and customers are involved, as appropriate.
Anecdotal evidence indicates that the development of new products by such cross
functional teams and the use of concurrent engineering have potential of significantly
improving three key objectives: time to market, improved quality and reduced total cost. The
turnaround of many troubled manufacturers during the recent decade was the result of
replacing departmental walls with teamwork among those who should be part of the design
process. Supply management professionals and carefully selected suppliers are moving to
earlier involvement in the new product development process because of the important
contributions they can make in the areas of quality, cost, and timely market availability. This
early involvement commonly is referred as early supply management involvement and early
supplier involvement (ESI). By involving supply management and suppliers in simultaneous
(cross functional) engineering process teams at an early stage, R&D gets the chance to

increase efficiency. In fact, early supply management involvement help to shorten

engineering time and increase engineering quality.

Cross Functional Team

EPC Project Managers Responsibilities

Customer relations point responsibility
Championing safety zero accidents
Meeting project quality objectives
Leading environmental compliance and advocating sustainable
development
Execution Planning
Project scope, cost, and schedule control
More EPC Project Manager Responsibilities
Prime contract administration
Risk management
Project coordination and interface management
Management reporting and financial control
Delivering planned profitability (as sold or better)
No surprises
EPC Project Engineering Managers Responsibilities (Typical)
Engineering execution planning
Managing the engineering design work of the project.
Producing all engineering deliverables incl. design criteria, design
drawings, technical and general specifications, material requisitions,
equipment lists, necessary to define and construct the facility.
Providing the engineering input to the project execution plan, Preparing
the detailed engineering budget and schedule and the list of deliverables.
Reporting to the Project Manager regarding overall performance of
engineering activities, costs, and schedule.
Project Procurement Managers Responsibilities (Typical)
Procurement execution planning
Managing acquisition of equipment and materials(purchase orders and
supply contracts) in response tomaterial requisitions prepared by
engineering or fieldrequisitions generated at construction sites
Managing purchasing, expediting, supplier qualitysurveillance, traffic and
logistics, and materialmanagement services for supplier-furnished
equipmentand materials
Reporting to the Project Manager regarding overallperformance of
engineering activities, costs, and schedule.