Project Procurement and Contract

Management
What is Program?
A program is defined as a group of related projects, subprograms, and program activities managed in a coordinated way to
obtain benefits not available from managing them individually. Programs may include elements of related work outside the
scope of the discrete projects in the program. A project may or may not be part of a program but a program will always have
projects.

An example of a program is a new communications satellite system with projects for design of the satellite and the ground
stations, the construction of each, the integration of the system, and the launch of the satellite.
What is Portfolio?
A portfolio refers to projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives. The
projects or programs of the portfolio may not necessarily be interdependent or directly related.

For example, an infrastructure firm that has the strategic objective of “maximizing the return on its investments” may put
together a portfolio that includes a mix of projects in oil and gas, power, water, roads, rail, and airports.
Operations?

Operations are ongoing endeavors that produce repetitive outputs, with resources assigned to do basically the same set of
tasks according to the standards institutionalized in a product life cycle. Unlike the ongoing nature of operations, projects are
temporary endeavors.
What is Project?
A project is a temporary endeavor undertaken to create a unique product, service, or result. The temporary nature
of projects indicates that a project has a definite beginning andend.

A project is a sequence of unique, complex and connected activities having one goal or purpose and that must be
completed by a specific time, with in budget and according to specification.

For example office buildings can be constructed with the same or similar materials and by the same or different
teams. However, each building project remains unique with a different location, different design, different
circumstances and situations, different stakeholders, and soon.

Attributes of projects

unique purpose, temporary, require resources, often from various areas, should have a primary sponsor and/or
customer, involve uncertainty
Why Project Initiate?
To meet strategic business goals and objectives:

• Strategic opportunity

• Business needs

• Customer request

• Technological advance

• Legal requirements
Examples of Projects
• Developing a new product or service

• Effecting a change in structure, staffing, or style of anorganization

• Designing a new transportation vehicle

• Developing or acquiring a new or modified information system

• Constructing a building or facility

• Building a water system for community

• Running a campaign for political office

• Implementing a new business procedure or process

Project Success?

Customer Requirements Completed within

satisfied/exceeded allocated time frame

Completed within allocated

Accepted by the customer
budget
Project Success
Project success is measured in relation to the project objective in terms of:

• Scope (Project size, goals, requirements)

• Time/Schedule (Task durations, dependencies, critical path)

• Resources (People, Cost, equipment, material) and

• Customer Satisfaction/Quality.
Project Failure

Poor Requirement
Scope Creep
Gathering

Unrealistic Planning and

Resources Issues
Schedule
Project Management ?
Project management is the discipline of planning, organizing, and managing resources to bring about the
successful completion of specific project goals andobjectives.

OR

Project Management is the application of knowledge, skills, tools and techniques to project activities in
order to meet project requirement.(PMBOK)
 Project Manager
Someone responsible for

➢ Planning

• Strategic

➢ Scheduling and coordinating

• Tactical

➢ Working with people

• Art

• Soft skills
What is Procurement?
Procurement is the act of buying goods, services or works from an external source. It is favorable that the goods, services or
works are appropriate and that they are procured at the best possible COST to meet the needs of the acquirer in terms of
quality and quantity, time, and location.

Public & Private Sector often define own processes intended to promote fair and open competition for their business while
minimizing exposure to fraud andcollusion.

Procurement generally involves making buying decisions under conditions of SCRACITY. If good data is available, it is good
practice to make use of economic analysis methods such as COSTBENEFIT & COST UTILITYANALYSIS.
 Procurement Management

➢ Procurement management involves the planning, negotiating, buying, administration, and payments to vendors for
supplies and services provided from outside your project team. They buyer-seller relationship can exist at many levels
on one project.

➢ This involves planning for all the resources - people, goods and services - required by the project. It includes selection of
goods and services, writing and evaluating tenders and estimates and negotiating contracts to obtain goods and services
for the
 Procurement Strategy
Procurement Strategy is aimed at mapping the optimum route to achieving the project objectives. This involves identifying
what is required and investigating the market’s capacity to deliver, while accounting for the associated risks, opportunities
and constraints.

As an example, a procurement strategy will seek to establish:

• what is to be procured

• timelines to be achieved

• budget constraints and cost management

• an analysis of the market capability

• the approach for engaging the market

• implications associated with each potential option.

 What is Difference?
Terms purchasing and procurement interchangeably, but despite their similarities they do have different meanings

• Procurement involves the process of selecting vendors, establishing payment terms, strategic vetting, selection, the
negotiation of contracts and actual purchasing ofgoods.

VS

• Purchasing is a subset of procurement. Purchasing generally refers simply to buying goods or services. Purchasing
often includes receiving and payment aswell
 Project Procurement Management?
Project Procurement Management is about establishing, maintaining and closing relationships with suppliers of goods and
services for the project. The definition of project procurement management from the PMBOKis:

“the processes necessary to purchase or acquire the products, services, or results needed from outside the project team”

Includes the processes necessary to purchase or acquire products, services, or results needed from outside the project
team.

The organization can be either the buyer or seller of the products, services, or results of a project.

Project Procurement Management includes the contract management and change control processes required to develop
and administer contracts or purchase orders issued by authorized project team members.

Also includes administering any contract issued by an outside organization (the buyer) that is acquiring the project from the
performing organization (the seller), and administering

contractual obligations placed on the project team by the contract.

 Project Procurement Management?
• Contract - A mutually binding agreement that obligates the seller to provide the specified products, services, or results;
and obligates the buyer to provide monetary or other valuable consideration

• It is a legal relationship subject to remedy in the courts

• It may be simple or complex, and reflects the simplicity or complexity of the deliverables

• Includes terms and conditions, and other items that the buyer specifies to establish what the seller is to perform or
provide

• May also include items such as the seller’s proposal or marketing literature, and any other documentation that the buyer
is relying upon to establish what the seller is to perform or provide

• Tailoring the contract to the specific needs of the project is the responsibility of the project team

• Also known as agreement, subcontract, or a purchaseorder

• Usually subject to a more extensive approval process, because of its legally binding nature

• Typically organizations have policies and procedures defining signing authority on behalf of the organization