Project

procurement
management

Presented by Group G

Arpita Mitra
Naimish Srivastava
Nitesh Singh
Parshwi Jain
Pooja Ramachandran Singh
Surabhi Prakash
Introduction
Procurement is the process of obtaining goods or services from outside the
organization for the execution of the project and operations.

Can procure raw material, human resources, services, etc

Why procure from outside?

• Access skills and technologies

• Reduce both fixed and recurrent costs
• Allow the client organization to focus on its core business
• Provide flexibility
• Increase accountability

Project procurement management includes the processes necessary to purchase or

acquire products, services, or results needed from outside the project team
Introduction: Tailoring considerations

1 Complexity of procurement

2 Physical locations

3 Governance and regulatory environment

4 Availability of contractors
Steps involved in Procurement management process

Plan Conduct Control Close

Conduct in Control in monitoring

Plan in planning
executing process and control process Final closure
process groups
groups groups
 Plan Conduct Control Close

• Process of documenting various purchase decisions, specifying the approach, and identifying
the potential and quality sellers
• Executed at predefined points in the project life cycle to decide whether there is a need for
acquiring goods and services from outside
• Helps in identifying which resources are to be acquired, from where and when

Inputs Tools Outputs

 Plan Conduct Control Close

Inputs

Project management plan – describes needs, justifications, and scope of the project
Requirements document – information about project requirements such as health, safety, etc
Risk register – risk related information such as identified risks, risk owners, and responses
Activity resource requirements – information on specific needs such as people, equipment, etc
Project schedule – required timelines
Activity cost estimates – compare cost estimate with bids to evaluate rationale
Stakeholder register – project participants and their roles and interests
Enterprise environmental factors – external factors that can influence the process
Organizational process assets – mostly internal factors that can influence the process
 Plan Conduct Control Close

Tools and techniques

Make or buy analysis – to determine whether needs to make inhouse or buy from outside
Expert judgement – evaluating proposal by a multi-specialist team
Market research – examination of industry and specific vendor capabilities
Meetings – to decide on mutually beneficial approach or product
 Plan Conduct Control Close

Output

Procurement management plan – steps from developing procurement documents upto closure
Procurement statement of work – describes procurement item for sellers to see if they can
provide it
Procurement documents – required to solicit responses from sellers such as RFI (request for
information), RFQ (request for quotation), IFB (invitation for bid), etc
Source selection criteria – used for rating sellers and their proposals
Make or buy decisions – conclusions regarding what to be made inhouse and what to be
bought
Change requests – any changes that needs to be made in the project management plan
Project document updates – updates in the required documents such as risk register,
requirements documents, etc
 Plan Conduct Control Close

• Process of obtaining responses from sellers, selecting a seller and awarding a contract
• Element of Executing Process group

Inputs Tools Outputs

 Plan Conduct Control Close

Inputs

Procurement Management Plan – Details of how the procurement will be managed

Procurement Documents
Source selection criteria – Supplier information, capacity, delivery date, cost, life cycle
Seller Proposals
Project Documents – Risk register and risk related contract decisions
Make or buy decisions
Procurement statement of works – Specs, quality, quantity, performance, period, location
Organizational process assets – Qualified seller list and past experiences
 Plan Conduct Control Close

Tools and techniques

Bidder conferences – Meetings, query answering, decisions and understandings as

amendments
Proposal evaluation techniques – Evaluation based on the defined criteria
Independent estimates – Cost estimation for benchmarking
Expert judgment – Specialist team evaluates the proposal
Advertising – Request for proposal/quotation
Analytical techniques – review cost against budget, study past performances
Procurement negotiations – final price and terms negotiation, contract agreement
 Plan Conduct Control Close

Output

Selected sellers – Sellers are judged and draft contract becomes actual contract
Agreements – Contract awarded and payment obligation based on the terms is there
Resource calendars – Quantity availability calendar
Change requests – Request to change the Procurement management plan
Project Management plan updates – Cost and procurement plan
Project document updates – Tracing matrix and risks
 Plan Conduct Control Close

• Managing the procurement relationships, monitoring contract performance, and

making changes as required
• Buyer and seller both administer the procurement contract

Inputs Tools Outputs

 Plan Conduct Control Close

Input

Project Management Plan – Process from procurement documentation through contract

closure
Procurement Documents- Procurement contract awards and the statement of work
Agreements
Approved change requests- Modifications to the terms and conditions of the contract
Work performance Reports – Seller performance documentation- Technical
documentation,
Work Performance Data- evaluate quality standards, costs incurred
 Plan Conduct Control Close

Tools and techniques

Contract Change Control System– Paperwork, tracking systems, dispute resolution

procedure required for modifying procurement
Procurement Performance Reviews– Seller's progress to deliver Project Scope and
quality as per contract
Inspections and audits– Required by the buyer and supported by the seller as per
contract
Performance reporting– Management reviews seller’s effectiveness on achieving
contractual objectives
Payment systems – Processed by the accounts payable system after delivering work
Claims administration– Changes where buyer and seller can’t agree- Need to resolve it
Records Management system– Project Manager manages documentation and records
 Plan Conduct Control Close

Output

Work Performance Information– Basis for identifying current/potential problems

Change requests- Change in Project management plan such as cost baseline, schedule
baseline
Project Management plan updates- Updates to procurement management plan,
cost/schedule baseline
Procurement documentation update- Procurement contract with schedules, requested
unapproved contract changes, and approved change requests
Organisational process assets updates- Payment schedules and requests, Seller
performance evaluation documentation
 Plan Conduct Control Close

• Process of verifying & accepting all work and deliverables

• Includes activities such as finalizing claims, updating records, & archiving
information for future use, etc

Inputs Tools Outputs

Project management plan Procurement audits Closed procurement

Procurement documentation Records management system Asset update in
Procurement negotiations organizational process
Types of contracts
Fixed price or lump sum contracts
• Point of Total Assumption (PTA): cost at which the contractor assumes total responsibility
for each additional dollar of contract cost

Cost-reimbursable contracts:
• involves payment to the seller for different direct and indirect costs incurred
• Cost plus incentive fee, cost plus fixed fee, and cost-plus percentage of costs

Time and material contracts: Mix of both fixed price and cost reimbursable contracts

Unit price contracts: Amount payable per unit of service as per the rate determined
Procurement software capabilities
• Invoicing automation
• Documentation support, including RFPs, purchase orders, etc.
• Contract management
• Request and approval process workflows
• Supplier management
• Integration with budgeting mechanisms
• Supply chain management integration, including order and inventory
management
• Spend/expense management and analytics
Benefits
• Spend analysis
• Savings Tracking
• Sourcing
• Procure to pay
• Minimizes time and errors
• Improved supplier relationships
• Equity and fairness
• Flexibility and Scalability
• Transparency
Risks
• Inaccurate internal need analysis
• Poor vendor selection
• Disorganized vendor management
• Non-compliance and crude contract management processes
• Delays in procurement
• Talent shortages
Thank You!