Project Procurement &Contract Management

Amina Imtiaz
MS Project Management
SAP ID 50295

Define Project Procurement and its importance for project success at least with 5 key
highlights or importance:
Procurement is a strategic process of acquiring or purchasing goods and services to fulfill a specific need.
Therefore, Project Procurement means obtaining or acquiring all of the materials, goods, and services
required by a project.
As we know that projects need resources and those resources need to be acquired from outside sources.
For Example,
Let’s say there is a construction project. The procurement managers acquire all the required and appropriate
materials and goods from outside resources or vendors in the most cost-effective manner. The procurement
manager also ensures the materials arrive on time and within budget.
A well-designed and carefully executed procurement process helps in project success in many ways.
The procurement process has a direct impact on cost savings objectives and enhancing supplier performance,
compliance, and risk management.
when a procurement manager intends to buy materials and goods for the projects from vendors and suppliers
negotiation happens. The main focus of the procurement manager is on cost, time, and quality. A proper
negotiation will be helpful in saving costs and making sure the availability of materials is on time.
There are many risks when acquiring materials from suppliers but they can be reduced by effective risk

management. Risk management is part of the procurement process and there are two types of risks.
Internal risks, for example, human resources, project demand, and procurement processes. External risks, for
example, global events, supplier relationships, political situations, etc. Proper risk management in project
procurement leads to project success. There are many other risks that should be overcome by the procurement
manager like changing work environments, poor supplier performance, unethical sourcing, Price instability,
and inaccurate forecasting. If those risks are managed properly then project success will be guaranteed.
Transparency of the procurement process eliminates any ambiguity and mismanagement by
employees. Every employee is well aware of the position and requirements of the project because of the
transparency in processes.
Another important factor is relationship management with suppliers. The procurement manager
builds a long-term relationships with suppliers. if there is a healthy relationship with the supplier we can
create a win-win situation. The supplier will provide quality materials on time if we fulfill the terms and
conditions mentioned in the contract. Quality materials will lead to quality work and the availability of
materials on time will lead to project success.

What are the best procurement principles for project and organizational success?

Transparency of the procurement processes

Transparency guarantees better record management, strategic purchasing practices, and procurement cost
reduction but for this purpose, we need to have a single procurement platform. By managing purchasing,
buying, invoicing, and vendor monitoring through one platform. Communication and accountability are ensured at
every stage of procurement. Having a single procurement platform helps all members to be able to access records,
purchase orders, and technical specifications at any stage of their journey which will reduce any misunderstanding
and miscalculation.

Value for money

Value for money means the achievement of the desired procurement outcomes at the best possible price.
Value for money is the effective, efficient, and economic use of resources. Providing the best value for
money means combining cost, quality, and sustainability. The effective use of resources will surely help in
project success.

Responsiveness of the procurement process

Responsiveness of the procurement process affects the overall efficiency of the project. Having the ability to
react purposefully to customer demands and changes in the marketplace to maintain or bring competitive
advantage and high procurement performance can be defined as responsiveness. When the procurement
officer reacts with responsiveness to changing trends, requirements of the project, economic conditions, and
other factors it will ultimately lead to project success.
Inventory Management (optimization)

Inventory optimization in the procurement process is crucial. fulfilling the demand of the project and
managing the stock is a challenge. Inventory optimization is one of the best practices of procurement. It
involves the overall planning of the quantities of inventory and how to minimize waste while fulfilling
customers’ needs and expectations. As we know that holding inventory for long periods can cause many
problems that’s why inventory should be managed properly to reduce the risk for the project.

Efficiency and effectiveness

In an organization, a good procurement process ensures higher efficiency in every stage of the procurement
cycle, which in turn shortens sourcing cycles. Effectiveness means maximum utilization of the resources.
Effective and efficient use of resources helps in reducing the lead time of the project and also in cost saving.

Integrated procurement processes

By integrating various procurement processes, bottlenecks are reduced while a smooth, streamlined process
is ensured from start to finish. As a result of integrating our procurement workflows, we will be able to speed
up our procurement process, allowing us to make sure that our procurement strategy is following best
practices. Integration of procurement processes also plays important role in project and organization success.