MELES ZENAWI

LEADERSHIP ACADEMY

WELCOME TO:
PROJECT PROCUREMENT MANAGEMENT
COURSE CODE: PLMT 5024

Instructor:
Dr. Getachew Mohammed
(BA, MA, MBA, PHD)
E-mail-getachewmoh@gmail.com
phone -0985155783
 COURSE CONTENTS
Part one-introduction to procurement fundamental
 Part two-project logistics and supply chain
management
 Part three-the role of strategy in pm procurement
 Part four-planning for the procurement of project
scope
 Part Five-planning for solicitation and tender
management
 Part Six-emerging issues project procurement
 PART-ONE
-Introduction to procurement
fundamental
 1.1. Overview of Project procurement
A. What Is a Project?

• A project is “a temporary endeavor undertaken to create a

unique product, service, or result” (PMBOK® Guide, Fifth
Edition, 2013)
• Projects end when their objectives have been reached or
the project has been terminated
• Projects can be large or small and take a short or long time
to complete
• which is designed to achieve a specific and unique outcome,
which operates within time, scope, cost and quality
constraints and which is often used to introduce change

4
 What is a Project
An activity is defined as a project if it has one or more of
the following characteristics:
• It is a one-time undertaking (not part of routine)
• It has a start and end date
•Temporary Has a definite beginning and end, not an
on-going effort.
Ceases when objectives have been attained.
Team disbanded upon completion.

•Unique The product or service is different in

some way from other products or services.
Product characteristics are progressively
elaborated.
 B. Characteristics of project
– Has a unique purpose.
– Is temporary.
– Is developed using progressive elaboration.
– Requires resources, often from various areas.
– Should have a primary customer or sponsor.
• The project sponsor usually provides the direction and
funding for the project.
– Involves uncertainty.

6
 C. Classification of projects
• Projects range in size, scope, cost
and time from mega international
projects costing millions of dollars
over many years to small domestic
projects with a low budget taking
just a few hours to complete.

7
 Classification of project-Cont’d
i. On the basis of time: short vs. long-duration
ii. On the basis of type of products (project producing goods-
sugar factory project; services-telecommunication projects;
knowledge & info-research projects
iii. Scope-project catering for regional, national or
international
iv. Size (large, medium & small-scale projects)
v. Technology (labor intensive, capital, energy)
vi. Ownership (private, public, joint-venture, cooperative,
NGOs)

8
 D. What is Project Management?
• The application of knowledge, skills, tools and
techniques to project activities to meet project
requirements and objectives
• Key features include:
– Identifying what is needed or to be achieved
(requirements)
– Addressing needs, concerns, and expectations
– Balancing competing constraints [scope, quality,
schedule, budget, resources, and risks]

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 E. Project Management Framework
-Knowledge Areas
• Project Management Framework provides a basic structure
for understanding project management
• The project management framework (PMF) is an approach
that can be applied to all sizes of project.
• The framework is designed to cover different sizes and types
of project
• The full framework should be applied to all major projects.
The framework is based on best practice principles of project
management. 
• The Framework should adopts a life-cycle approach and
separates large projects into different stages
 Objectives
• PMF-To describe:
– The Characteristics of projects
– The Project management
– The Project management process/ cycle
– The Project management knowledge areas
Project Management Framework

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 Nine Project Management Knowledge
Areas
• Knowledge areas describe the key competencies
that project managers must develop
– Four core knowledge areas lead to specific project
objectives (scope, time, cost, and quality)
– Four facilitating knowledge areas are the means
through which the project objectives are achieved
(human resources, communication, risk, and
procurement management
– One knowledge area (project integration
management) affects and is affected by all of the other
knowledge areas
– All knowledge areas are important!

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Project Management Knowledge Areas

Project Integration Management

Scope Management

Time Management

Cost Management

Quality Management
Project Management Knowledge Areas

Human Resource Management

Communications Management

Risk Management

Procurement Management

NB- the focusing area of this course

is Procurement Management
 Conti…
• Project procurement management is one of the nine
Knowledge Areas that acts as a supporting pillar for the 
Project Management Framework.
• Its main purpose is to establish and maintain a healthy
relationship with the vendors providing goods and services
throughout the project lifecycle.
• The relationships with vendors are generally established
and legalized through contracts. It ensures that the
required goods and services are received at the right time
and qualify the project quality standards as stated by the
purchasing organization. This greatly helps in the smooth
execution of the project development process and ensures
that the project meets its objectives
 1.2. Project procurement
A. What is project procurement?
• Projects are not done in isolation. Most require obtaining
other resources to get them done, be that through purchase
or contract.
• Resources (Goods, supplies, and services) are the fuel that
keeps the project development process in motion. If they
are not of good quality or insufficient quantity, your project
might not meet a successful end.
• Thus, for a project manager, it becomes necessary
to establish and maintain relationships with vendors in
order to run a project smoothly. This is where the concept
of project procurement management comes in and helps a
project manager in delivering a successful project.
 What is Procurement?
Procurement is the act of obtaining goods, supplies, and/or
services. Therefore, project procurement is obtaining all of the
resource materials and services that are required for the project
completion.
-What are the Functions?
What to be procured?
-Projects typically procure:
 Goods and materials for the execution of the project
 Parts and components for the project deliverables
 Assets the project needs to carry out its work – these can be
procured for outright ownership or on lease or hire terms
 Services to conduct some elements of the project work
 Contracted staff
 Consultancy or other professional advice
 Conti…
• Procurement, in terms of project management, is
relationship when you need to purchase, rent or
contract with some external resource to meet
your project goal. These relationships, like any
process in the project, need management.

• Managing these relationships means getting the

best quality from the outside vendors employed
by the company to assist in its doing business.
 Conti…
• There are constraints in a relationship with
vendors that revolve around cost and time.
-Procurement management is a way to more
efficiently and productively handle the process
of sourcing, requisitioning, ordering,
expediting, inspecting and reconciliating of
procurement.
Logical order- Procurement management
• Procurement management follows a logical order.
-First, you plan what you need to contract;
- then you plan how you’ll do it.
- Next, you send out your contract requirements to
sellers. They bid for the chance to work with you.
- You pick the best one, and
- then you sign the contract with them.
- Once the work begins, you monitor it to make sure
that the contract is being followed.
- When the work is done, you close out the contract
and fill out all the paperwork.
Decision to purchase from outside
• Before making any purchases, the question of
whether the goods and services are required from
outside vendors must be answered.
• Therefore, weigh the pros and cons of producing the
goods or services in-house and contracting the work
out.
• Is the relationship with outsider companies
necessary and cost-effective in the long-term? Once
an informed decision has been made, only then you
can move forward with confidence that the steps
you’re taking to purchase outside are financially
sound and fit within your timeframe.
 Conti…

• Once an informed decision has been made

and you’re ready to procure goods from a
vendor, project procurement management is
broken down into four processes.
A. Plan Procurement Management
B. Conduct Procurements
C. Control/ Administer Procurements
D. Close Procurements
 B. Procurement Management Benefits
• It helps in identifying the goods and services needed to be
procured for the successful project completion.
• Provides a complete list of Purchase Orders and related issue to
the suppliers.
• It gives agreed timeframes and methods regarding delivery.
• Helps in reviewing and procuring goods and services from
suppliers.
• It validates the supplier contract milestones and approves their
payment.
• It acts as a reference that helps in reviewing the supplier
performance against the contract.
• It helps in identifying and resolving supplier performance issues.
• It acts as a communication channel, that updates the project
status to the upper management.
 C. Why Require Procurement from
Vendors/Outsiders
Organizations require procurement for many
reasons:
• They don’t have the expertise to complete a
certain job.
• They are busy with other responsibilities.
• Procurement is cheaper than doing it yourself.
• They don’t have sufficient work space, energy,
technology, and experience
 D. Project Resource Management
• Project procurement management is directly related with Project
Resource Management
-the project material resources are the main catalysts that drive a project
toward success, thus it becomes very important to properly manage
and utilize these resource.
-Project Resource Management- exclusively deals with properly manage
and utilize the resources involved in a project. And clearly identify and
define the type and amount of resources required. 
-Resource in project management is an umbrella term for physical
resources and team resources that are required in order to complete
the final deliverable. Physical resources include materials, equipment,
facilities, and infrastructure whereas the team resources are human
resources
 E. The Benefits of effective Resource
Management
I. Optimum Utilization of Resources: With a well-organized project
resource management you can use your project resources to their full
potential, maximizing their productivity while making sure that they do
not feel overworked.
II. Increases Revenue: With optimum utilization of resources and balanced
workload, the efficiency of a project increases that in turn results in
increased revenue and success of a project.
III. Helps in Resolving Internal Conflicts: Resource management helps in
resolving any kind of internal issues regarding the project resources
whether be it human resources or physical resources. In project teams,
internal conflicts are very important to resolve; else they may hamper in
the project development.
IV. Avoids Unforeseen Obstacles: A structured resource management will
help you in gaining insights into your resources upfront and help in
planning how to use them, and troubleshoot gaps or hindrances
beforehand.
 Conti…
V. Enhances Employee Satisfaction: Project resource management also helps in
clearly outlining the right compensation and benefits which ensures that the
employees are happy and satisfied.
VI. Improves Employee Performance: Resource Management helps in defining the
project resource requirements and thus recruiting the right resources from the
very beginning of the project.
VII. Helps in Quality Training and Development: The project resource management
team solely focuses on the development and growth of the project team. From
time to time they organize assessments for determining what type of skills
training and programmes are required for the development of the employees.
VIII. Better Control of Budget: With effective resource management, you can easily
avoid “overallocation” or “dependency” of resources which will give you better
control over your project.
IX. Builds Transparency: It builds up a transparent framework from where other
teams of your organization can see and analyze your team’s bandwidth, and
thus help in deciding whether your team is working at their full potential and
are available to take on new projects.
 1.3. Project procurement categories
(Types)
There are mainly four types of procurement
these are:
 Single Procurement.
 Vendor Managed Inventory (VMI)
 Just in time procurement.
 Just in sequence procurement.
 A. Single procurement
What is single procurement?

• single source procurement. Award for supply

of a good or service that can only be
purchased from one supplier because of its
specialized or unique characteristics. Also
called sole sourcing or single sourcing.
What are the advantages of single sourcing?
Single sourcing offers various benefits such as
• Minimal variation in quality of the product or service,
• Better optimization of the supply chain,
• Cost Savings to the project and Lower production costs to venders
• Creating better value for customers and stakeholders.
• streamline training and enables better utilization of resources
• Better Accountability,  
• Channel Visibility,
• Better Efficiency,
• Quicker Delivery,
• Boosts Brand Image,
 B. Vendor Managed Inventory
What does vendor managed inventory mean?
• Vendor Managed Inventory (VMI) is when venders/suppliers
manage their customer’s inventory even it may
occurs through physical counts; where the customer of a
product provides information to a vendor of that product and
the vendor takes full responsibility for maintaining an
agreed inventory of the material, usually at the buyer's
consumption location.
• In traditional inventory management, a buyer makes his or her
own decisions regarding the order size, while in VMI the buyer
shares their inventory data with a vendor (sometimes called
supplier) such that the vendor is the decision-maker who
determines the order size for both. Thus, the vendor is
responsible for the retailer's ordering cost.
 Components of VMI

• Inventory location-In VMI practice, inventory

location depends on the arrangement between
the vendor and the customer.
• Inventory Ownership-vendor is the owner of
inventory at the premises of customer. Invoice is
issued when the items are issued from the stock
• Level of Demand Visibility- Many types of
demand information are shared in VMI Program.
Top 3 Benefits of VMI for Vendors
• VMI gives vendors more control so they can accurately forecast
demand..
• Strengthen Customer-Vendor Relationships
• Reduce Inventory Costs- Since VMI gives vendors control, they can
eliminate wastage,

Top 3 Benefits of VMI for Customers/Projects

• Reduced Inventory Overstocks and Stock Shortages
• Increase Sales by ensuring that products are always in stock and
available
• Less Responsibility- here, the vender is responsible. thus, It lowers
costs, reduces admin work, and allows buyers to focus their efforts on
other areas within their business.
 C. Just in Time Procurement
What is just in time procurement?
• Just-in-time purchasing (JIT purchasing) is a cost
accounting purchasing strategy.
You purchase goods so that they're
delivered just as they're needed to meet
customer demand. ... Less inventory on hand
means you pay less in storage and insurance
costs. JIT also requires less cash in the short term.
• Only ordered and received as they are needed in
the production process. The goal of this method
is to reduce costs by saving money on overhead
inventory expenses.
 Just-in-Time (JIT) Purchase Advantages
JIT purchase systems have several advantages over
traditional models.
• Production runs are short, which means that manufacturers
can quickly move from one product to another.
• Reduces costs by minimizing warehouse needs.
• Possible to spend less money on raw materials 
• Areas devoted to storing inventory are now free to be used
in production or for other needs.
• Less waste and lower inventory costs result in increased
profits for the organization.
 D. Just in sequence procurement
• Just in sequence (JIS) is an inventory strategy that matches 
just in time (JIT) and complete fit in sequence with variation of
assembly line production. Components and parts arrive at a
production line right in time as scheduled before they get assembled.
Feedback from the manufacturing line is used to coordinate
transportation to and from the process area. When implemented
successfully, JIS improves a company's return on assets (ROA),
without loss in flexibility, quality or overall efficiency. JIS is mainly
implemented with automobile manufacturing.
• The sequencing allows companies to eliminate supply buffers as soon
as the quantity in component part buffers necessary is reduced to a
minimum. Just In Sequence processes are typically implemented only
after the company has achieved a high degree of competency on Just
In Time processes
What is the difference between JIT and JIS?

• Just In Time simply refers to delivering parts or

materials to manufacturers at the time they
are needed for assembly. The primary goal of
Just in Time is to produce goods with 
minimal waste including time, resources, and
materials; while, Just In Sequence- parts are
delivered at the scheduled time and in the 
exact order needed for assembly
Tea-Break
 1.4. E-procurement
• cartel In its broadest sense, E-procurement involves
electronic data transfers to support operational,
tactical and strategic procurement.
• It can be define as the business- to- business purchase
and sale of supplies and service over the internet
• From the 1960s until the mid 1990s, e-procurement
primarily took the form of electronic data interchange
(EDI).
• Nowadays, e-procurement is often supported by
internet technologies and is becoming more prevalent.
E-procurement
E-procurement
 Historical development of E-procurement
The historic context is demonstrated in the chart below:
E-procurement tools and applications
Some E-procurement tools and applications include:
Electronic systems to support traditional procurement
• EDI (electronic data interchange)
• ERP systems
internet as a support or complement to traditional
procurement
• electronic mail (e-mail)
• web enabled EDI
• extensible markup language (XML)
• world wide web (www)
internet tools and platforms that replace traditional
procurement
I. Electronic systems to support traditional procurement

• These include mainframes and personal computers (PC), Electronic Data

Interchange (EDI) and Enterprise Resource Planning (ERP).
A. EDI (Electronic Data Interchange)
• EDI is an application whereby electronic messages can be exchanged
between computer programs of two separate organizations.  Some features
of EDI include:
• Messages are exchanged in groups, known as batches.
• Messages can automatically be sent, transmitted and stored between
computers without retyping or keying data.
B. ERP systems
• ERP systems are management information systems that integrate and
automate many of the business practices associated with the operations of
a company or organization. ERP systems typically handle the
manufacturing, logistics, distribution, inventory, shipping, invoicing, and
accounting for a company or organization. ERPs aid in the control of many
business activities, like sales, delivery, billing, production, procurement,
inventory management, and human resources management.
 II. Internet as a support or complement to
traditional procurement
There are various types of internet based applications that serve different purposes.
Some well-known applications that use the internet are described below:
A. Electronic mail (e-mail)
• Email is an Internet based application through which electronic messages are
exchanged between people.
B. Web enabled EDI
• web enabled EdI is like traditional EDI, but run on the Internet; also known as EDI-INT.
C. Extensible Markup Language (XML)
• XML is used to allow for the easy interchange of documents on the World Wide Web.
D. World Wide Web (WWW)
• The WWW is a major service on the Internet. The World Wide Web is made up of
"Web servers" that store and disseminate "Web pages," which are "rich" documents
that contain text, graphics, animations and videos to anyone with an Internet
connection.
 Internet tools and platforms that replace
traditional procurement
(applications of e-procurement)
Some internet tools and platforms that
replace traditional procurement include:
• E-sourcing
• E-tendering
• E- auctioning
• E-ordering and web-based ERP
• E-information
 Applications of e-procurement
E-sourcing
• Finding potential new suppliers using the
internet during the information gathering step
of the procurement process.
E-tendering
• The process of screening suppliers and
sending suppliers requests for information
(RFI) and requests for price (RFP)
 Applications of e-procurement
E-informing
• Qualification of suppliers for suitability. It doesn’t involve
transaction but instead handles information about the
supplier’s quality financial status or delivery capabilities.
E-reverse auctions
• Enable the purchasing company to buy goods and services
that have the lowest price or combination of lowest price and
other conditions via internet technology.
Web-based ERP
• These involve the purchase and supply of products which are
the core of the most e-procurement applications. The software
used manages the process of creating and approving
purchasing requisitions, placing orders and receiving goods or
service ordered.
 1.5. Project types and their procurement
needs
• What distinguishes project procurement from other forms of
procurement are; in project procurement, there is the series
of procurement activities carried out during the execution of
a project, some interdependent and some not. Project
objectives are predetermined primarily in the project
proposal, and there are a corresponding set of procurement
activities undertaken in accordance with the project
procurement plan over a period of time to achieve the
project objectives
• For our purposes project procurement will be classified,
based on the sector served, as public sector project
procurement and private sector project procurement.
 A. Public Sector Project Procurement
• It supports projects funded and developed to meet the
objectives of government, including the provision of
public goods and services to the population.
• These public sector projects (building of roads, bridges,
dams, electric power plants, hospitals, schools, ferries,
etc.) can be donor funded, government funded, a
combination of both. It is bound by national or
supranational regulation and legislation
• There is transparency and openness to bidders, fair
competition, reasonable timescales, and disclosure of
certain information.
 B. Private Sector Project Procurement

While the rules of public and private sector projects may differ,
the fundamentals are the same.
Private sector project procurement focuses on procurement
activities that satisfy the requirements of projects done for
private sector entities, such as small, medium or large businesses
and corporations, and which are primarily profit-making
(monetary benefit of the owners or shareholders of the
business).
• The private sector is freer to buy from whomever they choose,
and to let contracts following any process they wish. However,
many of the best commercial organizations choose to apply
procurement processes that are every bit as rigorous as those of
their corresponding public sector colleagues.
 Internal and External Providers
• Projects may procure goods and services from either a
within their own organization, or from an external
provider.
• For external providers, the procurement team will need
to enter into a legal contract. Depending on the parties,
it may be either the commissioner (project) or the
provider who prepares the contract.
• Where the provider is a part of the same organization,
provision is often governed by a service-level agreement
(SLA). These can be anything from a short
memorandum, to a highly detailed document that is
every bit as complex and rigorous as a contract.
Any Questions?

Advancing Professional Construction and

Program Management Worldwide
56
 PART-Two
-Project Logistics and Supply
Chain Management
 What Is A Supply Chain?
• The system of suppliers, manufacturers,
transportation, distributors, and vendors that
exists to transform raw materials to final
products and supply those products to
customers.
• That portion of the supply chain which comes
after the manufacturing process is sometimes
known as the distribution network.
 What is a Supply Chain?
A supply chain consists of the flow of products and
services from:
– Raw materials manufacturers
– Intermediate products manufacturers
– End product manufacturers
– Wholesalers and distributors and
– Retailers

Connected by transportation and storage activities,

and

Integrated through information, planning, and

integration activities
What is a Supply Chain?

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 SUPPLY CHAIN
"a channel of distribution beginning with the supplier of materials or
components, extending through a manufacturing process to the distributor
and retailer, and ultimately to the consumer" (dictionary.com)
The interconnected set of business procedures and business partners that
manage the flow of goods and information from the point of design to the
delivery of the product or service to the end customer (City University, London)
SUPPLY CHAIN COMPONENTS
SUPPLIERS
Source of raw materials, component parts, semi-manufactured products and
unfinished or non-consumable products that occurs early in the supply chain.

MANUFACTURERS
Makers of final products. Manufacturers perform the task of final assembly or
product integration.

DISTRIBUTORS
Responsible for managing, storing and handling of products for organizations that
don’t want to carry entire variety of products in their own facilities.

LOGISTICS SERVICE PROVIDERS

Commercial provider of individual or multiple integrated service for other entities in
the supply chain e.g. transportation management, value-added warehousing and
distribution and information technology based services

RETAILERS
The entity that buys from the manufacturer and sell to the final customer.

CONSUMERS
People who go into the stores and buy and consume the product
 Types of Supply Chains - Examples
Different types of organizations require different types of supply chains – this
can be shown through a matrix linking uncertainty of demand with
uncertainty of supply
 Efficient Supply Chain (functional products and stable process): e.g. petrol,
diesel, cement, groceries
 Agile Supply Chain (innovative products with uncertain demand and
evolving processes): innovative high-tech products, e.g. “smart” mobile
phones
 Risk-hedging Supply Chain (functional products with high supply
uncertainty due to changing processes): seasonal products
 Responsive Supply Chain (innovative products with high demand
uncertainty but stable supply processes): e.g. fashion goods and music

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12/09/2020
 Traditional Scope of the Supply Chain
Business logistics

Physical supply Physical distribution

(Materials management)

Sources of Plants/
End Customers
supply operations
• Transportation • Transportation
• Inventory maintenance • Inventory maintenance
• Order processing • Order processing
• Acquisition • Product scheduling
• Protective packaging • Protective packaging
• Warehousing • Warehousing
• Materials handling • Materials handling
• Information maintenance • Information maintenance

Internal supply chain

 Key Activities/Processes
• Primary
– Setting customer service goals
– Transportation
– Inventory management
– Location
• Secondary, or supporting
– Warehousing
– Materials handling
– Acquisition (purchasing)
– Protective packaging
– Product scheduling
– Order processing
 Project Supply-chain management
• The planning and management of all activities involved in
sourcing and procurement, conversion, and all logistics
management activities
• Supply-chain management is the integration of business
processes from end user through original suppliers, that
provide products, services, and information that add value
for customers.
– Supply-chain management connects a
supply side with its demand side.
 PROJECT SUPPLY CHAIN
PURCHASING/Transation
MANAGEMENT ACTIVITIES INVENTORY MGMT.
Activities relating to the procurement
of all necessary goods and services
required to the project. Involves all
components.
ORDER PROCESSING MGT
The function needed to fulfill users’
orders, such as order receipt, order
picking and order shipment. Involves
suppliers
FORECASTING
The process of predicting the user’s
demand based on expected future
work and actual past works.
PROJECT PLANNING
The process of scheduling project
works lines to meet the needs
determined by forecasting. It also
includes ensuring that needed raw
materials and supplies are on hand
for project work.
The process entails monitoring of
stock levels, proper positioning of
stock and active tracking of product
age and availability.
WAREHOUSING
The holding of goods with focus on
moving resources/ product into,
through and out of warehouses in a
timely manner.
TRANSPORTATION
The movement of products from one
suplier to another using single
(motor, rail, water, air, pipeline) or
combined modes of transport
(intermodal).
PURCHASING SERVICE
All purchase or post purchase
activities that occur between the
buyer and seller such as order status
and post purchase support.
• Transaction and exchange 5
• Customers/ Consumers 4
• Integration (backward and forward) 3
• Legal entity/ Ownership transferring 2
• Utility/Value addition 1
Important terms in SCM
 What is logistics?
One quite widely accepted view shows the relationship as shows:
Lately, a more scientific definition was used :

Logistics = Supply + Materials management +

Distribution
 Logistics is the . . .
 “process of planning, implementing, and controlling
the efficient, effective flow and storage of goods,
services, and related information from point of origin
to point of consumption for the purpose of conforming
to customer requirements.“
What is Project logistics management?

-Is that part of supply chain management that

plans, implements and control the efficient,
effective forward and reverse flow and storage of
goods, services, Inputs, resources and related
information between the point of origin and the
point of utilization in order to meet customers
requirements.
 Logistics versus supply chain management?

Logistics Defined

Logistics is the process of planning, implementing and controlling the efficient,

cost-effective flow and storage of raw materials, in-process inventory, finished

goods and related information from the point of origin to point of consumption for

the purpose of conforming to customer requirements.

Supply Chain Management

Defined

SCM is the integration of all activities associated with the flow and

transformation of goods from raw materials through to end user, as well as

information flows, through improved supply chain relationships, to achieve a

sustainable competitive advantage

 The Logistics/SCM Mission
• Getting the right inputs, goods or services to the right place, at
the right time, and in the desired condition at the lowest cost
and highest return on investment.

Effective SCM – 7 Rs
• Rightproduct
• Right quantity
• Right condition
• Right place
• Right time
• Right customer
• Right cost
 Utility/Value
• Product / Service Utility
– Possession Utility - the value or usefulness that
comes from a customer being able to take
possession of a product
– Form Utility - in a form that can be used by the
customer and is of value to the customer
– Place Utility - available where they are needed by
customers
– Time Utility - available when they are needed by
customers
Logistics obviously help time and place utility
 Project Logistics Decisions

1. Order processing
– key is to reduce the elapsed time between order receipt,
fulfillment and payment
2. Warehousing
– key is to reduce total warehousing costs without incurring
stock-outs
3. Inventory
– higher levels of service require greater inventory and/or
better logistics management
4. Transportation
 Transportation in project
Logistics

Airways

Water

Pipelines

Motor Carriers

Railroads
Transportation Mode Choice

Factors to be considered
 Cost
 Transit time
 Reliability
 Capability
 Accessibility
 Traceability
Criteria for Ranking Modes
of Transportation
 Greening the Supply Chain:
The Reprocessing Flow

 The Reprocessing Flow is a critical part of

“Greening the Supply Chain”

 The US Environmental Protection Agency (EPA) originally came up with

the concept of the “4Rs of waste management”: Reduce, Reuse,
Reallocate & Recycle

 However, the growth and ongoing development of Remanufacturing

must also be recognized as an important contributor to the greening of
the supply chain
-it includes Reduce, Reuse, Reallocate, Recycle & Remanufacture

12/09/2020 78
 Greening the Supply Chain:
The 5 R’s of Reprocessing
REDUCE: The Reduction in use of materials,
e.g. reduce solid waste, reduce packaging, etc.

REUSE: The Re-use of materials,

e.g. returnable boxes, reusable packaging

RE-ALLOCATE: Extending the use of waste,

e.g. by - products used for another purpose

RECYCLE: Collection and separation of material,

e.g. waste paper, plastics, aluminium beverage cans

REMANUFACTURE: Resource regeneration,

e.g. reconditioning single-use cameras, printer cartridges
12/09/2020 79
 Fluctuations in Supply Chain

 The behavior of supply chain that are subjected to

demand fluctuations has been described as Bullwhip
Effect and occurs when there is a lack of
synchronization in supply chain members.
 The factors that increase the variability in the supply
chain include:
o A time lag between ordering materials and getting them
delivered;
o Leading to over-ordering in advance to ensure sufficient stock
are available to meet project’s requirements;
o Use of order batching
o Price fluctuation such as price cuts and quantity discount
 Fluctuations in Supply Chain Cont’d

 There are some commonly agreeable measures

to handle the bullwhip effect:
• Improve information sharing through EDI (electronic
data interchange), POS (point of sale systems), and web-
based IS (information systems);
• Reducing batch ordering;
• Coordinating capacity and production planning;
• Apply appropriate safety stocks to insulate the oscillation;
• Reducing inventory level through JIT (just in time), VMI
(vendor managed inventory), QR (quick response).
Project Supply Chain Challenges
• Typical pain points in project Supply Chain:
– Unreliable resource forecasting,
– Project dalliance and poor scope management
– Bad inventory tracking,
– Weak (cold) procurement and storage capabilities,
– Lack of qualified staff,
– Wrong storage conditions/ inconvenience
– No waste treatment,
– No or unreliable returns management,
– Theft and counterfeiting
– In most case wholesalers do not provide last mile
distribution; many handovers
– Poor inspection and surveillance of rules and regulations
– Intransparent Project performance and poor
communication
 INTEGRATED SUPPLY CHAIN MANAGEMENT
An integrated supply chain management is the coordination and efficient
management of information, material and financial flow through improved
relationships at all stages of supply chain.
- In project works, a supply chain is made from all parties that participate in
the completion of a project purchase, like the project resources, raw
materials, resource utilization, shipping of the project requirements and
facilitating services. Therefore, it needs a close collaboration within a
supply chain participants
Supply Chain Integration
Supply Chain Integration- when supply chain participants work
for common goals. Requires intra-firm functional integration.
Based on efforts to change attitudes & adversarial
relationships

Links internally performed work into a

Internal seamless process that stretches across
Operations departmental and/or functional boundaries,
Integration with the goal of satisfying the projects’
requirements

A competency that enables the projects

Supplier to create long-lasting, distinctive, value-
Integration added offerings from those suppliers in
supply chain management
 The Four Interrelated Flows in SCM
1. Product & Service Flows:
The value-adding flow, as products & services
progress along the supply chain from point of
origin to point of final use or consumption.
Generally flow downstream the chain but also upstream (e.g.
reprocessing)

2. Information Flows:
The bi-directional flows of information throughout the chain – particularly
on customer demand which “pulls” the supply chain, but also on supply
conditions & eventual disruptions

3. Funds Flows:
The flows of funds, mainly upstream (payments for goods
& services received) but also in some cases downstream

4. Expertise & Technology Flows:

Sharing in areas such as IT systems, SCM expertise, product design,
marketing, developing joint SC performance indicators, etc. 86
 Supply Chain Integration
• There are different levels of projects’ supply chain
integration. The initial step in this integration shall include
choosing precise merchants to supply certain project
inputs and ensuring compliance for them for supplying
certain amount of inputs within the year at a set cost.
• If we move to a higher level, the next step would be to
integrate the project with the supplying companies more
closely. The supplier company may construct a plant close
to the project and may also share project work/
management.
• Further higher level is referred as vertical integration. This
level starts when the supply chain of a project is actually
owned/managed/controlled by the project itself.
 Project Supply Chain and Distribution
 Vertical Integration

Vertical Integration Examples of Vertical Integration

Raw material
(suppliers) Iron ore Silicon Farming

Backward
integration Steel

Current Integrated
transformation Automobiles Flour milling
circuits

Distribution
Forward integration systems Circuit boards

Finished goods Computers

(customers) Dealers Watches Baked goods
Calculators
 Types of Integration in SCM
Backward Integration:
-A project Acquiring or partnering with one or more of its
suppliers . This sort of Integration is most common in project
SCM

Forward Integration:
-A project Acquiring or partnering with one or more of its
Distributers, if any

Horizontal Integration:
-A project Acquiring or partnering with one or more of its
similar Projects , if any
 BENEFITS OF AN INTEGRATED SUPPLY CHAIN
IMPROVED PROJECT SUCCESS, SERVICE & VALUE ADDED
Increased inventory availability, better on-time
delivery performances, higher order fill rates and
lower costs of project.

Finance & capital use will be maximized through

Better USE OF
FINANCE & partnerships and joint planning that can decrease
CAPITAL stock levels whilst maintaining service.
Asset utilization can be maximized by increasing
UTILIZED
ASSET inventory turns and closely aligning supply with
demand
INCREASED Properly manage time, Shorter lead-times, better
QUALITY & productivity better quality can be enhanced
EFFICIENCY through increased visibility resultant from
information sharing among supply chain partners
 Outsourcing
Outsourcing: moving some of the projects internal
activities and decisions to outside providers
• Why do Projects outsource?
A. Reasons Related to the projects Nature
- Focus on Specialization
- Focus on core capabilities
- Transform the project organization
- Increase flexibility
B. Operational reasons
- Improve performance (quality, productivity, etc.)
- Obtain expertise, skill, and technology
- Risk management
Why do Projects outsource?

C. Financial reasons
- Transfer assets to the outsourcing partner.
- Free up resources for some other project Works.

D. Cost driven reasons

- Transform fixed costs into variable costs.
- Reduce costs through outsourcing partner efficiencies.

E. Return driven reasons

- Expand and Success with the help of another organization.
- Obtain access to outsourcing partner’s network.
93
 PART THREE:
The role of strategy in PM Procurement
 3.1.Project Procurement Process:
(inputs, tools, and outputs)

• “Project Procurement Process includes the

steps required to purchase or acquire the
products, services, or results needed from
outside the project team to perform the
project work”
• This chapter assumes that the Buyer is the
project performing organization and the seller
is external to the performing organization.
 Project Procurement Process
• Mostly all projects will need to acquire some
resources from outside. Thus, not
understanding the procurement process and
different ways to contract could result in
unnecessary risk for the project
 Project Procurement Process

• Mostly, the process is common and is equally applicable

to formal agreements entered into with other units of
the performing organization. When informal agreements
are involved, the processes can be considered as casual.
• In this process, the steps interact with each other.
Although the processes are presented hereunder as
discrete elements with well-defined interfaces, in
practice they may overlap and interact in ways not
detailed here.
 Timely Determination of Availability of Funds and
Requirements Land & Statutory Clearances
(Goods/Works/ Services) wherever required
Public Project Procurement Mgt
Payment
Finalization of Technical
Specification & Commercial
Conditions
Invoice Verification
Plan Mode of Bidding
-Open Tendering
-Limited Tendering
Acceptance of -Nomination
Goods/works/services Procurement
Cycle
Processes

Plan Type of Bidding

-Single Stage Single Envelope
-Single Stage Two Envelope
-Two Stage
Contract Monitoring/Follow up

Bid announcement/
Submission/Receipt
-e-bids
-paper bids
-Award to Lowest /contract
Evaluated Responsive Bidder Bid Evaluation
-Contract Signing -General Compliance to Bid Conditions
- Performance Guarantee Submission -Qualification of Bidder
-Technical & Commercial Compliance
-Capacity & Capability of Bidder
-Price
 How Do We Manage Procurement?
Project Procurement Mgt Processes
• Four processes
A. Plan Procurements
B. Conduct Procurements
C. Administer Procurements
D. Close Procurements

Plan Conduct Administer Close

Procurements Procurements Procurements Procurement
s
 A. Procurement Planning
• Procurement planning involves identifying
which project needs can be best met by using
products or services outside the organization.
It includes deciding
– whether to procure
– how to procure
– what to procure
– how much to procure
– when to procure

100
 Plan Procurements
-Scope statement
-Product
Tools & Techniques
Procurement
description/Requirements  Make or Buy Analysis Management Plan
-Procurement resources  Expert Judgment
-Activity Resource  Contract Types Procurement
Requirements Inputs Statements of Work
Outputs
Project Schedule
Make or Buy Decisions
Risk Register
-Activity Cost Estimates
Procurement
-Environmental Documents and
Factors/market conditions Selection Criteria
Organizational
considerations

Conduct Administer Close

Plan
Procurements Procurements Procurements Procurements
 i. Inputs to Procurement Planning
• 1. Scope statement-describes the current project
boundaries/activities
• 2. Product description- describes the ultimate end-product of
the project
• 3. Procurement resources /activities resources requirement
– explains availability and requirement of resources.
• 4. Market conditions- available in the marketplace, from
whom, and under what terms and conditions.
• 5. Project duration and Schedule-the time required and plan
ii. Tools/Techniques for Procure Planning
• Make-or-buy analysis: it is indirect as well as
direct cost- benefit analysis to determine
whether a particular product or service should
be made inside or purchased from someone else.
Often involves financial analysis
• Expert Judgment-individuals with specialized
knowledge or training
• Contract type selection. Different types of
contracts are more or less appropriate for
different types of purchases
iii. Outputs from Procurement Planning
• Procurement Management Plan-describe how the
remaining procurement processes will be managed
• Statement(s) of work-describes the work required
from sellers and the procurement items in sufficient
detail to allow prospective sellers to determine if
they are capable of providing the item
• Prepare the Procurement Documents and
Selection Criteria that are important be well guided
• Make or Buy Decisions
 B. Conducting Procurements
• Deciding whom to ask to do the work
- it may identify potential sources
• Sending appropriate documentation to potential
Prospective sellers
• Obtaining quotations, bids, offers, or proposals as
appropriate
• Source Selection—choosing from among
potential sellers.
• Awarding a contract

105
 Conduct Procurements
Tools & Techniques
Procurement  Bidder Conference
Management Plan Outputs
 Proposal Evaluation Techniques
Procurement Documents Inputs Proposal and Selected
 Independent Estimates Seller
Source Selection Criteria
 Expert Judgment Procurement Contract
Qualified Sellers List
Award
Project Documents  Advertising
 Internet Search Resource Calendars
Make-or-Buy Decisions
 Procurement Negotiations Change Requests
-Procurement Statement
Project Management
of Work
Plan Updates
Organizational Process
Project Document
Assets
Updates

Plan Administer Close

Conduct
Procurements Procurements Procurements Procurements
 i. Inputs to Conducting Procurements
• Procurement Management Plan - Provides the
required input in how the procurement process will be
managed, how procurement documentation through
contract closure
• Procurement/project documents ( example-Risk
register)
• Source selection criteria - Criteria can include
information on the supplier's required capabilities,
capacity, delivery dates, product cost, life-cycle cost,
technical expertise, and the approach to the contract
• Procurement Statement of Work -like Specifications -
Quantity desired - Quality levels
 ii. Tools/Techniques for Conduct Procurements

• Bidder conferences- meetings with prospective sellers

prior to preparation of a proposal to have a clear,
common understanding of the procurement.
• Contract negotiation- clarification and mutual
agreement on the structure and requirements of the
contract prior to the signing of the contract
Independent estimates-the procuring organization may
prepare its own estimates as a check on proposed pricing
Expert Judgment, Advertising, Internet Search
iii. Outputs from Conduct Procurements
• Proposals- seller-prepared documents that describe the
seller’s ability and willingness to provide the requested
product
• Select and Contract award- a mutually binding
agreement which obligates the seller to provide the
specified product and obligates the buyer to pay for it
• Change Requests, Plan and Document Updates- Changes
to any part of the project need to be reviewed, approved,
and documented; and evaluation of any change should
include an impact analysis and modification
 C. Contract Administration
• Ensures that the seller’s performance meets
contractual requirements
• Contracts are legal relationships, so it is
important that legal and contracting
professionals be involved in writing and
administering contracts
• includes application of appropriate contractual
relationship(s) and integration
• Many project managers ignore contractual
issues, which can result in serious problems
• It is critical to watch for constructive change orders
110
 Administer Procurements
Tools & Techniques
Procurement  Contract change control system
Documents
 Procurement performance
Project review Procurement
Management Plan Documentation
 Inspections and audits
Contract Inputs  Performance reporting
Outputs Correspondence
Performance  Payment systems
Reports Contract changes
 Claims administration
Approved Change
 Records management system Payment requests
Requests
Work Performance
Information

Plan Conduct Administer Close

Procurements Procurements Procurements Procurements
i. Inputs to Contract Administration
• Performance report and information- the
seller’s work results—which deliverables have
been completed and which have not, to what
extent are quality standards being met
• Seller invoices. The seller must submit
invoices from time to time to request payment
for work performed.
• Procurement Documents
• Contract, change request
 ii. Tools/Techniques for Contract Admin
• Contract change control system-defines the process by
which the contract may be modified. It includes the
paperwork, tracking systems, dispute resolution
procedures
• Performance reporting- provides information about how
effectively the seller is achieving the contractual objectives.
• Payment system- include appropriate reviews and
approvals by the project management team
Inspections and audits
Claims administration
Records management system
iii. Outputs from Contract Administration
• Correspondence- certain aspects of buyer/seller
communications, such as warnings of
unsatisfactory performance
• Contract changes-the project plan or other
relevant documentation is updated as
appropriate.
• Payment requests- Requesting payment for well
performed works
• Procurement Documentation
 D. Closing Procurements
• The project team should do the followings:
 product verification to determine if all work was completed
correctly and satisfactorily
– administrative activities to update records to reflect final
results
 Archive/record information for future use
• The contract itself should include requirements for formal
acceptance and closure
• Contract close-out includes
-Procurement audits identify lessons learned in the procurement
process

115
 Contract Closure
Inputs Tools & Techniques Outputs
Project procurement  Procurement audits Closed Procurements
Management Plan
 Negotiated Settlements
Procurement  Records management system Organizational Process
Documentation Assets Updates

Plan Conduct Administer

Close
Procurements Procurements Procurements Procurements
 i. Inputs to Contract Close-out
• Contract documentation- any contract-related
inspections,
• Correspondence, Contract changes, Payment
requests

ii. Tools and Techniques for Contract Close-out

- Procurement audits-a structured review of the
process, Implementation, output, and
product/services
- Records management system
 iii. Outputs from Contract Close-out

• Contract file- A complete set of indexed records

should be prepared for inclusion with the final
project records
• Formal acceptance and closure- The person or
organization responsible for contract
administration should provide the seller with
formal written notice that the contract has been
completed. Requirements for formal acceptance
and closure are usually defined in the contract.
 Contract Management - Introduction
• World Bank regards contract management as:
• CM- is a systematic and efficient planning,
execution, monitoring, and evaluation of contracts
• an approach to optimize performance
• an integral part of managing risks
• a method ensure that both parties fulfill their
contractual obligations
• a process to deliver the ultimate goal of achieving
Value for Money (VfM)
• a key driver to achieving results on the ground
 Introduction
• Successful contract management covers the period from the
beginning of a procurement until after a contract ends. The
receipt of goods and services at the right price, quality, and on
time as well as proper compensation of the contractor is the goal
of a successful procurement.
• However, poor contract management often results in end-user
frustration, reluctance to use new vendors, agency acceptance of
poor quality service or goods, increased costs due to lack of
quality or overpayment to contractors, lack of contractor
accountability, and generally poor contractor performance.
• A good contract is a means to an end. Simply enforcing the
contract, however, does not necessarily result in a successful
relationship with the contractor. Success should instead be
measured by the effectiveness of the program that the contract
supports.
 DEVELOPING SPECIFICATIONS -
SPECIFY THE NEED

• Design Specifications:
 A good contract describes:
- the design Specifications of goods such as dimensions,
physical requirements, materials, etc; and the Price, times
to deliver etc. It determines exactly what the contractor
must provide.
- The Performance Specifications of goods that is
oriented to results and function.
– A good contract requires an ability to interpret the Scope
of the Work that can determines the contract’s
performance.
 WHAT ARE CONTRACT RISKS?
• What is risk? A negative deviation from our
expectation
• Proposal Risk –
– How well is the good/service described? Do the terms and
conditions adequately and understandably described Make
sure that ambiguous language is avoided..
• Surety/Liability Risk –
– Requirements of contractor (licensing, certification, etc.),
bonds, insurance, data privacy, warranties, etc.
• Schedule Risk –
– Is timely delivery ensured?
 WHAT ARE CONTRACT RISKS?

• Contractual Risk –
– Are procedures for dispute, break and change
order /modification procedures clearly outlined?
• Performance Risk –
– Is the definition of agency acceptance clearly
defined?
• Price Risk –
– Do payment terms fit the contract and minimize
risk? (progress or milestone payments as
applicable, etc.)
 Types of Contracts
A. Fixed price or lump sum
B. Cost reimbursable
C. Time and material contracts: hybrid of both fixed price and cost reimbursable, often
used by consultants and used to staff augmentation, acquisition of experts, and any
outside support when a precise statement of work cannot be quickly prescribed.
D. Unit price contracts: require the buyer to pay the seller a predetermined amount per
unit of service

 A. Fixed price or lump sum

◦ involve a fixed total price for a well-defined product or service
-Contractor performs the work for negotiated value.
◦ If estimated target cost is low, profit for seller may be low or even nil.
◦ Lowest risk to the buyer, highest risk to the seller
◦ Usually requires a long period for preparation of bids; also buyers include many contingency
provisions to protect their interests

 Fixed price incentive fee: ◦ Allows for adjustment of the total profit depends on the final
total cost at the completion of the duties. ◦ There is an incentive to the seller to decrease
costs. 125
 B. Cost Reimbursable Contracts
• Cost Reimbursable Contracts-involve payment to the seller for
direct and indirect costs. Thus, it require that the seller’s books be
audited. The followings are types of Cost Reimbursable Contracts
I. Cost plus incentive fee (CPIF): The seller is reimbursed for all allowable
costs for performing the contract work, and receives an incentive fee
based upon achieving certain performance objectives as set forth in the
contract.
-The Same as cost plus fixed fee, except that these have provision for
adjustment of the fee.
II. Cost plus fixed fee (CPFF): the buyer pays the seller for allowable
performance costs plus a fixed fee payment.
-Here, the Cost may vary, but the fee remains the same; it provides incentive
to the contractor for early completion of the job
III. Cost plus percentage of costs (CPPC): the buyer pays the seller for
allowable performance costs plus a predetermined percentage based on
total costs.
-Not preferred, because there is no effort by the seller to control costs ◦ Is
illegal in several companies and countries
126
 Contract Types Versus Risk

Copyright Course Technology

127
2001
 Procurement Strategy (PS)
Procurement strategy' refers to the process
used to take a project from its early planning
phases to completion and occupation by the
users

PS is a Policy requirement

 Procurement Strategy (PS)
What is the PS?

 The PS describes how the project procurement activities

support the development objectives of the project
 The scope and details of the PS take into account, and are
proportional to, the relevant market, scale, risk, value, and
country circumstances
 The Procurement Plan is based on the PS and sets out the
selection methods to be followed by the Beneficiary.
 What is the PS?
-PS is a structured analytical approach designed to support
procurement planning

-Framework to research and analyze information and

data to make decisions on what constitutes a fit for
purpose procurement approach.

-The right choices in the Procurement Strategy and Plan

will lead to Value for Money and Fitness for Purpose.
 Outcome analysis in PS

The outcome of the analysis in the PS is:

a)Requirements ( Specifications);
b)Contract Strategy;
c)Selection Methods;
d)Evaluation Methods
 Contents of the PS

Procurement Approach
A. Operating A. Type of requirements
B. Market Approach
Assessments

Environment
B. Beneficiary C. Selection Method
capacity and track D. Contract Type
record E. Evaluation Criteria
C. Market F. Contract Management Plan
Assessments

A.Beneficiary capability
 What are the Beneficiary’s capabilities for procurement and contract management and
how can they strengthened
 From Previous experience / track record in implementing similar projects / procurement

B. Operating environment
 What is the operating environment –Governance, Economic, Sustainability,
Technological, etc.

c. Market assessment
 What is the nature of the market and how will the best suppliers be motivated to bid
 How do other buyers achieve value for money
Procurement Approach
A.Types of Requirements
 Conformance requirements
 Performance requirements

B. Market Approach
 Local or international
 Open, restricted or direct sourcing

C. Contract Type
 Fixed price or lump sum
 Cost reimbursable
 Time and material contracts
 Unit price contracts

D. Contract Management
 Contract management plan
 Risk management, monitoring of costs, key
performance indicators
 milestone/objectives and deliverables
 The Procurement Strategy covers the following areas

Identification of the specific project needs

Assessment of the operating context and its potential impact on
the procurement

Assessment of the implementing capacity, resources and

previous experience in procuring these types of activities

Assessment of the adequacy, behavior and capabilities of the

market to respond to the procurement

Justification of the proposed procurement arrangements based

on market analysis, risk and operating context and the project’s
circumstances
Questions
137
 PART FOUR:
Procurement Teams and
Performance
 Introduction-Teams
TEAM- two or more people with common
interests, objectives, and continuing interaction
- Two or more interdependent individuals who
influence one another or who come together to
achieve particular goals

Work Team - a group of people with

complementary skills who are committed to
a common mission, performance goals, and
approach for which they hold themselves
mutually accountable
 What is a procurement team?
• Procurement Team is a group of experts who provide
a wide range of services to all project participants
involved or interested in the activities relating to the
purchasing of materials and supplies required for
project implementation
• Procurement team negotiates with private/
government contractors treats for the major activities
of chain management including logistics and contract
management. It makes sure that the activities are
carried out in line with current legislation and existing
requirements of the project. Procurement team also
ensures compliance with purchasing best practices and
existing business policies and procedures.
Characteristics of Effective Procurement Teams
 Characteristics of Effective Procurement Teams
• Are unified in their
• Have a clear commitment to team
understanding of goals
their goals • Have good communication
• Have competent systems
members with • Possess effective
negotiating skills
relevant technical • Have appropriate
and interpersonal leadership
skills • Have both internally and
• Exhibit high mutual externally supportive
trust in the environments
character and
integrity of their
 Group/team Behavior

 Norms of Behavior - the standards that a work group uses to

evaluate the behavior of its members
 Group Cohesion - the “interpersonal glue” that makes members
of a group stick together
-What are the Advantages and Disadvantages of Group Cohesion?
 Social Loafing - the failure of a group member to contribute
personal time, effort, thoughts, or other resources to the group
– It is the tendency for individuals to expend less effort when
working collectively than when working individually
 Loss of Individuality - a social process in which individual group
members lose self-awareness & its accompanying sense of
accountability, inhibition, and responsibility for individual behavior
 Which one is best practice- Mutually accountable or individually
 Group Formation

Formal Groups - Informal Groups -

official or assigned groups gathered to perform unofficial or emergent groups that
various tasks evolve in the work setting to gratify
 need ethnic, gender, cultural, and a variety of member needs not met
interpersonal diversity by formal groups
 need professional

and geographical diversity

 Standing committee  Ad hoc Committee

-temporary committee
-permanent/ continuous
established to address
Responsibility
pacific issues.
 Why Procurement Teams?

• Good when performing complicated, complex,

interrelated and/or more voluminous work than
one person can handle
• Good when knowledge, talent, skills, & abilities
are dispersed across members
• Empowerment and collaboration; not power
and competition
• Basis for total quality efforts and
• managing Corruption and Unethical behavior
 New vs. Old Procurement Team Environments

New Team Environment Old Work Environment

Person generates Person follows orders
initiatives, procedures
Team charts its own Manager charts course
steps
Right to think for People conformed to
oneself. People rock manager’s direction. No one
boat; work together rocked the boat.
People cooperate using People cooperated by
thoughts and feelings; suppressing thoughts and
direct talk feelings; wanted to get along
SOURCE: Managing in the New Team Environment, by Hirschhorn, © 1991. Reprinted by permission of Prentice-Hall, Inc.,Upper Saddle River, N. J.
What does the Procurement department do?

• The Procurement Department is the office

responsible for the acquisition of supplies,
services, and construction in support of the
Authority's business. ... The Procurement
Department issues purchase orders, develops
term contracts, and acquires supplies and
services.
Procurement Departmental Structure

• The Department of Procurement may comprise five

(5) primary units
1. Financial and Administrative Services
2. Systems Management and Technology Services
3. Strategic Planning and Procurement Policy
4. Contract Compliance and Vendor Services
5. Purchasing and Contract Administration
 Departmental Responsibilities
A. Finance and Administrative Services
– Office Management
– Record Management
– Requisition Services
– Facilitate Vendor Services

B. Systems Management and Technology Services

– Purchasing Web Site
– E-Procurement
– E-Bids for technology goods and services
 Departmental Responsibilities
C. Strategic Planning and Procurement Policy
– Procurement Policies and Procedures
– Strategic planning for Sourcing
– Board Reports
– Plan to Contract Administrators for special projects

D. Contract Compliance and Vendor Services

– Quotation and Monitoring
– Statistical Data
– Vendor Performance issues
– Vendor Report Cards
 Departmental Responsibilities
• Purchasing and Contract Administration
– Competitive Solicitations - Professional Services
– Competitive Solicitation - Operations
(Construction)
– Contract Management
– Ordering and reconciliation
 PROCUREMENT- KEY
PERFORMANCE INDICATORS
• A procurement KPI or metric is a measurable
value that tracks all relevant aspects of obtaining
or buying goods and services.
• These KPIs enable the procurement department
to control and optimize the quantity, quality,
costs, timing and sourcing of purchasing processes
• Every procurement team or Procurement
department should measure their performance
with KPIs without fail
 Procurement KPIs
15 most important procurement KPIs and metrics:
1. Compliance Rate: Understand if suppliers fulfill your requirements on the
whole basic agreements such as reaction time, the delivery time, quality,
specification, special discount offers, and so on
2. Number of Suppliers: how many suppliers the Project has. Relying on too few
suppliers and not diversifying your sources creates a risk of dependency and
problems
3. Purchase Order Cycle Time: the time in- Know who to address your urgent
orders to. That covers the end-to-end ordering process, from the moment a
purchase order is created to the order approval, receipt, invoice and finally
payment of the order. It focuses on the order time and does not include the
material itself
4. Lead Time: Understand the total time to fulfill an order. It is the interval of
time between the placement of an order and the delivery of the order
5. Supplier Availability: Measure suppliers’ capacity to respond to the project’s
demand in terms of the number of times goods/services were available on the
supplier’s side, the guarantee of availability in their stocks, and the degree of
reliability you can place in them.
 Procurement KPIs
6. Supplier Defect Rate: Evaluate your suppliers’ individual quality. It measures the
percentage of products received from suppliers that do not meet the
compliance specifications and quality requirements. The supplier defect rate
and returned items is more critical
7. . Supplier Quality Rating: Analyze the quality of your suppliers in trying to
reach the highest quality score and availability . It is critical in evaluating
present as well future relationships with supplier
8. Vendor Rejection Rate & Costs: Examine your quality management strategies. It
is vendor performance metrics The correlation between the two will let you
know whether there are issues on a more serious note such as increment in
both measures, and to avoid further bottlenecks.
9. Emergency Purchase Ratio: Track the number of your emergency purchases. It
focused on unplanned orders. These unplanned orders are usually done when
there are shortages. it can be measured as a percentage between emergency
purchases and total purchases.
10. Purchases In Time & Budget: Monitor purchasing time & budget. The extent of
tracking the budget and time are critical elements in analyzing procurement
performance metrics. It can express the average percentage of purchases in
time and budget
 Procurement KPIs
11. Cost of Purchase Order: Control the internal costs incurred by each purchase.
It represents the average costs, total cost, and marginal costs of processing an
order, from purchase creation to invoice closure.
12. Procurement Cost Reduction: Streamline the tangible costs savings. It wants
to measure the tangible “hard savings”, that you have performed in terms of
cost management over the years. You can easily measure them by comparing
directly the old costs versus the new ones for the same good or service.
13. Procurement Cost Avoidance: Avoid potential extra costs in the future. It
focuses on the actions undertaken to avoid potential future costs, like
replacing parts before they fail, and inevitably damage other parts. It is
sometimes referred to as “soft savings” by opposition to the “hard” ones.
14. Spend Under Management: Track and optimize your expenditures. , it
includes strategically managed spend that covers established rates with your
preferred suppliers and spend under contract.
15. Procurement ROI: Determine the profitability of investments. usually
calculated with the formula ROI = (gain from investment – cost of investment)
/ cost of investment.
 PRINCIPLES/FACTORS AFFECTING
ACHIEVEMENT OF PROCUREMENT OBJECTIVES

The following principles/factors affect the

achievement of good procurement
objectives:
• Professionalism
• Transparency
• Value for money (Efficiency and Economy)
• Competitiveness
• Accountability
• Fairness
• Ethical approach
PROCUREMENT PRINCIPLES
 1. PROFESSIONALISM
 Professionalism is the discipline whereby
educated, experienced and responsible procurement
officers make informed decisions regarding
purchase operations.
 The role of procurement professionals is critical
for economic advantages.
 It is in the recognition of this fact that the Public
Procurement Authority’s object includes:
‘‘the professional development, promotion and support
for individuals engaged in public procurement and ensure
adherence by the trained persons to ethical standards
 2. TRANSPARENCY
Transparency refers to the level of
openness of a procurement process and the
idea that procurement procedures should be
characterized by clear rules and by means to
verify that such rules were followed in the
procurement process.
Transparency means that the same rules
apply to all and that these rules are
publicized as the basis of procurement
decisions prior to their use.
3. VALUE FOR MONEY (EFFICIENCY AND
ECONOMY)

Value for Money (VFM) is the optimum

combination of whole life cost and quality to meet
the customer’s requirements. It is reflected in the
price of the item or service procured.
The essence of the Public Procurement Authority’s
object is to “secure a judicious, economic and
efficient use of state resources in public
procurement’’.
 Value for Money (VFM) is a critical measure of
the effectiveness of the procurement process, its
outputs and outcomes.
 4. COMPETITIVENESS
Competitiveness means actively encouraging greater
suppliers, contractors, consultants and/ or service
providers’ participation in the tendering process through
advertising, sourcing reviews, prequalification and
transparent procedures.
The merits of competitiveness include:
• Potential for cost savings and achievement of value for
money
• Increases the potential for supplier, contractor, consultant
and/or service provider’s base
• Greater awareness of new developments
• Greater understanding of the Act and confidence in public
sector procurement
 5. ACCOUNTABILITY
 Accountability can be explained as the process of
holding an individual or an organization fully
responsible for all aspects of the procurement decision
making process over which they exert authority.
Answering for all questioning
The merits of accountability include:
• Strengthens the perception of transparency and fairness
• Reduces the incidence of corruption
• Increases the need for actors within the procurement
process to take ownership and responsibility for their
actions and decisions
 6. IMPARTIALITY and FAIRNESS
 Fairness in public procurement implies
showing consideration and impartibility in all
stages of the procurement process, such as
demonstrating equality in tender evaluations.
Fairness results in:
• Development of mutual trust
• Instils confidence in the procurement process
which ultimately promotes increased participation
by tenderers for contract opportunities
• Increases the potential for supplier, contractor,
consultant and/or service provider’s base
 7. ETHICAL APPROACH
Ethics is concerned with moral
principles and values which govern our
beliefs, decisions, actions and
behaviours.
Ethical approach implies exemplary
approach to all procurement processes
that cannot be questioned or criticized.
 Procurement Ethics
• For each stage of the procurement and contract
management process, the procurement team/
department should consider possible ethical issues and
consider some practical solutions for addressing them
• Ethical procurement prohibits breach of the trust by
discouraging the team member from attempting to realize
personal gain through conduct inconsistent with the
proper discharge of the member’s duties
• Code of procurement Ethics- all should adopted code of
ethics and require to uphold the code and seek
commitment to it.
 Ethics versus Compliance/legality
Ethics Compliance

Objective Encourage Prevent misconduct

responsible conduct

Standards Self-imposed and Externally imposed

unwritten and written
Motivation Self improvement Avoid penalties

Reinforcements Personal Legally driven

responsibility (What I can’t do)
(What should I do?)
166
 IMPORTANCE OF ETHICS
Ethics is important in procurement for the following
reasons:
• Procurement staff are the representatives of their
organization in its dealing with suppliers, contractors,
consultants and/or service providers.
• Sound ethical conduct in dealing with suppliers contractors,
consultants and/or service providers is essential to the
creation of good relationships and the establishment of
supplier goodwill
• It is impossible to claim professional status for
procurement without reference to a consideration of its
ethical aspects.
• Procurement staff are probably more exposed to the
temptation to act unethically than most other employees.
 Fraud and Corruption
“A fraudulent practice is any act or omission,
including a misrepresentation, that knowingly or
recklessly misleads, or attempts to mislead, a party to
obtain a financial or other benefit or to avoid an
obligation.”
“A corrupt practice is the offering, giving, receiving
or soliciting, directly or indirectly, anything of value
to influence improperly the actions of another party.”
Procurement Entities and tenderers, suppliers,
contractors, consultants, technical service providers
and their agents and any personnel thereof, are
required to observe the highest standard of ethics
during the procurement and execution of contracts.
Common Forms of Corrupt and Fraudulent
Practices
 “Coercive practice” means impairing or harming, or
threatening to impair or harm, directly or indirectly,
any party or the property of any party, to influence the
actions of a party in connection with the
implementation of any contract supported, in whole or
in part, including such actions taken in connection
with the execution of a contract.
 “Collusive practice” means a tacit or explicit
agreement between two or more parties to perform a
coercive, corrupt, fraudulent, obstructive or prohibited
practice, including any such agreement designed to
establish prices at artificial, non-competitive levels or
to otherwise deprive the Employer of the benefits of
free and open competition.
Common Forms of Corrupt and Fraudulent
Practices (Cont’d)
“Obstructive practice” means any act taken in
connection with the implementation of any contract
supported, in whole or in part:
• That results in the destroying, falsifying, altering or
concealing of evidence or making false statement(s) to
investigators or any official in order to impede an
investigation into allegations of a coercive, collusive,
corrupt, fraudulent or prohibited practice,
• That threatens, harasses or intimidates any party to
prevent him or her from either disclosing his or her
knowledge of matters relevant to an investigation or
from pursuing the investigation and/or
• Intended to impede the conduct of an inspection and/or
the exercise of audit or investigation rights
Common Forms of Corrupt and Fraudulent
Practices (Cont’d)

“Prohibited practice” means any

action that violates Compliance with
Anti-Corruption, Anti-Money
Laundering, and Trafficking of Persons.
 There are two common types of corruption
in Procurement
Approach Includes
 Cash paid to the procurement officer, to settle the buyer’s
personal debts or paid to a third party for the buyer’s benefit.
Direct  Cheques paid directly to the buyer or members of his family, paid
to businesses in which the buyer has an interest.
 Cheques paid to settle the buyer’s personal debts.
 Shares and share options.
 Free or discounted goods or services.

 Chance to a member of the buyer’s family, or employment of the

buyer on a consultancy basis.
Indirect  Future offers of the same.
 Inside information which will benefit the buyer.
 Threats of blackmail or violence.
 Free travel and expenses to visit exhibitions or to visit suppliers’
factories.
 Invitation to entertainment events.
 Gifts and Entertainment
Officials must not accept directly or
indirectly, any gift (including any gratuity
favour, entertainment, loan or other
consideration) with a value in excess of a
certain amount of money (which should
be set at a low level, having regard to the
overall situation in the country concerned
from any person or entity which has or
seeks to obtain a contract with their own
agency.
 Gifts and Entertainment
• If you receive some Gifts, you feel obliged to give something in
exchange; i.e. there is no such thing like a “free lunch”. Suppliers
often offer different types of gifts. It may be overt or covert gifts.
In such conditions, What would be the appropriate action?
• The table below provides some examples of good practice:
If the gift is… Then…
Low value, e.g. chocolates, --Accept it but tell suppliers it will be shared
given at the end of the year with all colleagues in your office.

High value, e.g. a gold watch Return it, and thank the supplier but say you are
not allowed to accept it.
Sent to your private address Immediately return it to the supplier, and tell the
supplier it is unacceptable practice to send gifts to
procurement team members’ private addresses.
Types of Unethical Procurement Behaviors

Revealing confidential or “inside information” either directly or indirectly
to any tenderer or prospective tenderer;

Discussing a procurement with any tenderer or prospective tenderer
outside the official rules and procedures for conducting procurements;

Favouring or discriminating against any tenderer or prospective tenderer
in the drafting of technical specifications or standards or the evaluation of
tenders;

Destroying, damaging, hiding, removing, or improperly changing any
official procurement document;

Accepting or requesting money, travel, meals, entertainment, gifts,
favours, discounts or anything of material value from tenderers or
prospective tenderers;

Discussing or accepting future employment with a tenderer or prospective
tenderer;

Requesting any other Concern organs to violate the Project’s procurement
rules or procedures;

Ignoring evidence that the Code of Ethics has been violated by a member
of the Tender Committee or representative of the Procurement Entity;

Ignoring illegal or unethical activity by tenderers or prospective tenderers,
including any offer of personal inducements or rewards.
 So how do you ensure that the project’s
procurement ethics are upheld?
An ethics policy
-should have a written policy making clear what top management considers ethical and
what it considers unethical.

Ethics Training
Ethics training is one of the most essential components to ensure that employees are
aware of the importance of ethical practices.
- Such training programmes could cover: Conflict of interest, Bribery, Fraud and
corruption, Money laundering, Terrorism financing, and Modern slavery

A process with checks and balances

-Every major procurement should require management review to confirm that all
guidelines were followed and that no ethical violations have occurred or will occur.

Audits
• Ongoing and Periodically, audits should be performed to verify that all procurement
activities were conducted ethically and in accordance with procedures. Audits also
serve as a deterrent to future unethical behavior.
 RESULT OF UPHOLDING
PROCUREMENT PRINCIPLES/ETHICS
Procurement principles and ethics will result in
the following:
– Increased efficiency in the procurement functions
– Procurement operations become more effective
– Enhanced profile of procurement
– Improved achievement of objectives
– Professionalism of procurement
– Reduction in bribery and corruption and thereby
achieving value for money in public procurement
Any Questions?

Advancing Professional Construction and

Program Management Worldwide
179
 PART FIVE:

Tender Management
and Solicitation
 What is tender?

• It is an invitation from the owner to the contractor to

execute some work at specific cost in specified time.
-It is published in the form of tender notice in news paper,
Notice board, TV, and Radio etc. according to the cost of
work
 What is tender?
Tender is :
• an offer to contractor to do the work for a
certain amount of money
• incorporate time and other conditions required
• to carry out the contract requirements
• main reason is to complete a project
• The tender which is submitted by the contractor
is generally based on a bill of quantities &
specifications of the statement of work.
 When does Tender Management Start?

• The tender starts when an appropriate Invitation To Tender (ITT)

has been identified. The ITT is a formal document that is
published by a purchasing company in order to notify other
companies that bids for a piece of work, project or service is
required. And it will ends with tender awarding.
• There is always a fixed deadline that the tenders must be
returned by and this makes bid management very time
dependent.
What does a tender specialist do?
• Specialist Tenders

-Identify new opportunities for tenders/ requests for quotations and

requests for proposals. Develops, designs and completes proposals
and responses to tender specifications in terms of technical, legal,
commercial requirements and terms and conditions.
Moreover, they are in charge to:
• Managing the staff that will write the tender.
• Producing a pricing structure that will win the bid as well as produce
a profit by the end of the project.
• Minimizing risk and maximizing the impact of the tender.
• Sticking to tight deadlines.
• Analyzing the requirements within the ITT.
 Difference between
TENDER & CONTRACT

TENDER CONTRACT

 A contract is the
• The term tender term used when 2
formally means parties have
an invitation to reached
agreement.
trade under the
terms of offer.
Types of Competitions in Tender
• Open International Competition: provide
equal opportunity to the universe of eligible
vendors
• Limited International Competition:
narrowing the competition field into a short
list of prospective offerors
• National Competition: under certain
circumstances

187
 Terms of Sale in international tender

• The responsibilities of the buyer and the seller

should be spelled out as they relate to what is
and what is not included in the price quotation
and when ownership of goods passes from
seller to buyer.
• Incoterms are the internationally accepted
standard definitions for terms of sale set by the
International Chamber of Commerce (ICC) since
1936.
 A. EX- works (EXW)
• Prices quoted ex-works (EXW) apply only at the point of
origin, and the seller agrees to place the goods at the disposal
of the buyer at the specified place on the date or within a fixed
period. All other charges are for the account of the buyer.
 
B. Free carrier (FCA)
• One of the new Incoterms is free carrier (FCA), which covers
all modes of transportation except vessel.
• The seller is responsible for loading goods into the means of
vessel transportation; the buyer is responsible for all
subsequent expenses. If a port of exportation is named, the
costs of transporting the goods to the named port are included
in the price
 C. Free alongside ship (FAS)
• Free alongside ship (FAS) at a named port of
export means that the exporter quotes a price
for the goods including charges for delivery of
the goods alongside a vessel at the port. The
seller handles the cost of unloading; however,
all other charges, such as loading, insuring,
and ocean transporting the goods, are left to
the buyer
 D. Cost and freight (CFR)
• Under cost and freight (CFR) to a named overseas
port of import, the seller quotes a price for the goods,
including the charge for the goods and their cost of
transportation to the named port of debarkation.
• However, the cost of insurance and the choice of
insurer are left to the buyer.
E. Cost, Insurance, and Freight (C.I.F.)
• C.I.F. (cost, insurance, and freight): the price includes
the charge for the goods, insurance, transportation,
and miscellaneous charges to the point of
debarkation from the vessel at a named overseas port
of import.
 OTHER TYPES OF TENDER
1.Open tender
2.Close tender/Selective tender
3.Negotiated tender
 A. Open tender
• Bidding process that is open to all
qualified bidders
• Tender usually published in the
newspaper and internet
• chosen on the basis of price and quality.
• This is most effective way of obtaining
many competitive rates.
  Open tender - advantages
 Any contractor can tender their work
 No favoritism occurred
 maximum competition
 No commitment to tender, all tender
received will be genuine.

Open tender - disadvantages

 Client must bearexpensive cost of tendering
 The wrong contractor may be chosen because they
are from unknown background
 Time consuming
 B. Limited / selective tender
Limited tender
– Tender open to bidders in the category stated in the
notice only.
– Example: limited tender is for Cooperative Society
bidders only.

Selective tender
– A number of contractor of known reputations are selected
by the design team to submit a price of the project.
– The contractor who submit the lowest tender is generally
awarded the contract.
– The number chosen to bid under this tender is little
– they are chosen for their expertise and experiences
 Negotiated tender
• Under this method, only one contractor is approached
• normally because the skills of the contractor are such that
the architect and other members of the design team needed
from the contractor’s specialist knowledge use for design
stage
• Following the completion of the design, the contractor will
price the bill of quantities and then enter into a negotiation
with the quantity surveyor.
Single tender-invitation is given to only one firm to
render a service by quoting their rates. If the quoted
rates are high, it will be negotiated prior to the
agreement of the Contract
 Conventional Tendering Process
-Conventional tendering process will involve pre-tender stage, tender
advertisement stage, closing of tender, tender opening process, tender
evaluation process and finally tender award.
A. Pre-tender Stage/Bid Package Development
• having an idea, get advising in managing the tender, and also transfer the idea
into the drawing. At this stage client will brainstorming about the scope, time
to complete and budget that client willing to allocate. it will initiate the next
step of a project. If the pre-tender stage is failed, the project will not
successfully complete.

B. Tender Advertisement/Solicitation of Bids

• Tender advertisement also called tender notice. The conventional tender
notice will advertise in local newspapers. The required information in tender
notice, are: Title of the project, Class of contractor, head and subhead
needed, Location, date, and time to obtain the tender document, Fees for
tender document, and Location, date and time for submission of tender doc.
 Conventional Tendering Process

C. Receipt of Bids and Closing of Tender

-If the contractors fail to submit their bids within specific time and date, it
considers the contractors refuse to bid for the tender. At that time also tender
validity period is started. At this period, contractors can withdraw back their bids
if they are no more interested to fight for the tender. Consultant use this period
to make assessment and evaluation each of the offers.

D. Tender Opening and Evaluation Process

• Quantity surveyors usually will handle tender opening process. In order to
preserve the integrity of the competitive process, it is imperative that the
evaluation of proposals is undertaken objectively, consistently and without bias
towards particular suppliers.  Tenders are usually evaluated against a pre-
determined set of criteria. The evaluation of the tenders shall be prepared the
soonest possible after the tender opening.
E. Tender Award
• An evaluation team will examine each tender received and make recommendations as to
which tender represents best value for money.  Once the contract has been awarded, both
the successful and unsuccessful tenderers will be notified. -Tender results notification
which is in letter form, and then sent to all participating contractors.
 1. Bid/Proposal Package Development
Activities:
1. Prepare the scope of work statement and/or specifications of
materials/services to be solicited.
2. Establish the solicitation timeframe which includes:
a. Date and time period for advertisement.
b. Closing date for receipt of bids/proposals.
c. Opening date of bids/proposals.

3. Establish minimum requirements.

4. Establish evaluation criteria, if applicable.
5. Prepare the bid package
 2. Solicitation of Bids/Proposals
Activities:
1. Prepare the advertisement for newspaper.
2. Get ready to notice to be posted.
3. Submit to Contracts.
4. Submit advertisement to newspaper and post advertisement.
5. Secure documentation of advertisement, i.e. newspaper - tear
sheet, posting signed statement from the office where it was
posted.
6. Notify all individuals on the bidders list of solicitation,
if applicable.
 Solicitation of Bids/Proposals
Activities:
7. Record the name of the individuals or firms requesting bid
packages, the date the request was received, and the date the
bid package was sent.
8. Prepare technical information for bidder’s conference.
9. Facilitate bidder's conference.
10. Provide sign-in sheet for bidder’s conference and ensure all
individuals sign.
11. Record minutes of bidder’s conference.
 3. Receipt of Bids/Proposals
Activities:
1. Log all sealed bids/proposal into the bid/proposal control sheet.
2. Stamp each bid with the date and time received and initial the
date and time stamp.
3. Store bids/proposals in a locked location unopened until the
time of opening.
4. Return all bids/proposals received/submitted after the closing
date unopened to bidder including a letter of explanation as to
the reason it was returned.
 4. Evaluation of Bids/Proposals and Contractor
Selection
Purpose:-To evaluate the bids/proposals submitted, select the contractor
and award the contract.
Activities
1. Conduct bid opening (public or private).
2. For public bid openings, the bid amounts will be announced at the
opening.
3. Schedule meeting of evaluation panel.
4. Evaluate bids/proposals for compliance with all requirements.
5. Evaluate the responsive bids/proposals based on cost of criteria
established in the bid package.
6. Prepare summary of points/costs for all of the responsive bidders.
 Evaluation of Bids/Proposals and Contractor
Selection
7. Submit the name, the bid amount and justification for selection
of the individual/firm selected for contract award to
administration for approval.
8. Send the notice to contract to secure the following information.
a. Certification of insurance, if applicable.
b. Review and approve suppliers list, if applicable.
c. Secure a copy of all required licenses, if applicable.
d. Certification regarding suspension and debarment from suppliers
and subcontractors.
 
 Evaluation of Bids/Proposals and Contractor
Selection

 9. Verify that the insurance meets requirements, if applicable.

 10. Secure fully executed contract.
 11. Provide written notification to unsuccessful bidders.
 12. Schedule debriefing conference for bidders based on individuals
requests.
Two Types of evaluation:

1. Lowest price technically compliant – the award goes to the lowest priced offer
among suppliers; provided the price is within the budget for the contract

2. Cumulative analysis – the maximum weight is allocated to the lowest price

proposal. But all other non-price proposals receive points in accordance with
the given formula
 Records Management
Purpose:
To detail the required information that must be maintained in the
bid process, contract, and protest (if applicable) to ensure proper
documentation.
 Records Management
Activities:
1. Establish and maintain the bid
e. Minutes of the bidders
file(s) which includes:
conference.
a. Cost estimated and approval to f. List of evaluation panel
proceed with the procurement. members.
b. Documentation of g. Bids received.
advertisement. h. Summary sheet and
work papers.
c. Bid/proposal package. i. Rejection letters.
d. List of individuals attending the
bidders conference (sign-in
sheet).
 Records Management
Activities:
2. Establish and maintain contractor files which include the
following information:
a. Bid/Proposal g. Change Order, if applicable
b. Notice to Contract h. Contract
i. Certifications
c. Certificate of Insurance Suspension and Debarment
Lobbying
d. Licenses, if applicable Drug Free Workplace
e. Payment Requests
f. Performance Evaluations
 TENDER NOTICE
 The Tender Notice is a brief description
of the job being tendered
 to be published in Newspapers and on
the Internet.
 The Internet is a very cost effective way
of publishing the tenders.
Format of an ideal tender notice
1. Name of the Project. 9. Date and time up to which
2. Name & Address of the tender documents can be
Company offering the tender. obtained.
3. Name of work, materials or 10. The cost of tender
services. documents.
11. Due date of submission
4. Place of work location.
12. Eligibility Criteria
5. Procedure of tender
application.
6. Earnest Money.
7. Period of completion.
8. Date on which the Tender
Document sale commences.