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CHAPTER FIVE
Project Procurement Management

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 Definition
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 Project procurement management is about

establishing, maintaining and closing
relationships with suppliers of goods and services
for the project.
 “the processes necessary to purchase or acquire
the products, services, or results needed from
outside the project team”

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 Managing project procurements and acquisitions

requires the project manager to efficiently
collaborate with the purchasing department on the
process of planning and managing procurements.

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 Project procurement management is a section of

the Implementation Plan to determine how “the
ordered products necessary for producing
deliverables can be delivered on time and within
the allocated budget”.

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 Project Procurement Process

 A Project Procurement Process [also called

“Project Procurement Management Process”] is a
method for establishing relationships between an
organization’s purchasing department and external
suppliers to order, receive, review and approve all
the procurement items necessary for project
execution.

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 The process aims to ensure timely delivery of the

purchased items which are selected and acquired
according to the specifications and requirements set
up by the purchasing department and approved by
the project manager.

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 Major steps for procurement process

 Specification. This step involves the purchasing

department in communicating with the project
manager to develop and approve a list
of procurement item  necessary for project
implementation. The department must specify the
approved items to external vendors.

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 Selection. This step of the project procurement

process requires the department to find potential
suppliers which can procure the necessary items,
according to the specifications. For this purpose the
department needs to set vendor selection criteria,
which may include such measures as Delivery,
Service Quality, Cost, and Part Performance.

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 Contracting. The department must communicate

with the suppliers on delivery dates and payment
conditions in order to ensure “on-time” delivery of
the ordered items within the stated project budget.
All the conditions should be listed in a procurement
contract. Also a detailed delivery schedule should
be negotiated with the procurers and approved by
the purchasing department.

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Control. Success of the procurement management process

depends on how the purchasing department controls the
delivery and payment processes through
 arranging regular meetings with the vendors,

 tracking delivery progress

 reviewing the ordered items against the approved product

specifications
 making necessary changes to the procurement contract

 the department can control the process and ensure

successful accomplishment
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Measurement. The final step of the project

procurement management process refers to
 using a system of performance indicators

 measures for assessing the effectiveness and

success of the entire process.

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 Project Procurement Plan

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 Planning of project procurements is carried out

within the procurement process and results in
developing a plan.
 A procurement plan is a convenient tool for
organizing and managing activities and tasks
related to the procurement management process.

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 A template of the plan is to be designed by the

purchasing department in cooperation with the
project manager.
 A project procurement plan should be reviewed
and approved by the project manager before any
supplier relationships get started.

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 A project procurement plan template documents:
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 Deliverables to be procured by proposed

agreements/contracts.
 Effective resource management strategies for
negotiating and managing the
agreements/contracts.
 The need for staged delivery and desirability of
testing the procured items before introducing them
into the implementation process (this item is
optional).

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 The chosen procurement method (payments,

expressions of interest, request for price/quote,
request for tender).
 Key stages of the process for selecting suppliers
and vendors.
 The model of procurement funding.
 The sample of procurement contract/agreement.
 References to quality approvals, quality assurance
and risk management.
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 Post-Project audits

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 Comparison of the actual income yielded by a 

capital project with the Income projected at the time
of project appraisal.
 Project appraisal is Systematic and comprehensive
review of the economic, environmental, financial,
social, and technical and other such aspects of a
project to determine if it will meet its objectives.

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 A project audit provides an opportunity to uncover

issues, concerns and challenges encountered in the
execution of a project.
 If done at the close of a project, a project audit can
be used to develop success criteria for future
projects by providing a forensic review.

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 The purpose of the audit is to analyze the

completed project, the effectiveness of the project
team, the success of the project, the value of the
deliverables, and the overall approval from the
clients.

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 This audit must answer the following questions:
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Was the Project Vision Achieved?

 Remember when you first created the vision of the

project?
 The first question should answer whether the project

accomplished what its original intent was. If the project

did not, explain why.
Was the Project on Track from Start to Finish?
 the project was able to stay on plan, on time, and

within the allotted budget. If the project wasn’t explain

why.
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Did the Project Create a Recognizable Business

Value?
 make a company more profitable in its streamlined

process, attract more sales, or gain productivity.

Can You Share the Knowledge?
 excellent method for reporting on the work you’ve

completed and the value you’ve added to a

company.
 how it worked for them

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THANK YOU

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