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Session 6
Project Procurement
Module Name: IT Project Management
Module Code: IT G09101

Dr. Bakari Mashaka, Bakiri Angalia & Dr. Lashayo

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Outline
• Overview of Procurement
• Issues in IT Project Procurement
• Components of request for proposal
(RFP)
• Discussion

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General introduction & definitions
• Procurement is the process of acquiring
goods, works and services and spans
the life cycle from identification of needs
through to the end of a services
contract or the end of the useful life of
an asset.

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Procurement principles & objectives
May vary by sector/nature/industry/organisation;
• To obtain required ‘resources’
• To obtain “Value for money”
- right quality, right quantity, right time, right -
place, right price, right source
- lowest cost of supply
- Lowest life-cycle costs (capital items)
• To ensure continuity of supply
• To maintain co-operative relationships with other
departments & elements of logistics

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Procurement objectives
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– transparency,
– value for money,
– open and effective competition,
– fair dealing,
– accountability and
– due process
– sustainability.

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 IT Project procurement (contd.). 1
• Every procurement, whether large or small, begins with
a planning phase
• An effective procurement begins well before a
request for tenders is released
• The procurement life cycle begins with strategic
planning and continues through procurement and
on into the planned obsolescence of both hardware
and software

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 IT Project procurement (contd.). 1

Why planned obsolescence?

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 Establish legal framework 1

• IT Project procurement requires a legal

framework in implementing policies agreed
on in international and national institutions
• It is shaped by a country’s legislation,
culture, economics, and politics.
• An effective legal framework covers
procurement in general, provides for the
legislation and regulation of ICT and related
matters, and covers the use ICT.

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Procurement Planning
• Procurement is in itself a project, and its planning
phase 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

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Elements of a typical procurement process
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• Procurement strategy
• Funding
• Detailed requirements and schedules
• Bidding documents preparations
• Management of bidding process and bid
evaluation
• Negotiation and award of contract

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 Procurement decisions: 1
‘Make or Buy’?
H a v e w e de s ign H ave we
c a p ab ility? m a n u fa c tu rin g
c a p a b ility?

Yes No Yes No

M a k e v s B uy Buy M a ke vs B uy Buy

Is th e c o m p o n e n t/ A re w e
a s s e m b ly s tra te g y
im p o rta n t/c o re
c o m p e t it iv e ?
b u s in e s s?

Yes No
Yes No

M a ke M a ke vs B uy M a ke Buy
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 How to decide whether to 1
‘Make or Buy’
A quantitative method to decide whether to
‘make or buy’ is to use break even analysis

Break Even point is when:

Total purchase price = Total cost to make

‘Buy’ when:
Total purchase price < Total cost to make
‘Make’ when:
Total purchase price > Total cost to make
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Phases of the procurement process 1

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Phases of the procurement process (contd.) 1

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Procurement Cycle in TZ public sector 1

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Procurement Cycle in the public sector 1

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Request for Proposal (RFP)
• It is a document that describes the lists of the
IT services or products needed, and specifies
the features required for an organization

• RFP
– Helps to ensure that the organization’s
business needs will be met
– Spells out the service and support levels
required

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Request for Proposal (RFP)
• Vendors can decide if they have a product
that will meet the company’s needs
• Vary in size and complexity, just like the
systems they describe
• Used to designate some features as essential
and others as desirable
• Requests specific pricing and payment terms

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Request for Proposal (RFP)-Content
1. Introduction and project overview
2. Organization Overview
3. System Audience or Users
4. New System Objectives
5. Current System
6. New System Functional Requirements
7. Additional Features/Functions
8. Allocated Budget
9. Proposal Requirements
10.Timeline 19
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Any Question???

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Tutorial Questions
1. Why would a company choose in-house IT
systems development?
2. What is an RFP. Explain the typical
components of RFP
3. Should brand name be specified in the
tender document of ICT systems to allow
acquisition of genuine, quality and viable ICT
products?
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