answer the 4 question attach

Project Procurement Management Chapter 01: What is Project Procurement Management?

Contract Negotiations Chapter 01: The New Performance-based Buying and Selling Environment – The World We Live In!

Week 1

By Definition: “Project Procurement Management incudes the processes required to acquire goods and services, to attain project scope, from outside the performing organization.” (PMBOK 2nd Edition)

Practically: It’s about buying and selling to achieve project goals and deliverables when the organization isn’t able to fulfill/accomplish such themselves.

The Formula: The Project = the “Make” content + the “Buy” content

What is Project Procurement Management?

By Definition: “A project is a special kind of activity. It involves something that is both unique and important and thereby requires unusual attention. It also has boundaries with other activities so that its end is defined. And it has a beginning and an end and objectives whose accomplishment signal the end.” (Ruskin & Estes)

Practically: A temporary endeavor with a specific purpose, timeframe, deliverable(s), and end. And with a designated leader, the Project Manager.

What is a Project?

Project Management by Definition: “Project management, then, is the application of knowledge, skills, tools, and techniques to project activities to meet the requirements.” (PMI)

Project Procurement Manager: An individual or an organization acting to acquire goods and services while simultaneously selling project scope to others.

Project v. Procurement Management?

Depicted Another Way: Procurement Management is a Binary Process. The Project Procurement Manager (“PPM”) wears two hats.

Project v. Procurement Management?

Project Procurement Management Figure 1.2: Two Critical Project Relationships: as Buyer or Seller

Project Procurement Management Figure 1.1: Project Procurement Management: Buying Project Scope

PMBOK Project Procurement Process

PMBOK Figure 12-1: Project Procurement Management Overview

PMBOK Project Procurement Process

PMBOK Figure 12-2: Plan Procurements: Inputs, Tools & Techniques, and Outputs

The PMBOK Process for the four Project Procurement Activities follow the same three-part process flow:  Inputs – The elements from other PMBOK Processes needed for PPM  Tools & Techniques – The elements within the PPM Process  Outputs – The results or further work of/from the PPM

PMBOK Project Procurement Process

PMBOK Figure 12-3: Plan Procurements: Management Data Flow Diagram

 To select the best suppliers in the market.  To help generate the effective development of new products.  To protect the company’s cost structure.  To maintain the correct quality/value balance.  To monitor supply market trends.  To negotiate effectively in order to work with suppliers who

will seek mutual benefit through economically superior performance.  To adopt environmentally responsible supply management.

Procurement Objectives

Beyer et al., Procurement, Principles and Management, 11th Edition

 To supply the organization with a flow of materials and services to meet its needs.  To ensure continuity of supply by maintaining effective

relationships with existing sources and by developing other sources of supply either as alternatives or to meet emerging or planned needs.  To buy efficiently and wisely, obtaining by ethical means the

best value for every pound spent.  To maintain sound cooperative relationships with other

departments, providing information and advice as necessary to ensure the effective operation of the organization as a whole.  To develop staff, policies, procedures and organization to

ensure the achievement of these objectives.

Procurement Purpose

Beyer et al., Procurement, Principles and Management, 11th Edition

“I would never give procurement authority to a project manager. There is too much stake, too many non-technical matters to know, which most project managers are typically not prepared to handle. Procurement authority must be restricted to people who are familiar with contracting terms, procurement regulations, funding and contractual compliance issues. We delegate procurement authority to only procurement people, but who are assigned to support the project manager.” Zoltan Stacho, President, Holmes & Narver, 1994.

PPM: Organization v. Individual

Delegated Authority (Delegations of Authority)

Chief Procurement Office (CPO)

Contract v. Subcontract v. Purchase Order

21st Century Procurement

Beyer et al., Procurement, Principles and Management, 11th Edition

Reactive v. Proactive Procurement

Beyer et al., Procurement, Principles and Management, 11th Edition

Project Procurement Management Chapter 01: What is Project Procurement Management?

PPM Week 1 Discussion Question

Question 01a: Who are the participants in the procurement process and what are their roles and responsibilities?

By Definition: “One’s ability to leverage or negotiate, in both their personal and professional life, is often key to their success.” (Contract Negotiations, 2nd Edition)

Practically: Buying and/or selling, particularly in one’s professional life, is memorialized in a contract that required negotiation…give and take on both sides of the “deal.”

In-Practice: “Today there is a growing shortage of highly skilled, demonstrated successful master contract negotiators. Unfortunately, in both the public and private business sectors, many master contract negotiators have retired, are retiring, or are retirement eligible. With the growth of technology tools in our new supply environment we have fewer people directly involved in the buying and selling process.” (Contract Negotiations, 2nd Edition)

Why Discuss Contact Negotiation?

25-Industry Cross-Industry Outsourcing Benchmark Including: Aero Space/Defense, Construction, Engineering, Manufacturing, Financial Services, Telecommunications, and Utilities

Outsourcing now equals 48% of Sales Revenue.

21st Century Procurement

Contract Negotiations, 2nd Edition, Table 1-1: CAPS Research Cross-industry Benchmarking Summary

“Products, services, or solutions purchased electronically should be selected carefully, properly evaluating the opportunities and risks. One of the key items concerning this selection is the degree of digitalization of the products, processes, and transactional partners.” (Contract Negotiations, 2nd Edition)

Electronic (Digital) Procurement

Contract Negotiations, 2nd Edition, Figure 1-1: The E-Procurement Cube (Choi/Stahl Winston, 1997 modified)

Divided into Traditional Segments  Vertical Marketplaces – Focused on one’s own

industry/market’s products & services  Horizontal Marketplaces – Focused on multi-industry products

& services

E-Marketplace Segmentation  Buyer Oriented Marketplaces – Those seeking a product or

service  Neutral Marketplaces – Those seeking and offering products

or services  Seller Oriented Marketplaces – Those offering a product or

service

The E-Marketplace

E-Marketplace Architecture

Contract Negotiations, 2nd Edition, Figure 1-2: E-Marketplaces

E-Marketplace Architecture

Contract Negotiations, 2nd Edition, Figure 1-3: The World We Live In

Supply Drivers New Performance-Based Supply Te

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Contract Negotiations Chapter 01: The New Performance-based Buying and Selling Environment – The World We Live In!

CN Week 1 Discussion Question

Question 01b: How Important are contract negotiating skills to business success and why?

Project Procurement Management Chapter 01: What is Project Procurement Management?

Contract Negotiations Chapter 01: The New Performance-based Buying and Selling Environment – The World We Live In!

Week 1