Wk 3 - Procurement Planning Paper

Procurement Planning Paper

Adam Bentley

CPMGT/302

September 01, 2020

Pamela Hill

Planning of project procurements is done inside the obtainment procedure and results in building up an arrangement. A procurement plan is a beneficial tool for sorting out and overseeing exercises and tasks identified with the obtainment of the executive's procedure. A layout of the arrangement is to be structured by the obtaining office in participation with the venture director. A task acquisition plan should be explored and upheld by the task supervisor before any provider connections begin. During the procurement planning process, the acquisition technique is relegated and the desires for the satisfaction of obtainment necessities are decided. It enables organizers to decide whether desires are sensible; especially the desires for the mentioning properties, which as a rule expect their prerequisites met without warning over a shorter period than the utilization of the relating obtainment technique permits.

The valuable output - Procurement Management plan.

This shows how most of the other processes are to be carried out. In point of interest, it shows what is to be acquired for the company, the type of contract that is used, how or how it is to be selected, how its implementation is measured, and how the risk of acquisition is to be monitored. Because the procurement strategy is vital.

All anticipated specifications are reported and more than once guaranteed. A purchase schedule is developed from there that sets the course for every stage of the purchase process to allow awards to be granted and to meet the requirements. It includes strengthening comparable needs under one single agreement or dividing a necessity into various packages of economic-scale agreements. The purchasing component that previously focuses on additional personnel specifications for finalization of all selection factors from the number of preconditions to the purchase agreement, including external assistance. To determine how actual training comparisons and tasks are carried out, the analysis of the procurement process is considered, therefore, informing the business divisions and modifying the structure equivalently. It improves the quality and performance of the procurement process.

Three general types of contract compensation:

1. Fixed Price: The supplier is obliged to deliver the contract at a fixed price. The supplier bears the risk.

2. Incentive contracts: In this, the supplier is rewarded for controlling cost and improving schedule performance. The risk is shared by both buyer and supplier.

3. Cost-Type: In this, the buyer is obliged to pay for all reasonable costs agreed to the supplier. The buyer bears the risk.

Risk is a major factor during the contract type selection. Every contract type has a different type of sharing of risk amongst the parties involved. The risks and their impact also differ from one project to another. So, while selecting a contract type the degree of risk and the risk-sharing between the parties entering the contract must be kept in mind.

The contracting helps to mitigate the risks in a project in two ways. Firstly, it mitigates the risk through the sharing of the risk with the contractor. When a contract is given, the risk is either shared or transferred to the contractor. This helps in mitigating and avoiding the risk. Secondly, the contractors are often experts in their work, and getting a job done by an expert reduces the chances of risk and helps in mitigating the risk.

The success of a development project can be measured in several ways using the following indicators, Increased customer base is a major indicator of the success of a growth project. The purpose of the project is reviewed if the purpose is almost solved then t is considered that a growth project was successful. This can also be seen in the balance sheets if the profit and loss statement say that profits have increased then it can be conserved that the project was successful. Another indicator is that the project should get completed within the defined budget. Sustainability of the growth over a period is also a measure of the success of a growth project. The quality of the products produced, and the customer reviews can also be considered to ensure the success or failure of the growth project.

When identifying a source selection standard, there may be some ethical concerns, especially when a preferred supplier/vendor list is not going to be used by the procurements department. Some of those ethical issues are favoring a vendor for personal reasons and therefore giving them the advantage of knowing more about the scope of work than the other vendors, providing an unfair advantage to that vendor. Other ethical issues can be fairness across the board as far as making sure every vendor/supplier has all the same information with regards to the scope and requirement of the project. Providing misleading information to one vendor because of personal issues with that vendor is an ethical issue as well.

Risk management is part of the procurement management process. Risk management is continuing the early stage, the firm must decide the requirements of the project and for this, they must keep in mind the suppliers available who can meet these needs. But available suppliers cannot fulfill all the requirements, so risk management starts from here. Firms must search for new suppliers who can fulfill their needs, but the risk is involved in it. In risk management, they must determine which supplier has the least risk level. It must be based on the facts or experience, not on the rule of thumb, for example, intuition or guesses. Each step of the planning process contains risk, the firm must consider all factors before appointing a supplier. Therefore, risk management plays important role in procurement planning.

References:

  MYMG TEAM. (MARCH 23, 2011).  Project Procurement Management: 5 Steps of the Process. https://mymanagementguide.com/project-procurement-management/

Watt,A. (Na).  ProcurementManagement. https://opentextbc.ca/projectmanagement/chapter/chapter-13-procurement-management-project-management/

Fahad, U. (July 25, 2020).  Types of Procurement Contracts used in Project Management. https://pmstudycircle.com/2013/12/types-of-procurement-contracts-used-in-project-management/

Choma, A. A. (2008). How to reduce risks in contractors' management. Paper presented at PMI® Global Congress 2008—North America, Denver, CO. Newtown Square, PA: Project Management Institute.