Procurement management
Skaur
ProcurementManagementPlanSlideDeck.pptxProcurement Management Plan
•A component of the project or program management plan that describes how a project team will acquire goods and services from outside the performing organization.
•Can be formal/informal, highly detailed/broadly framed and it is based on the needs of each project.
•Describes how the remaining procurement processes (from developing procurement documents through contract closure) will be managed and includes:
◦Types of contracts to be used
◦Persons who prepare independent estimates and when
◦Actions taken by the procurement department and the project team
◦Sources of standardized procurement documents
◦Methods to manage multiple providers
◦Ways to coordinate procurements with the other aspects of the project
Procurement Management Plan Format
PROJECT NAME
Procurement Management Plan
Version 1.0
mm/dd/yyyy
AGENCY:_________________
CONTACT:________________
Procurement Management Plan Format
| Version # | Implemented By | Revision Date | Approved By | Approval Date | Reason |
| 1.0 | Author name | <mm/dd/yy | <name> | <mm/dd/yy> | <reason> |
VERSION HISTORY
TABLE OF CONTENTS
PROCUREMENT MANAGEMENT APPROACH
STANDARDIZED PROCUREMENT DOCUMENTATION
INTRODUCTION
The purpose of the Procurement Management Plan is to define the procurement requirements for the project and how it will be managed from developing procurement documentation through contract closure.
The Procurement Management Plan defines the following:
Introduction
Items to be procured with justification statements and timelines
Type of contract to be used
Risks associated with procurement management
How procurement risks will be mitigated through contract performance metrics, insurance, or other means
Determining costs and if/how they’re used as evaluation criteria
Any standardized procurement templates or documents to be used
How multiple suppliers will be managed if applicable
Contract approval process
Introduction
Decision criteria
Establishing contract deliverables and deadlines
How procurement and contracts are coordinated with project scope, budget, and schedule
Any constraints pertaining to procurement
Direction to sellers on baseline requirements such as contract schedules and work breakdown structures (WBSs)
Vendor Management
Identification of any prequalified sellers if applicable
Performance metrics for procurement activities]
Procurement Management Approach
The Procurement Management Plan should be defined enough to clearly identify the necessary steps and responsibilities for procurement from the beginning to the end of a project.
The project manager must ensure that the plan facilitates the successful completion of the project and does not become an overwhelming task in itself to manage.
The project manager will work with the project team, contracts/purchasing department, and other key players to manage the procurement activities.
Procurement Definition
The purpose of procurement definition is to describe, in specific terms, what items will be procured and under what conditions. Sometimes items which must be procured for a project can be made internally by an organization.
Additionally, procurement deadlines are usually affected by the project schedule and are needed by certain times to ensure timely project completion.
This section is where these items must be listed, justified, and the conditions must be set. Any important technical information should also be included. Individuals may also be listed with authority to approve purchases in addition to or in the absence of the project manager.
| Item/Service | Justification | Needed By |
| Item A | ||
| Item B | ||
| Item C |
Type of Contract to be used
The purpose of this section is to describe the type of contract to be used so the contracts and purchasing department can proceed accordingly.
There are many different types of contracts like firm-fixed price, time and materials (T&M), cost-reimbursable, and others.
Different procurement items may also require different contract types. A well-defined product may be a firm-fixed price while a product which will require a research and development effort may be a T&M contract.
Procurement Risks
The purpose of this section is to identify any potential risks associated with procurement for the project. Depending on the contract type, items or services being purchased, vendor history, or uncertainties in the project’s scope, schedule, or budget, potential risks may require more detailed planning and mitigation strategies.
For instance, if an organization has a close relationship to a particular vendor but there is a chance that vendor will no longer to be able to provide goods or services needed; this represents a significant risk to the project’s procurement activities that must be managed.
Procurement Risk Management
The purpose of this section is to describe how risks related specifically to procurement activities will be managed. All projects should have an independent and thorough risk management plan.
However, much like there are risks which pertain only to procurement, there are risk management considerations which may also be unique and apply only to procurement.
This may include involvement of specific personnel in managing procurement risks or obtaining approval on mitigation steps from a particular management level within the organization.
Cost Determination
The purpose of this section is to describe how costs will be determined and if/how they will be used as part of the selection criteria.
For procurements seeking goods and/or services from an outside vendor, costs are usually provided in response to a Request for Quote (RFQ), or a Request for Proposal (RFP)
Vendors submit quotes, proposals, or bids which describe the costs of the good or service in detail to aid the customer in their decision making. Costs are almost always used as part of the procurement decision criteria but may be prioritized differently depending on the organization.
Standardized Procurement Documentation
The purpose of this section is to describe what standard procurement documentation will be used as part of the procurement.
For large complex projects, standardization makes work across all project process areas easier to manage.
When organizations utilize standard forms, templates, and formats, there is commonality across different projects as well as different groups within the organization.
Procurement Constraints
The purpose of this section is to describe any constraints which must be considered as part of the project’s procurement management process.
These constraints may be related to schedule, cost, and scope, resources, technology, or buyer/seller relationships. As constraints are identified, they must be considered every step of the way as procurement activities are planned and conducted.
Every effort must be made to identify all constraints prior to any project or procurement planning as constraints identified later in the project lifecycle can significantly impact the project’s likelihood of success.
Contract Approval Process
The purpose of this section is to define the process through which contracts must be approved.
This process may vary greatly from company to company but it is important to define the process within your organization and who is involved in the decision-making.
Typically large purchases follow an established bidding process and follow a formal selection and approval process. Smaller purchases can be less formal and can be approved by the Project or Program Manager.
This section should clearly identify the rules for all procurements within your organization.
Decision Criteria
The purpose of this section is to define the criteria used by the contract review board to decide on what contract(s) to award.
These criteria may vary between organizations but must be defined as part of the Procurement Management Plan.
Vendor Management
The purpose of this section is to describe the roles and actions the project team and purchasing and contracts department will take to ensure that the selected vendors provide all of the products/services agreed upon and that the appropriate levels of quality are maintained.
Performance Metrics for Procurement Activities
This section describes the metrics to be used for procurement activities associated with the project.
These metrics may be used to ensure the project stays on schedule regarding procurement activities.
They may also be used to compile data on the performance of various vendors in order to assist with future procurement activities’ vendor selection criteria.
Sponsor Acceptance
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