Project Management – Conducting Procurements
By Jason Rich, Northwest University
Conducting procurements is where you sign on the dotted line. By now you should have sent out your request of information, proposals and quotes, and are now ready to choose a supplier or vendor. Often times a bidder’s conference may be needed. A bidder’s conference is a meeting with all of the qualified bidders’ to clarify requirements and let the bidders’ ask any questions that they may have before they submit their bids. From there all the bids will be complied and evaluated by you and your team. The evaluation process can be more formal or less so depending on the significance of the procurement. Often the bids or proposals are weighed against specific criteria that have been set by you and the team ahead of time. Once you pick a winner the contract is awarded. Sometimes there may be a formal appeal process that a losing bidder may initiate, this is uncommon in the private sector but may be in place when dealing with government contracts. Read the Complete Article
Planning Procurements in Project Management
By Jeremy Siegel
The process of planning procurements involves determining the project’s need for materials or services found outside of the organization and documenting those procurements determined to be required. The scope baseline, requirements documentation, and risk register are key inputs for the process. Different tools used include make-or-buy analysis, contract types, and expert judgment. Make-or-buy analysis weighs the pros and cons of making a deliverable internally or buying it externally. Factors such as cost, risk, time, and legal implications should be considered.
The type of contract that governs the procured work should also be decided upon in the planning for procurements phase. Different contracts are appropriate for different situations. For example, if a project’s scope is clearly defined, the buyer might prefer to pay the vendor a fixed price for the work performed because the requirements are known and the cost to the buyer will not increase. Read the Complete Article
The 5 Phases of the Vendor Selection Process
By Keith Mathis – PM Expert Live
Let’s face it. No matter how hard we try or how much we want it, we can’t do it all. Regardless of the size of your organization, you will eventually come across at least one aspect (usually several) that is not feasible or cost effective to do for yourself. Whether it is buying paper, printer ink, food, or a new MRI machine, you will sooner or later find that you must go in search of a vendor.
Hiring a vendor has several advantages. It can reduce operational costs, enhance working conditions, improve responsiveness, and save significant money.
While outsourcing to a vendor may be necessary, there are also times when it is not wise to do so.
Read the Complete Article
- If you and the potential vendor do not have the same goals.
- If you feel like you must micromanage the entire project and process.
Project Management – Can You Handle the Truth?
By Michael Gorman
Quite apart from your usual day-to-day operations, a project is mandated when a business need requires your organisation to meet new and unprecedented objectives. This could be the need to distribute your enterprise geographically, to manage your documents and records more accountably, or to accomplish a fundamental change in the way your organisation does business through new utilisation of new technologies or improved business processes.
The skills and resources required to meet these needs, or implement the necessary changes, may simply lie outside your organisation’s operational capability. Or your strategic plan may require your departments to keep their focus on their primary business functions whilst your organisation moves through change. In either case, you may decide to outsource and publish a request for tender in the hope that a self-managed external group can make a competitive proposal and accomplish a satisfactory solution in an acceptable time frame. Read the Complete Article
How to Develop a Procurement Management Plan for Outsourced Projects
By Michael D. Taylor
Since those who are assigned to a Procurement Management Team are often nonplused with their role, it is incumbent upon the project manager to facilitate the development of a comprehensive procurement management plan. The plan is to be directed to the PMT, not to the outsourced organizations, and its purpose is to ensure that the PMT understands how it will operate within the project environment, how it will establish subcontracts, and how it will manage and monitor the subcontractors. This plan should include the following aspects:
- Procurement goals
- Team roles (RAM)
- Competitive vs. sole-source rationale
- List of potential bidders
- Subcontractor selection method
- Procurement risk management plan
- Subcontractor monitoring and control methods
Procurement goals. The specific goals of the eventual subcontract will define not only the objectives of the subcontract around the constraints of time, cost, and scope, but it should include their relative priorities. Read the Complete Article
An Introduction to Procurement Management in Project Management
By Brian Egan – Global Knowledge
Project procurement activities are often managed by specialists. By this I mean that the procurement department takes over responsibility for purchasing and contract management from the project manager. As a result of this separation of responsibilities, the steps and stages of procurement are often poorly understood by PMs.
Read the Complete Article
- Make purchase decisions – Planning
Purchase decisions follow from project planning and analysis. Project needs are analyzed and compared with available resources and skills. Anything the organization cannot provide must be procured.
Prepare bid documents
These documents include a SOW statement (Scope of Work), general terms and conditions, bid response instructions, and an explanation of how proposals will be evaluated (source selection criteria).
Distribute bid packages to potential vendors
Potential vendors can be identified through advertising, the internet, or through an organization’s qualified vendors list.
Bidder or vendor conferences are used to efficiently deliver detailed information to potential vendors.
Horse Trading and Project Management
By Marty Davis, National Aeronautics and Space Administration (NASA)
I asked two of our regular contractors to tell us what doing business in the commercial world is like. They talked about fixed-price contracts, and how this was the way to go to hold down your overall costs. But with a fixed-price contract, I asked, how do you get what you want (or need) without modifying the contract? Because inevitably you will find something you want that is not in the contract. This is not something intentionally left out or something you knew you would want at a later time. With today’s technology, where there is a great deal of uncertainty, things change all the time during a project. Priorities shift, new needs arise. Also, as you learn more about commercial practices you may want some things changed. That’s when they told me about horse trading. Read the Complete Article
Contractor/Vendor Selection: Bridging The Communication Gap (#3 in the series Outsourcing From a Project Manager’s Perspective)
By Susan Peterson
In the continuing series on outsourcing project work this month’s column addresses the challenges related to selecting those individuals and/or organizations that will provide the expertise needed for specific activities. All too often this process is filled with “communication disconnects” in documenting what is needed from contractors/vendors. Whether one uses requests for proposal (RFPs), requests for information (RFIs), or other types of vendor solicitation documents, clear definition is critical. I have participated in the election process in multiple roles including leading the selection process, writing solicitation documents for clients, and responding to client proposals. The following areas are primary considerations to effectively facilitate the project vendor selection and subsequently the contracting process.
Be specific — even if it hurts.
There is no substitute for clarity in specifying what activities need to be performed. Read the Complete Article
Procurement Management in Project Management – Build or Buy? (#4 in the series Procurement Management in Project Management)
By Joseph Phillips
Ah, one of the great arguments of all time. Should we buy it or should we build it? Well, it’s probably not that great of an argument, but I’ll bet you’ve been in some heated discussions on the value of either side of the debate. If not, let’s start one now.
Sometimes, like it or not, it’s more cost-effective to spend the cash and pay someone else to build the thing for you. Why? Your crew is busy doing other jobs, they don’t have the competence to build the thing you need, or your organization doesn’t want to take the risk of creating the thing in-house. Lots of reasons.
Other times, like when your project team is lounging by the company pool sipping pinot noir and snacking on spaghetti, it’s ideal to put them back to work building something. Read the Complete Article
Procurement Management in Project Management – Cash and the Law of Diminishing Returns (#3 in the series Procurement Management in Project Management)
By Joseph Phillips
One of my favorite economic laws is the Law of Diminishing Returns. It’s basic stuff at first glance, but can really haunt a project manager if he’s not careful. I know you’re familiar with the Law of Diminishing Returns, but some aren’t, so let’s help them out.
Imagine that you have a corn field and you know that you can get 100 trucks of corn out of the field. That’s the most corn you’ll ever get from the field. You also know that if you hire 10 guys to harvest the corn for you, they’ll be done in 2 days. So you reason that if you hire 20 guys you’ll be done in 1 day. So this must mean that if you hire 40 workers, all the corn will be harvested in half a day, right? Read the Complete Article