PROJECT PROCUREMENT AND TENDERING PCC 512

SESSIONS BREAK-UP
• Prof. Ajaya M R: 28 sessions (covering Unit I and II) –
Lecture – 2 Credits

• Dr. Sundrani D: 14 sessions (covering Unit III) - Tutorial

– 1 Credit
Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Lecture Lecture and an Internal Assessment
(2 Credits)
Tutorial Tutorial on Tendering
(1 Credit) (2 groups will be made)
Text and Reference books
• Patil, B.S., and Woolhouse, S.P. (2020), B.S.Patil’s
Building and Engineering Contracts, 7th Edition, CRC
Press.
• Kumar Neeraj Jha, Construction Project Management,
Theory and Practice, by Pearson Education India.
• Lewis, H. (2009). Bids, tenders and proposals-Winning
business through best practice. Kogan Page, London.
• FIDIC (1994). FIDIC tendering procedure. FIDIC
• Reading Materials
 PROJECT VS. PRODUCT
PROCUREMENT
1. Definition of basic terminologies

2. Steps in Project procurement

3. Steps in Product procurement

4. Overall differences

5. Difference in steps

6. Conclusion
Basic Terminology
• Philip Kotler: “A product is anything that can be
offered to a market for attention, acquisition, use or
consumption. It includes physical objects, services,
personalities, place, organizations and ideas.”

• PMI - “a temporary endeavour undertaken to create

a unique product or service or result.”
Basic terminology
• PROCUREMENT is the process involved in obtaining or sourcing
something that is needed. Businesses procure supplies and raw
materials, while governments may procure contractors or
service providers.

• PROJECT PROCUREMENT is the creation and maintenance of

relationships with external resources (contractor and/or
consultants) needed to complete a project.

• PRODUCT PROCUREMENT is the process of purchasing goods

and/or services and usually in reference to a business spending
PROJECT PROCUREMENT STEPS
PRODUCT PROCUREMENT STEPS
 PRODUCT PROCUREMENT STEPS
• Obtaining a purchase request
• Requesting proposals and evaluating quotations
• Dispatching official purchase orders
• Receiving products and services
• Checking the quality of delivered items
• Effecting payment to vendors
 OVERALL DIFFERENCES
PROJECT Procurement PRODUCT Procurement

A complex process associated with

A set of activities directly related to
sourcing and obtaining goods and
acquiring goods and services
services

Includes multiple stages and has Fewer steps and fewer employees
numerous people involved involved

Stages can be tailored depending on the Stages are usually standard among all

company and vendor businesses

Takes place before, during, and after the

The actual process of purchasing
purchase

Aimed at recognizing and satisfying the Aimed at ordering and paying for goods
company’s internal needs
 OVERALL DIFFERENCES
PROJECT Procurement PRODUCT Procurement

Proactive approach Reactive approach

Involves need identification, supplier Comprises placing an order,

management, contract management, expediting, receipt of goods in the
and purchasing stock, and making payments

Has long-term goals like gaining

Has short-term goals like obtaining
competitive advantage for the
business the necessary goods at the right time

Focused on creating and maintaining

Focused on making transactions
strong supplier relationships

Places more importance on More focused on the item’s price

the item’s value than its cost
DIFFERENCE IN PROCESS
Project Procurement: Strategic Product Procurement:
Process Transactional Activities
Identify requirements and needs Receive purchase requisitions

Source and evaluate local, national, or

international suppliers Evaluate quotes from suppliers

Negotiate conditions, terms, and contracts Raise and process purchase orders

Build and manage relationships with Receive goods/services and warehouse

contracting/subcontracting parties management
Perform cost savings and profit margin Process and organize payment with
analysis supplier
Conclusion
Project vs. Product Procurement
The main difference between Project procurement and
Product procurement is that Product procurement only
focuses on order costs and how to lower them,
whereas Project procurement focuses on the overall
value creation and total costs throughout the project
life- cycle. Project procurement aims to manage
supplier relationships, risk mitigation, lowering costs
and contract compliance.
THANK YOU