Introduction to Project

Procurement
Management
 Understanding Project Processes
Project Boundaries Closing

Monitoring &
controlling

Project
Pre-project Initiation Planning Deliverables

• Select and Executing

prioritize
projects Project
• Draft scope Records
• Overview
• Business case Docs
 Understanding Project Processes
PRE- PROJECT
• Business Case
• Enterprise Analysis
• Stakeholder analysis
• Project Statement of
Work (SOW)
•…

Project Charter
Purpose, justification
SMART objectives
High-level requirements
Summary milestone schedule
Summary budget
Stakeholder list
Understanding Project Processes

• Scope
• Time
• Cost
• Quality
• Human resources
• Communications
• Risk
• Procurement
• Stakeholder
 Understanding Project Processes

• Work of the project begins

• Primary output is status reports
 Understanding Project Processes

• Work results are monitored, changes

requested, and problems corrected
• Primary output is change requests and
corrective actions
 Understanding Project Processes
Project Boundaries Closing

Monitoring &
controlling

Project
Pre-project Initiation Planning Deliverables

• Select and Executing

prioritize
projects Project
• Draft scope Records
• Overview
• Business case Docs
Closing
• Project is completed and project
documents closed out
• Primary output is signed off project
documents and lessons learned
Connecting
the dotsESSES
OC
PR
 Activity list
DELIVE
WBS RABLE

LO WE
Work Packages ST SU
B-DE
LIVE
RAB
LE

TASKS
ACTIVITIES
Activity attributes:
• predecessors,
AL • logical relationships,
ACTU DATA
TION • constraints
EXECU

Plan
n
ed d
cost ata (e
Gantt
EV a n d x pe c chart
tim t
e ) ed
reports
AON
 Activity list
DELIVE
WBS RABLE

LO WE
Work Packages ST SU
B-DE
LIVE
RAB
LE

TASKS
ACTIVITIES
Activity attributes:
• predecessors,
AL • logical relationships,
ACTU DATA
TION • constraints
EXECU

Plan
n
ed d
cost ata (e
Gantt
EV a n d x pe c chart
tim t
e ) ed Project Procurement
reports
AON
Introduction to
Procurement
Management
 Introduction to Procurement Management

• Inter-organizational purchasing-related issues

 supply chain management
• A supply chain consists of all parties involved
in fulfilling a customer request
• Integrating SCM into PM can significantly
enhance the effectiveness of project
management

Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
 Introduction to Procurement Management

Supply Chain
Purchasing management

• Used interchangeably
• Integration of related functions to acquire
needed products and services

Procurement
Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
 Procurement Factors
• The importance of Procurement to general project
management depends on a number of factors:

Value of outsourced
products/services The timing of the
Capability of the
relative to value of the work being
project team
project purchased

Role of the Structure of the

Number of suppliers
outsourced work in procurement supply
required
the entire project chain

Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
 Procurement Decisions
Distribution
network Logistics
configuration
Inventory
control in a
Supply contracts
supply chain

Outsourcing &
Distribution IT & Decision
procurement
strategies Support Systems
strategies
SC integration &
strategic Product design
partnering
Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
 Purchasing process management

Define Select Contract Ordering Expediting Evaluation

specification supplier agreement Follow up

- Vendor
Procurement - Get - Assure adequate - Prepare - Establish - Establish performance
specification supplier selection contract expediting
Role Order routine evaluation
routine - Settling contract
problems

- Functional - Prequalification - Contracting - Develop - Expediting

specification of suppliers expertise order routines - Vendor rating
- 'Trouble- - Vendor
Activities - Technical - Request for - Negotiating
changes Proposal expertise - Order handling shooting' evaluation
- Bring supplier quotation
engineering
knowledge to

- Functional - Vendor
Contract
specification Supplier balanced score
Documents (types, Order Overdue list
- Norm/spec. Selection card
control special
proposal - Vendor profile
conditions)
- Vendor ranking

Adapted from van Weele, A. Purchasing and Supply Chain Management, 5th edition, Cengage Learning / Nelson Education
 Project
Procurement
Planning
Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
 Understanding Project Processes
Project Boundaries Closing

Monitoring &
controlling

Project
Pre-project Initiation Planning Deliverables

• Select and Executing

prioritize
projects Project
• Draft scope Records
• Overview
• Business case Docs
Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
 • Plan for purchasing and acquisition whether for part or all of a
project
• Complete most of project planning first in order to
understand what the true project needs are
– A minimum requirement is the project scope
statement
Plan procurement – “the process of documenting project purchasing
decisions, specifying the approach, and identifying potential sellers”
PMBOK® Guide
Project scope statement – “the narrative description of project
scope, including major deliverables, project assumptions, project
constraints, and a description of work that provides a documented
basis for making project decisions and for confirming or developing a
common understanding of scope among the stakeholders.” PMBOK®
Guide
Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
 • Breakeven and Weighted
scoring analysis
• Sourcing

Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
 Make or Buy Analysis

Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
 A statement of work (SOW) is a formal
document that captures and defines the work
activities, deliverables, and timeline a vendor
must execute in performance of specified
work for a client. The SOW usually includes
detailed requirements and pricing, with
standard regulatory and governance terms
and conditions.
Ref.: Statement of work. (2013, February 22). In Wikipedia, The Free Encyclopedia. Retrieved
01:34, March 5, 2013, from http://en.wikipedia.org/w/index.php?
title=Statement_of_work&oldid=539578879

Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
 Outputs of Planning
Procurement management plan– “the document that describes how
procurement processes from developing procurement documentation
through contract closure will be managed.” PMBOK® Guide
• The procurement management plan guides client company
efforts through all activities dealing with the acquisition of
materials and services to complete the project
• The procurement statements of work ensures that the
contractor and client companies understand the work that is
being requested
Procurement statements of work – “describes the procurement item
in sufficient detail to allow prospective sellers to determine if they are
capable of providing the products, services, or results.”PMBOK® Guide

Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
 • SOW–Statement of work
• RFI—request for information
• RFP—Request for proposal
• RFQ—Request for quotation
• SLA--Service level Agreement
• CONTRACT

Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
 Plan Contracting
• The client company creates a situation in which
prospective contractor companies have capability and
motivation to provide useful and complete proposals
• Outputs of plan contracting include procurement
documents and evaluation criteria

Procurement documents – “those documents utilized in bid and

proposal activities to solicit proposals from prospective sellers, which
include buyer’s invitation for bid (IFB), request for information(RFI),
request for quotation (RFQ), request for proposal (RFP).” PMBOK®
Guide

Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
WORK PACKAGE

Ref.: Project Management Institute (PMI). (2013). A guide to the Project

Management Body of Knowledge (PMBOK guide - 5th edition).
Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
 Conduct Procurements
• Includes identification, evaluation, and
advertising to attract contractors’ interest.
• A formal request is sent seeking competent
firms to compete for the right to perform the
project

Conduct procurements – “the process of

obtaining seller responses, selecting a seller,
and awarding a contract.” PMBOK® Guide
Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
 Administer Procurements
• Buyers and sellers administer contracts to make sure that the
obligations set forth in the contract are met and to make sure
neither has any legal liability
• Sellers create performance reports
• Buyer reviews performance reports to ensure contract obligations
are satisfied

Administer procurements – “process of

managing procurement relationships,
monitoring contract performance, and
making changes and corrections as needed.”
PMBOK® Guide
Adapted from Kloppenborg, T. (2011) Contemporary Project Management (2nd ed). South-Western College Pub.
Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).
Ref.: Project Management Institute (PMI). (2013). A guide to the Project Management Body of Knowledge (PMBOK guide - 5th edition).