Procurement Management Process

For [Project Name]

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Process

1 Introduction
The Project Procurement Process is followed during the Execution process of the Project
Management Life Cycle.

1.1 What is a Project Procurement Management Process?

A Project Procurement Management Process is a formal method by which products (goods

or services) are acquired for a project from external suppliers. The process entails managing
the ordering, receipt, review and approval of products from suppliers, as well as the overall
management of supplier relationships to ensure continued customer service.

A Project Procurement Management Process is used to ensure that all products acquired for
the project are in accordance with the requirements set out by the Project Procurement Plan.
This requires that the products are:

 Acquired within the correct timescales

 To the level of quality defined
 Within the budgeted cost identified. ©

The process also lays out the procedures for ensuring that supplier relationships are
properly managed through the:

 Regular review of supplier performance

 Identification and resolution of supplier issues

1.2 When to use a Project Procurement Management Process

The Project Procurement Management Process is initiated immediately after the Project
Procurement Plan has been approved and the Supplier Contract signed (i.e. during the
‘Execution’ process of the project). The Project Procurement Process is usually managed by
a single person within the project (usually a Project Procurement Officer or Manager) and
overseen by the Project Manager.

Without a formal Project Procurement Management Process in place it will be difficult to

confirm that the products provided by the supplier are ‘fit for purpose’ and hence meet the
requirements outlined within the Project Procurement Plan. Furthermore, it will be difficult to
identify and manage supplier issues and will therefore increase the overall risk to the project.
The Project Procurement Management Process is terminated only when the Execution
process of the project is completed (i.e. just prior to Project Closure).
©

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1.3 Instructions

Not all sections in this document will apply due to the uniqueness of each project. If a
particular section is not applicable; enter NA (Not Applicable) to indicate that you have at
least considered this section.

Under Contact Information, the Sponsor, Authorized By, and Contact can be the same or
different individuals.

All tables and boxes are expandable. Add rows when it is necessary to include additional
information.

Definitions of project management and technology terms are presented in the On-line
Project Management Glossary (Browse: www.technology.wv.gov > Products and Services >
Project Management Methodology > Glossary).

1.4 Contact Information

Date Submitted: Click here to enter a Prepared By: Click here to enter text.
date.

Sponsor: Click here to enter text. Sponsoring Entity: Click here to enter text.

Authorized By**: Click here to enter text. Contact: Click here to enter text.

Contact Phone No.: Click here to enter text. Contact Email: Click here to enter text.

PAS number: Click here to enter text.

1.5 Document History

Version Issue Date Changes

Submit Questions and Acceptance documents to: [email protected]

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Table of Contents

1 INTRODUCTION.................................................................................. I
1.1 WHAT IS A PROJECT PROCUREMENT MANAGEMENT PROCESS?........................................................... I
1.2 WHEN TO USE A PROJECT PROCUREMENT MANAGEMENT PROCESS..................................................... I
1.3 INSTRUCTIONS.......................................................................................................................... II
1.4 CONTACT INFORMATION............................................................................................................. II
1.5 DOCUMENT HISTORY................................................................................................................. II

2 PROJECT PROCUREMENT PROCESS.........................................................2

2.1 OVERVIEW.............................................................................................................................. 2
2.2 ISSUE PURCHASE ORDER...........................................................................................................4
2.2.1 Identify Required Product............................................................................................4
2.2.2 Document Purchase Order...........................................................................................4
2.2.3 Approve Purchase Order..............................................................................................4
2.2.4 Issue Purchase Order to Supplier.................................................................................4
2.2.5 Communicate Delivery Timeframes.............................................................................4
2.3 FULFILL PURCHASE ORDER........................................................................................................ 4
2.3.1 Receive Product...........................................................................................................5
2.3.2 Review Product............................................................................................................5
2.3.3 Resolve Product Issues................................................................................................ 5
2.3.4 Accept Product.............................................................................................................5
2.3.5 Approve Payment........................................................................................................ 5
2.4 MANAGE SUPPLIER CONTRACT....................................................................................................5
2.4.1 Confirm Milestone Reached.........................................................................................5
2.4.2 Review Supplier Performance......................................................................................6
2.4.3 Identify Supplier Issues................................................................................................6
2.4.4 Resolve Supplier Issues...............................................................................................6
2.4.5 Communicate Review Outcome...................................................................................6

3 PROJECT PROCUREMENT ROLES.............................................................6

3.1 PROJECT PROCUREMENT MANAGER / OFFICER...............................................................................6
3.2 PROJECT MANAGER...................................................................................................................7

4 PROJECT PROCUREMENT DOCUMENTS.....................................................7

4.1 PROJECT PROCUREMENT REGISTER..............................................................................................7
4.2 Purchase Order Form...........................................................................................................7

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2 Project Procurement Process

2.1 Overview

Provide an overview of the Project Procurement Management Process. For example:

"The Project Procurement Management Process is undertaken to ensure that all products
(i.e. goods and services) are ordered, delivered and received in accordance with the Project
Procurement Plan and that the performance of the supplier providing the products is
adequately managed." ©

The Project Procurement Plan lists the products, suppliers and timeframes for acquisition by
the project. The Project Procurement Process ensures that the products outlined within the
Project Procurement Plan are acquired on time, are within cost and at the level of quality
required. To ensure that Project Procurement is handled correctly, a ‘Purchase Order’
document is completed for each single / bulk purchase. A Purchase Order sets out the
specific product(s) required, the delivery urgency, the location for delivery and the cost
center to be charged for the delivery.

Purchase Orders are usually approved by the Agency’s Purchasing Agent and the delivery
information is recorded within a Project Procurement Register.

In summary, Project Procurement Management will be introduced to this project through the
implementation of three key processes:

 The issuing of Purchase Orders

 The completion of Purchase Orders
 The management of supplier contracts ©

The following diagram describes the processes and procedures required to manage
effectively the Project Procurement of products from suppliers for the project. Where
applicable, Project Procurement Roles have also been identified.

Note: This process is for the Project Procurement of all types of Products, including goods
(e.g. computer hardware, raw materials and equipment) and services (e.g. raw labor,
technical services, consultancy and management).

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2.2 Issue Purchase Order

The first process required to purchase product from an external supplier is the creation and
issue of a Purchase Order. The following procedures are undertaken:

2.2.1 Identify Required Product

The Project Procurement Manager (or Officer) identifies the products required to be
purchased (and the respective supplier) from the Project Procurement Plan. S/he also
identifies the timeframes within which the products must be delivered and the level of quality
to which each product should adhere.

2.2.2 Document Purchase Order

To request product from an external supplier, the Project Procurement Manager must
complete a ‘Purchase Order’ form. This form defines in detail the specific product required
(and its components), the delivery timeframes, the delivery address and the cost center to be
charged for the purchase. A Purchase Order form may be completed for several products
but only one supplier. It is important that the Purchase Order is completed well before the
required delivery date to give the supplier the maximum notice period possible and therefore
increase the likelihood of the delivery occurring on time.

2.2.3 Approve Purchase Order

The Purchase Order is then forwarded to the Project Manager for approval. The Project
Manager will consider the following criteria prior to approving the form:

 Is the product listed within the Project Procurement Plan?

 Is the product defined in sufficient detail for the supplier to interpret the requirement?
 Is there likely to be sufficient time for the supplier to deliver the product and meet the
timeframes outlined within the Project Procurement Plan?
 Is the supplier listed the approved supplier within the Project Procurement Plan? ©

2.2.4 Issue Purchase Order to Supplier

Once the Purchase Order is approved by the Project Manager, it is issued to the supplier for
action (by fax / mail / post).

2.2.5 Communicate Delivery Timeframes

The Supplier then confirms receipt of the Purchase Order and issues an ETA (Estimated
time of Arrival) for the product. The ETA describes the likely timeframe for delivery of the
product to the designated project location.

2.3 Fulfill Purchase Order

The Purchase Order is then processed by the supplier and the product delivered to the
project as ordered. The Project Procurement Manager then reviews the product and
identifies and resolves any product issues. The product is then formally accepted and
supplier payment is authorized. The following procedures are undertaken: ©

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2.3.1 Receive Product

The supplier fulfills the order by delivering the product (as defined by the Purchase Order) to
the Project. The Project Procurement Manager physically views the product received and
confirms that the project team have received it into their care. In the case of a service
delivered by the supplier, the Project Procurement Manager confirms from the project team
that the service has been performed and is ready for review.

2.3.2 Review Product

The product is then inspected / reviewed to access whether or not it meets the requirements
of the initial Purchase Order. This may involve a physical inspection (in the case of a ‘good’)
or a series of interviews (in the case of a ‘service’) to determine that the product was
delivered on time, within cost and at the level of quality required.

2.3.3 Resolve Product Issues

If the outcome of the review is that one or many of the requirements set out by the Purchase
Order have not been satisfactorily achieved, then a formal Issue is raised by the Project
Procurement Manager. The extent of the problem is then quantified and the impact and
severity of the issue rated. The Project Manager will then lead the resolution of the issue to
ensure that it is quickly and appropriately resolved. ©

2.3.4 Accept Product

Once all product delivery issues have been resolved, the Project Manager may formally
accept the product on behalf of the project team and will notify the supplier.

2.3.5 Approve Payment

The supplier will then send the project team an invoice, which is approved for payment by
the Project Manager (given no current outstanding issues).

2.4 Manage Supplier Contract

The above procedures are undertaken for each Purchase Order issued by the project. In
parallel to the Project Procurement of product for the project, the overall performance of the
supplier must regularly be assessed to determine that s/he is fulfilling the overall conditions
of the contract. This process involves reviewing the supplier's performance and ensuring that
all contractual conditions are being met throughout the project.

2.4.1 Confirm Milestone Reached

During the Planning process a number of supplier review milestones will have been
identified and documented (as part of the Project Procurement Plan). Each review milestone
may be triggered by the completion of a particular project process, deliverable or date. Once
each milestone is reached, the Project Procurement Manager informs the Project Manager
that the supplier's performance is ready to be assessed and a formal assessment program is
initiated.
©

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2.4.2 Review Supplier Performance

The Project Procurement Manager leads a review of the supplier's performance. This may
involve:

 Confirming that the review milestone has been reached

 Listing the actual products provided by the supplier and identifying whether or not they
met the requirements of the purchase order and what impact there was on any delivery
issues that arose
 Confirming that each condition listed within the supplier contract was met as specified.

2.4.3 Identify Supplier Issues

Any issues identified during the supplier performance review are listed and the overall
impact on the ability of the project to achieve its objectives is quantified. A formal supplier
issue is then documented and raised with the Project Manager for resolution.

2.4.4 Resolve Supplier Issues

The Project manager then leads the resolution of each issue identified through negotiation
with the supplier. The following outcomes may occur:

 The supplier is congratulated on his/her performance as there were no supplier issues

 The supplier is informed that should further issues occur, then payment will be withheld
and the contract potentially terminated
 Supplier payment is withheld and/or the contract terminated. Legal action may be
commenced by either the Project Manager or the Supplier. ©

2.4.5 Communicate Review Outcome

Once the supplier performance review is completed and any issues resolved, the outcome of
the review is communicated to key project stakeholders (e.g. the Project Sponsor).

3 Project Procurement Roles

Define the roles and responsibilities for all personnel (both internal and external to the
project) involved with the Project Procurement of product and management of supplier
relationships. Examples include:

3.1 Project Procurement Manager / Officer

The Project Procurement Manager (or Officer) is responsible for ensuring that the entire
Project Procurement Management process is executed appropriately, including:

 Identifying the product to be procured from the Project Procurement Plan

 Documenting each Purchase Order and forwarding it to the Project Manager for approval
 Issuing the Purchase Order and communicating the delivery timeframes
 Receiving and reviewing the product upon arrival at the designated project location
 Identifying and resolving any product delivery issues
 Accepting the product and requesting supplier payment from the Project Manager
 Reviewing the supplier performance and identifying any contractual issues for action. ©

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3.2 Project Manager

The Project Manager acts as a checkpoint to ensure that the Project Procurement
Management Process is being undertaken properly by:

 Approving each Purchase Order as presented by the Project Procurement Manager

 Approving each payment as requested by the Project Procurement Manager
 Resolving supplier contractual issues and agreeing a formal outcome.

4 Project Procurement Documents

List any other documentation used to control the purchase of product for the project.

4.1 Project Procurement Register

The ‘Project Procurement Register’ is the log / database where all Purchase Orders are
registered and tracked through to approval. Use the supplied template for the Project
Procurement Register.

4.2 Purchase Order Form

The ‘Purchase Order Form’ is used to request the delivery of product by an external supplier
to the project. Insert a template for the Purchase Order Form here to show how Purchase
Order will be issued for this project

See Also:
Procurement Register Template.xls

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