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What is Project Procurement Management

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Abez Zeledeta
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9 views

What is Project Procurement Management

Uploaded by

Abez Zeledeta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What is Project Procurement Management

Project Procurement Management includes the processes required to acquire


goods and services, to attain project scope, from outside the performing organization
The six major Project Procurement Processes
1. Procurement Planning: Begins at the start of a new project, includes the make or

buy analysis, and ends with a published Procurement Management Plan.


2. Solicitation Planning: Starts implementation of the Procurement Management Plan,

and ends with a solicitation document typically called the Request for Proposal (RFP).
3. Solicitation: Takes the RFP, and solicits formal proposals from sellers.

4. Source Selection: Evaluates seller proposals, and ends with the issuance of a contract

award to a seller.
5. Contract Administration: Manages seller performance, and manages changes to

seller authorized scope.


6. Contract Closeout: Settles all open contractual issues, and closes out each procurement.
Partnership. An ordinary partnership occurs when two or more entities (persons) combine capital
and/or services to carry on a business for profit. From a legal standpoint, it is a group of separate
persons.
A 'partner' is defined as a firm with whom your company has an ongoing buyer-seller relationship,
involving a commitment over an extended time-period, a mutual sharing of information and a sharing
of risks and rewards resulting from the relationship.
Joint Venture. An enterprise owned and operated by two or more businesses or individuals as a
separate entity (not a subsidiary) for the mutual benefit of the members of the group. Joint
ventures possess the characteristics of joint control; e.g., joint property, joint liability for losses
and expenses, and joint participation in profits. Joint ventures can be either incorporated or
unincorporated.
Various Models are Employed for Teaming Agreements

Model # 1: Teaming arrangements creating a "superior-subordinate" relationship


Model # 2: Teaming agreements creating "partners."
Model # 3: Performance on a single project but "without" a teaming agreement
 Risk: Possibility of loss or injury, a dangerous element or factor, the chance of loss, the
degree of probability of such loss.
 Risk Identification: The process of systematically identifying all possible risk events
which may impact a project. . . Not all risks will impact all projects, but the cumulative
effect of several risk events occurring in conjunction may well be more severe than
examination of individual risk events might suggest.
 Risk Assessment: The process of subjectively determining the probability that a specific
interplay of performance, schedule, and cost, as an objective, will or will not be attained
along the planned course of action.
 Risk Management is the systematic process of identifying, analyzing, and responding to
risk. It includes maximizing the probability and consequences of positive events and
minimizing the probability and consequences of adverse events to project objectives.
Risk management can hence be reduced into a simple three step process:
1. The identification of potential project risks;
2. The assessment of the probability of a risk's occurrence as well as the determination of
the impact/consequences should the risk materialize, and lastly
3. The development of a risk closure plan to bring all identified dangers down to
acceptable levels, but not necessarily eliminating them altogether.
The risks associated with a project such as the internal development or the external
procurement of a critical component may be divided into the three traditional areas of project
management, often referred to as the project's triple constraint:
The Risks associated with Technical, Quality, or Performance: The possibility that the item
being developed or procured will not perform to the levels needed by the project. Without
question, technical risks are paramount to the success of any project.
If a critical component does not work it will have an adverse impact on the success of any project.
Technical risks are most often "show stoppers" and they must be corrected.
The Risks with Schedule Performance: The possibility that a critical item needed by the project will
not be available in the time-frame needed, and/or that the technical risks will cause an adverse impact on
the project schedule. Depending upon the circumstances, schedule risks can be merely an annoyance, or
possibly have a catastrophic impact on the project. Schedule risks are second in criticality, right next to
technical performance.
The Risks with Cost Performance: The possibility that the costs of the critical items will exceed that
which is has been estimated, budgeted, or even available to the project, and that the technical and/or the
schedule risks will have an adverse impact on the costs of the subproject.
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