PROJECT PROCUREMENT ACTIVITIES 1 Project Procurement Activities Loren Karl Schwappach PM 610: Project Planning, Execution, and Closure Colorado Technical University
PROJECT PROCUREMENT ACTIVITIES 2 AbstractThis discussion board introduces project procurement to include what project procuremententails, the processes involved as outlined by the Project Management Body of KnowledgeGuide (PMBOK Guide), a recollection of my past involvement in procurement activities,alternate procurement entities, expected procurement activities IRTC will engage in, and a list ofactivates that will need identified and performed for successful completion of the IRTC project.
PROJECT PROCUREMENT ACTIVITIES 3 Project Procurement Activities The top four high level activities of a project manager should include setting clear andachievable objectives, indentifying a project’s requirements, adapt the project to meetstakeholder concerns, and balancing the needs of the project’s scope, schedule, and budget(Smith, 2011). There are many times when the project management team needs to procureresources to ensure the successful completion of a project within the previously mentionedconstraints. This paper specifically addresses project procurement to include what projectprocurement entails, the processes involved as outlined by the Project Management Body ofKnowledge Guide (PMBOK Guide), a recollection of my past involvement in procurementactivities, alternate procurement entities, expected procurement activities IRTC will engage in,and a list of activates that will need identified and performed for successful completion of theIRTC project. Project procurement management contains the procedures and processes required toobtain resources, products, services, and / or results necessary to ensure a projects success. Theorganization plays multiple roles in procurement activities and can alternate as the seller or buyerof the results, services, or products (Global Standard, 2008, p.313). Project procurementincludes change control processes as well as contract management practices necessary to overseeand expand purchase orders or contracts issued by the project management team (GlobalStandard, 2008, p.313). Project procurement also involves the direction and control of anycontractual obligations developed by outside buyers, and administering obligations required bythe project management team as outlined by the contract (Global Standard, 2008, p.313).
PROJECT PROCUREMENT ACTIVITIES 4 The Project Management Body of Knowledge Guide (Global Standard, 2008) outlinesfour main areas of project procurement to include: procurement planning, procurement initiation,procurement administration, and procurement closure. Procurement planning involves the processes of documenting project purchasingdecisions, specifying the approach towards procurement activities, and the detection of possiblesellers. Before project procurement can be completed the project management team needs todevelop a baseline scope of the project, a detailed requirements identification document, aproject team and project stakeholder contractual agreement, a risk register and detailed riskanalysis, a project charter, a project schedule, project cost estimates, a knowledge of availableorganizational assets, and the environmental factors that can affect the project. Projectprocurement requires expert judgment, knowledge of contract types and a make-or-buy analysis.Once procurement planning is completed the project manager should have a developed, clear andaccurate procurement management plan, procurement statements of work, make-or-buy decision,and the procurement documentation, change requests processes, and selection criteria (GlobalStandard, 2008). Procurement initiation (conduct) includes the processes used for collecting sellerresponses, the selection of a seller, and the final procurement contract award. Beforeprocurement initiation can occur the project manager should already have a detailed projectmanagement plan, the procurement selection criteria, a list of qualified sellers, seller proposals,knowledge of organizational assets and project agreements. Procurement initiation tools includebut are not limited to attending bidder conferences, proposal evaluations, independent contractestimates, and seller negotiations. After the initiation phase is complete the project manager
PROJECT PROCUREMENT ACTIVITIES 5should have a seller selected, will update the project management plan, schedule, and resourcecalendars, and will award a procurement contract (Global Standard, 2008). Procurement administration includes the processes required for managing relationships,monitoring contract performance, and enacting corrections and changes as required. In order tocomplete procurement administration the project management team should have all applicableprocurement documents, procurement work performance information and reports, and a detailedprocurement contract with applicable change requests. Procurement administration involvesperforming inspections and audits, managing procurement payment systems, and administeringthe contract change control system (Global Standard, 2008). Procurement closure involves the processes required to complete project procurementssuch as settlement negotiations and organizational process asset updates system (GlobalStandard, 2008). It is often beneficial and / or essential for corporation to use procurement activities toreduce corporate project expenses and increase resource availability. For instance a case studycompleted by Kidd (2001) of [WHO] Ford motor vehicles, the second largest [WHERE] UnitedStates automaker (fifth largest in the world) homed in Dearborn, Michigan was [WHEN]completed in 2001 demonstrating the benefits of well thought procurement activities. [WHAT]The case study showed that Ford motor vehicles spent an estimated fifteen and a half billiondollars a year (in 2001) procuring common outside resources, goods, and services [HOW] usingan e-procurement (internet) solution in order to meet project cost constraints. Ford also utilizedprocurement applications for processing more than a million yearly employee expense accounts.[WHY] These products and services could not be obtained from within the organization and the
PROJECT PROCUREMENT ACTIVITIES 6associated procurement methods provided a tremendous competitive advantage and savings forFord in obtaining outside goods and services and in the development and accounting of corporateexpense reports (Kidd, 2001). In my past employment with the United States Air Force as a satellite and widebandcommunications expert and non-commissioned officer my experience in the realm of projectprocurement is very limited and focused on setting up base communications on South Korean airfields, and working with multiple outside agencies. Although I never held the title of projectmanager, I was however involved in several large visibility and highly classified projectsthroughout my military career. In order to complete many of these projects our communicationsteam needed to work with several outside agencies for resource/service procurement. Forinstance on many occasions I had to procure satellite bandwidth/power/frequency/dataauthorizations for use on restricted commercial satellites. This involved contractual obligationsbetween the customer, our squadron, the Bandwidth Management Center, other agencies, etc.The procurement of non-US base resources (housing, land-usage, food, etc.) during my timedeployed also entailed organizational procurement activities. These were normally completed bythe squadron’s command staff. Project procurement involves planning what to buy, figuring out where to buy it,weighing the costs between building and buying, taking out a contract (fixed fee, time andmaterials, unit price, cost plus, incentive fee), paying for the products/services, and constantanalysis of the procurements performance against a designated contract and therefore can ofteninvolve leadership and managerial insight and approval above that of the project manager(Phillips, 2011).
PROJECT PROCUREMENT ACTIVITIES 7 Although the project manager is often the responsible for project procurement there isoften an organizational procurement manager and or procurement office that work towardsprocurement efforts. The project manager needs to have a thorough understanding of the legalobligations and requirements of project procurement contracting in order to guide the projectthrough initiation, planning, execution, monitoring, and closure (Kerzner, 2009). Whoever themember for responsible for procurement is he / she needs to be socially responsible, use ethicaldecision making and critical thinking, and ensure the procurement effort stays on track whileminimizing project costs, and schedule delays, while maximizing the projects value. Some of the procurement activities expected for IRTC’s web-based billing systemupgrade include deciding how many and whether or not to procure vender business analysts,technical architects, programmers or testers, instructional designers, trainers, and / or technicalwriters. The project team will also need to decide whether or not to procure documentation andtraining materials from the vender and whether or not to procure the vender’s additional softwareadd on. Before procurement activities can take place however, the project team will need todevelop the projects scope, create a detailed requirements identification document, a contractualagreement between the project team and stakeholders, a detailed risk analysis, a project charter, aproject schedule / deliverable estimate, cost estimates, and obtain greater knowledge of availableorganizational assets, and environmental factors affecting the IRTC project.
PROJECT PROCUREMENT ACTIVITIES 8 ReferencesGlobal Standard. (2008). A Guide to the Project Management Body of Knowledge (4th ed.). Newtown Square, PA: Project Management Institute, Inc.Kerzner, H. (2003). Project management: A systems approach to planning, scheduling, and controlling (8th ed.). Hoboken, New Jersey: John Wiley & Sons, Inc.Kidd, P. (2001). Case Example: Ford e-procurement in a manufacturing company. Retrieved August 19, 2011, from http://www.cheshirehenbury.com/emanufacturing/fordcase.htmlPhillips, J. (2011). Real World Project Management: Procurement Management. Retrieved August 19, 2011 from Project Smart Website: http://www.projectsmart.co.uk/real-world- project-management-procurement-management.htmlSmith, G. (2011, August 15). PM610 Live Chat Session 2 with Professor Gigi Smith [Online Presentation]. Retrieved August 19, 2011 from Colorado Technical University Online Virtual Campus, PM610-1103B-02: https://campus.ctuonline.edu