Procurement management is the process of purchasing goods and services from external sources. It involves planning procurement needs, soliciting bids or proposals, selecting sources, and administering and closing contracts. The key stages are procurement planning, solicitation planning, solicitation, source selection, contract administration, and contract closeout. The goal is to obtain the best value for the organization through a structured process of identifying needs, finding suppliers, and managing agreements.

1. Procurement Management
Getting Resources from outside

2. Procurement Management
• It is the process of purchasing the products or
services from the sources, Choosing a source,
Administrating the contract and closing out the
contract
• It consists of – Material, Equipment,
Consultants, Training and many other goods and
services
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3. Procurement Management
• Focus is from Buyer’s perspective
• Other parties are
– Contractor
– Sub-contractor
– Vendor or Supplier
• CONTRACT is the most IMP thing in this (not
SOW)
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4. Procurement Management
• Various Stages
– Procurement Planning
– Solicitation (Request) Planning
– Solicitation
– Source Selection
– Contract Administration
– Contract Closeout
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5. Procurement Planning
• Procurement Planning –
– Determining what to procure and when
– Inputs are – Scope statement, Prod. Desc.
market cond. etc
• Techniques used are -
– Make or Buy analysis (build Vs Buy)
– Expert Judgment
– Outputs are
– Procurement management plan
– Statement of work (SOW)
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6. Make or Buy analysis
• Time to Market
• Build Vs Buy cost
• Study various products
• Comparative analysis between products
• Product features
• Cost analysis
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7. Contract type selection
• Fixed price or lump-sum contracts
• Time and Material (T&M)
• Cost reimbursable contracts
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8. Solicitation Planning
• Procurement Documents –
– Invitation for Bid
– Request for proposal (RFP)
– Request for quotation (RFQ)
– Request for Information (RFI)
– Contractor Initial response
• Bid and Quotation are used when source
selection is based on price
• Proposal is used when Tech. skills or Tech
approach is more important
http://www.radiantminds.co.in

9. Solicitation Planning
• Evaluation Criteria
– Understanding of need
– Overall cost
– Technical capability
– CMMi process implementation
– Previous history
– Preferred vendor
– Financial capacity
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10. Solicitation Planning
• SOW – It describes the procurement item
in sufficient details to allow prospective
sellers to determine if they are capable of
providing those.
• Sufficient details varies based on nature
of item
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11. Solicitation
• Obtaining quotations, bids, offers or
proposals
• Input – Procurement document, Preferred
vendor’s list
• Tools – Bidder conferences, Advertising
• Output - Proposals
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12. Source Selection
• Choosing from among potential sellers
• Input – Proposals, Evaluation Criteria,
Organizational policies
• Tools – Contract negotiation, Weighting
system, Screening system, Independent
estimates
• Output - Contract
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13. Contract Administration
• Managing the relationship with the seller
• Input – Contract, Work results, Change
requests, Seller invoices
• Tools – Performance reporting, Payment
system
• Output – Correspondence, Contract
change, Payment request
http://www.radiantminds.co.in

14. Contract Closeout
• Completion and settlement of the
contract, including resolution of any open
issues
• Output – Contract File, Formal acceptance
and closure
http://www.radiantminds.co.in