This document discusses procurement management for IT projects. It defines procurement as obtaining goods and services from outside vendors rather than internal organizations. It describes the key aspects of a procurement management process, including managing contracts and supplier relationships to ensure high quality deliverables. The document outlines the main procurement processes of plan procurements, conduct procurements, administer procurements, and close procurements. It also discusses common procurement tools and techniques used in each process. Finally, it describes different types of contracts like fixed price, time and materials, and fixed price per delivered unit contracts.

1. IT PROJECT
MANAGEMENT
ASSIGNMENT
PROCUREMENT
MANAGEMENT

2. Procurement Management
Definition:
• Procurement refers to the aspects of project management related to
obtaining goods and services from outside companies; it does not refer to
other internal organizations within your own company.
• A Procurement Management Process, or Procurement Process, is a method
by which services are purchased from external or from outside organization.
What is Procurement Management?
Procurement management is the systematic approach used for buying all the goods
and services needed for a company to stay sustainable. Manage your procurement
well, and it will add value to all your business practices and save you both time and
money.
What is a Procurement Management Process?
A Procurement Management Process, or Procurement Process, is a method by which
services are purchased from outside the organization. The procurement
management process involves managing and review the contract and work with
approval of final product from suppliers. A procurement process also specifies how
the supplier relationships will be managed, to ensure a high level of service is
received. This is a critical task in Procurement Management.
In essence, the procurement process helps you "Get what you have paid for"
“The processes to purchase or acquire the products, services, or results needed
from outside the project team to perform the work”

3. PROCUREMENT TOOLS AND TECHNIQUES:
Process Name Process Description Tools & Techniques
Plan Procurements
Documents project purchasing
decisions, specifies the approach to
procurement, identifies potential
sellers.
1. Make-or-buy analysis
2. Expert judgment
3. Market research
4. Meetings
Conduct
Procurements
Obtains seller responses, selects a
seller, and awards a contract.
1. Bidder conferences
2. Proposal evaluation techniques
3. Independent estimates
4. Expert judgment
5. Advertising
6. Analytical techniques
7. Procurement negotiations
Administer
Procurements
Manages procurement
relationships, monitors contract
performance, makes changes and
corrections as appropriate
1. Contract change control system
2. Procurement performance
reviews
3. Inspections and audits
4. Performance reporting
5. Payment systems
6. Claims administration
7. Records management system
Close Procurements Completes each project
procurement.
1. Procurement audits
2. Negotiated settlements
3. Records management system

4. TYPES OF CONTRACTS:
A way of classifying contracts is by the way that the payment to supplier is
calculated. According to that:
➢ Fixed Price Contracts
➢ Time and Materials Contracts
➢ Fixed Price Per Delivered Unit Contracts
Fixed Price Contracts:
A buyer and seller enter a fixed-price contract by agreeing on the final cost of a good
or service, which is set by the contract both parties sign and agree. The seller and the
buyer agree on a fixed price for the project. The seller often accepts a high level of
risk in this type of contract. The buyer is in the least risk category since the price the
seller agreed to is fixed. Be sure this type of contract has fully detailed specifications,
checklists, and project scope statements from the seller side which the buyer will
use.
The advantage for you with a fixed price contract is that you know exactly how much
it is going to cost you before you begin the work, and for many project teams this is
very valuable.
Time and Materials Contracts:
With this type of contract, the customer is charged at a fixed rate per unit of effort
and provides an estimate of overall cost based on their current understanding. An
arrangement under which a contractor is paid on the basis of:
• Actual cost of direct labour, usually at specified hourly rates.
• Actual cost of materials and equipment usage.
• Agreed upon fixed add-on to cover the contractor's overheads and profit.
This sort of contract is great for projects where you don’t know exactly what you
want when you start out. Provided you keep a close eye on costs and manage the
Fixed-Price Per Deliver Unit Contract
This type of contract is often associated with Function point counting. The size of
system to be delivered is calculated or estimated at the outset of the project. The
size of the system to be delivered might be estimated in lines of code, but FPs can be
more easily and reliably derived from requirements documents. A price per unit is
also quoted. The final price is then the unit price multiplied by the number of units.