Project Management

Procurement refers to the aspects of project management related to obtaining goods and services from outside companies. This specifically refers to vendors and suppliers. It does not refer to other internal organizations within your own company. (For the purposes of this discussion, purchasing and procurement are equivalent terms.) This is an area that project managers definitely need to understand at some level, and it is an area into which the project manager will give input. However, in many, and perhaps most companies, procurement is an area that the project manager does not own. The project manager normally does not have the authority to enter into contracts on behalf of the company, and he normally is not asked to administer the contracts once they are in place.

If you are purchasing goods or services on your project, you should determine your project procurement strategy and plans. In some cases, you will simply follow the procurement contracts and plans that are already established by your company or your organization. For instance, you may purchase hardware from companies using a standard company contract. You may acquire contactors using your company’s preferred vendor list under prior master contractor agreements. In some cases, you will need to work with your Procurement Department to establish your own project-level vendor management plans.

The vendor identification and selection process can occur at different times. Many project teams consider the vendor identification and selection processes to be part of the actual execution of the project. In other words, they are done in the initial Analysis Phase after the project execution has started. This would be the case if you need to better understand your business requirements before you determine the vendor that can best meet the requirements.

In some cases, the identification and selection processes are executed outside of the project. In these cases the vendors and third-party products are all known before the project officially starts. This would be the case for vendors that are chosen on the basis of strategic priorities, and not based on the specific requirements of an individual project. For instance, your company may decide to purchase a leading customer relationship management (CRM) system based on high level business goals and strategies. This CRM system would then be used on all sales and marketing projects - regardless of the specific needs of each individual project.

Create Procurement Management Plan

The Procurement Management Plan describes how items will be procured during the project and the approach you will use to managing vendors on the project. Specific areas to describe include:

• Procurement process. This section provides a brief overview of the process requirements necessary to manage procurement of the identified needs. This process should include:
• Initiating a request
• Development of requirements (technical, timing, quality, constraints)
• Request approval
• Purchasing authority
• Bid / proposal review
• Contract management responsibility
• Contract closure requirements
• Procurement process flowchart
• Roles and responsibilities. This section describes the various roles on the project that have some connection to procurement. This section should describe who can request outside resources, who can approve the requests, any secondary approvers, etc.
• Identified procurement needs. This section details the material, products or services identified for outside procurement. Each listed item should include a justification statement explaining why this should be an outside purchase if there is the possibility of inside sourcing (make vs. buy decision).
• Timing. This section will describe the timeframe that resources are needed. This will provide a better sense for when the procurement process needs to be started for each item.
• Vendor processes. Describe the processes that the vendors should use for timesheet approval, invoice processing, contract renegotiation, status reporting, scope change requests, etc.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Weekly Anagram

Let's have some fun! See if you can unravel this anagram. (Anagrams are a word or phrase formed by reordering the letters of another word or phrase, such as satin to stain.)

Those non-critical activities, i.e. with some float, that tend to group together to form subprojects within the project network.

DECAF HEN RISE: _ _ _ _ _ _ | _ _ _ _ _ _

Last Week's Anagram.

Client-approved variation to a contract, bill of quantities, requirement specification or similar.

ADORER VAIN TRIO: VARIATION ORDER

Wideman Glossary Term of the Week - Team

• A group of people with a high degree of interdependence geared toward the achievement of a goal or the completion of a task.
• Two or more people working interdependently toward a common goal and a shared reward.

Labels: Procurement

Outsourcing of project work is more common today than ever. However, even though you outsource the work, you cannot completely outsource your obligation to make sure the project is progressing smoothly. If all goes well with the outsourcer, you do not have much work to do. Unfortunately, in many instances, the outsourcing vendor does not perform against expectations. If that happens, you want to know about it as soon as possible. For the purposes of this discussion, let us assume that your company has outsourced a project, or a portion of a project. Your company has also asked you to manage the relationship to ensure the vendor performs as expected.

Many people are not sure what they should be doing when they are asked to manage an outsourcing relationship. Part of the uncertainty is because some of the project roles are reversed when you outsource work to a third-party. On a normal internal project, the project manager assigns the work and manages issues, scope, risk, quality, etc. The project manager makes sure work is done on time and the project is progressing as it should. He is held accountable for the success of the project. Other people perform a quality assurance role to make sure things are progressing as they should.

With an outsourced project, the vendor takes on the direct management of the outsourced work. The client project manager is now the one that has to ask the quality assurance questions to make sure the vendor project is progressing as it should. Some of the up-front questions to ask include:

• Is there a contractual agreement that spells out the expectations of both parties in terms of deliverables to be produced, deadlines, payment schedule, completeness and correctness criteria, etc?
• Has a comprehensive project schedule been created?
• What is the Project Management Plan the vendor will use to control the project?
• Has the vendor been clear on what resources will be needed from your company and when they will be needed?
• Have a number of agreed-upon milestones been established to review progress so far and validate that the project is on-track for completion?

Ongoing Questions

As the project is progressing, you must continue to ask questions to determine the current state of the work. You may have status meetings weekly, but there should be a formal quality assurance check at the end of every agreed-upon milestone. The types of questions you would ask at every milestone include:

• Have the deliverables specified in the Project Charter been completed up to this point?
• Have the appropriate deliverables been agreed to and approved by the company?
• If the vendor has met expectations up to this point, have any interim payments been released?
• Can the vendor clearly explain where the project is vs. where it should be at this time?
• Will all the future deliverables specified in the Project Charter be completed?
• Are issues, scope, and risks being managed as stated in the Project Management Plan?
• Should the contract or Project Charter be updated to reflect any major changes to the project?

Once you understand your role on the project, it is easier to ask the right questions to make sure that everything is progressing as it should.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Weekly Anagram

Let's have some fun! See if you can unravel this anagram. (Anagrams are a word or phrase formed by reordering the letters of another word or phrase, such as satin to stain.)

The likelihood of a mistake.

LIBRARY ROBOT RIPE: _ _ _ _ _ | _ _ _ _ _ _ _ _ _ _ _

Last Week's Anagram.

Those non-critical activities, i.e. with some float, that tend to group together to form subprojects within the project network.

DECAF HEN RISE: FEEDER CHAINS

Wideman Glossary Term of the Week - Budget Estimate

• See Estimate and Appropriation Estimate
• (Accuracy -10 to +25 %) An estimate prepared from flow sheets, layouts and equipment details. This is often required for the owner's budget system. These estimates are established on quantitative information, are a mixture of firm and unit prices for labor, material and equipment. These estimates establish the funds required and are used for obtaining approval for the project. Other terms used to identify a Budget Estimate include Appropriation, Control, Design, etc.

Labels: Project Outsourcing