1. Introduction
There are four procurement-related project management processes, one in each of the following process groups: planning, executing, monitoring & controlling, and closing. The second process is therefore in the Executing Process Group, and is the process whereby the supplier of the procurement is selected.
This post is devoted to the Inputs, Tools & Techniques, and the Outputs of this second of the four procurement processes, 12.2 Conduct Procurements.
2. Inputs
The basis for having a procurement at all is the Make-or-Buy Decision. This is important to keep in the background of this process, because conditions within the organization, external market conditions, or those of the project itself (cost overruns, delivery delays, etc.) may change to the point that the scales are tipped away from “buy” back to “make”.
Most of the inputs of this Conduct Procurements process come from the previous process 12.1 Plan Procurement Management, the output of which is the Procurement Management Plan. This is the blueprint containing the guidelines for all the other procurement processes.
The Procurement Documents contain the Procurement Statement of Work, the “seed” of the procurement scope, which is the portion of the scope of the entire project out of which is carved the portion of the scope that is going to be provided by the procurement. These Procurement Documents can include the Request for Proposal which goes out to the sellers, in response to which they produce the Seller Proposals. These Seller Proposals are then judged according to the Source Selection Criteria, not to mention the past experience with sellers contains in the Operational Process Assets (OPAs).
| 12.2 Conduct Procurements | ||
| INPUTS | ||
| 1. | Procurement Management Plan | This describes how the procurement processes will be managed, from developing procurement documentation to closing of the procurement contract. |
| 2. | Procurement Documents | These include documents such as the Request for Proposal used to solicit proposals from prospective sellers. |
| 3. | Source Selection Criteria | Information may include information on:
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| 4. | Seller Proposals | These are the sellers responses to the Procurement Documents (input #2). |
| 5. | Project Documents | Includes risk-related contract decisions in risk register. |
| 6. | Make-or-Buy Decisions | Evaluation of the need for the organization to buy products versus make the items themselves. |
| 7.; | Procurement Statement of Work | Describes the scope of the product to be delivered by the supplier, and contains clearly stated set of goals, requirements, outcomes for the supplier to meet. |
| 8. | OPAs |
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| TOOLS & TECHNIQUES | ||
| 1. | Bidder Conference | Meetings between buyer and all prospective sellers prior to submittal of a bid or proposal. |
| 2. | Proposal Evaluation Techniques | Formal evaluation review process is defined by buyer’s procurement policies. |
| 3. | Independent Estimates | Independent estimate, either prepared by the buyer or by an outside estimator, may serve as a benchmark for proposed responses. |
| 4. | Expert Judgment | Used to evaluate seller proposals. May be a multi-discipline review team with expertise in each of the areas covered by the procurement documents and proposed procurement contract. |
| 5. | Advertising | Lists of potential sellers may be expanded by advertisements in publications such as newspapers or trade publications, or online solicitations to the vendor community. |
| 6. | Analytical Techniques | Helps identify the readiness of prospective vendors to provide the product without cost overruns, and to identify risks to be monitored during procurement process. |
| 7. | Procurement Negotiations | Clarifies requirements and other details of the purchases so that mutual agreement can be reached prior to signing the contract. |
| OUTPUTS | ||
| 1. | Selected Sellers | Those sellers who have
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| 2. | Agreements | Includes terms and conditions that specify what the seller is to perform or provide to the buyer. |
| 3. | Resource Calendars | Quantity, availability, and timing of when resources are either active or idle. |
| 4. | Change Requests | Any proposed changes to the procurement are treated like any other change to the project, through the Integrated Change Control Process. |
| 5. | Project Management Plan Updates |
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| 6. | Project Documents Updates |
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3. Tools & Techniques
The Bidder Conferences are there to clarify the requirements of the product that the buyer
is requesting, and to make sure that the prospective sellers understand them before submitting their proposals. The sellers may be solicited through a list of pre-qualified sellers that is enlarged through various forms of Advertising. Once they submit their proposals, the buyer may judge them using Expert Judgment, Independent Estimates, or more formal Proposal Evaluation Techniques such as a formal evaluation review process. Analytical Techniques may analyze the cost risk and other risks of the procurements. Further Procurement Negotiations with the sellers may clarify the requirements to the point that a draft contract may be negotiated.
4. Outputs
The sellers that qualify are the Selected Sellers, and from those a final Seller is selected with whom there is a final Agreement that is put into the procurement contract. Resource calendars are updated to make sure that the resources provided by the seller are accounted for in terms of their quantity, availability, and timing in terms of the larger project they will be used on.
The procurement will occasion changes in the project baselines (scope, time, and cost), and the communications management plan will be updated to reflect the coordination required between the seller and buyer. Project Documents like the stakeholder register and risk register will be updated to reflect the inclusion of the seller in the stakeholders to be managed and the risks of the procurement to be included in the risk register of the project as a whole.
If there are any changes that the seller proposes to the scope of the procurement, they are treated like any other change request through the Integrated Change Control Process.
The main output of course of this process is the Agreement between the seller and buyer in the form of a Procurement Contract. This will be the basis for the executing, monitoring & controlling, and finally closing of the procurement. The next post covers the elements that are typically included in a procurement contract or agreement.
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