Module 8 – Making Procurement Work
Key Takeaways
- Project procurement requires trained personnel who understand the process, as well as resources and budget requirements.
- Like most other aspects of project management, procurement is a planned process.
- The degree of contract performance is directly related to the degree of specification detail and accuracy.
- Contractual performance issues will always arise.
- Develop and sign off on an agreed dispute resolution process before the dispute arises (put the clause in the specification documentation).
- Be as meticulous in closing out the project as you are in preparing the specification.
- Ensure that potential suppliers know all the evaluation criteria they will be assessed against.
- Careful consideration should be given to whether the goods and services can be provided by the project parent organisation or whether they need to be outsourced.
- Goods and services are not the only things projects procure (think about it).
- Writing a specification requires both skill and common sense – use them both liberally.
- Evaluate the type of contract you will use against the advantages it delivers to the project.
- A lot of promises can be made when procuring, not all of which are realistic.
- Suppliers want your business, and they can go to extraordinary efforts to do so.
- Make sure you haven’t got the goods or service capability within your own organisation first before you go external.
- Going to the market won’t always give you the best options, value, and results.
- Procurement is there to serve the project.
Review Questions
- You need to estimate and document a budget for your final project . Developing a template appropriate to the project is important. The template provided below can help you itemise each expense and the projected cost (the items in the template are only an example). With your project team, decide the rate you will assign to the project HR resources. For example, you will need to assign an hourly rate for normal working hours and a different hourly rate for overtime. Other resources may require a fixed cost per use charge. For example, rented equipment or a fixed consultancy (outsourced) fee. In consultation with your team members, start documenting the budget but more importantly align this with the right procurement process to your project.
| Expense Item | Projected Cost | Priority (H= High, L= Low) |
| HR Labour (e.g., permanent staff, contractors, PM consultants, etc) | ||
| Supplies (e.g., materials, stationery, etc) | ||
| Overheads (e.g., administrative services) | ||
| Machinery (e.g., special equipment, technology, etc) | ||
| Travel (e.g., meeting expenses) | ||
| Total Project Cost |
- Refer to Make or Buy Decisions and discuss how ‘make or buy’ decisions may impact project time, cost, and quality.
Exercises
