Introduction Inputs Tools and Techniques Outputs Procurement Management

Introduction Inputs Tools and Techniques Outputs Procurement Management Plan 12. 1 Plan Procurement: Introduction The process of documenting project purchasing decisions, specifying the approach and identifying potential suppliers. It identifies project needs that are best met by acquiring products or services from outside of the project organisation. It considers potential suppliers and the contractual arrangements that may be required to manage these external parties to achieve the project objectives. Closely related to Risk Management Occurs during Planning Adapted from PMBOK 4 th Edition Click on Next to continue. Next

Introduction Tools and Techniques Inputs Procurement Management Plan Outputs 12. 1 Plan Procurements: Inputs to Plan Procurements • Scope Baseline - Scope Statement and WBS • Requirements documentation • Project Schedule • Teaming Agreements - with third parties • Risk Register • Activity Resource Requirements • Activity Cost Estimates • Cost Performance Baseline • Enterprise Environmental Factors – Marketplace conditions and products/services available – Suppliers past performance – Typical terms and conditions • Organisational Process Assets – Formal procurements policies and procedures – Preferred Supplier Agreements Click on Next to continue. Previous Next Adapted from PMBOK 4 th Edition

Introduction Tools and Techniques Inputs Procurement Management Plan Outputs 12. 1 Plan Procurements: Tools and Techniques Tools and techniques to Plan Procurements – Make or Buy Analysis Preferred Supplier Agreements Contract Types Procurement Policies & Procedures Expert Judgement Procurement Approach Adapted from PMBOK 4 th Edition Click on Next to continue. Previous Next

Introduction Tools and Techniques Inputs Procurement Management Plan Outputs 12. 1 Plan Procurements: Tools and Techniques Make or Buy Analysis – Determines whether particular work can be accomplished by the project team or must be purchased from outside sources – The capability may exist internally but may be committed to other projects – Budget constraints can influence make or buy decisions – Make or buy decisions need to cover the following – • Purchase versus lease • Related costs – direct costs and indirect support costs Adapted from PMBOK 4 th Edition Click on Next to continue. Previous Next

Introduction Tools and Techniques Inputs Procurement Management Plan Outputs 12. 1 Plan Procurements: Tools and Techniques Expert Judgement – Consulting procurement and legal professionals – May be internal or external to the project organisation Preferred Supplier Agreements – Many organisations (particularly government) negotiate agreements with pre-qualified suppliers of regularly purchased products or services – The project team then needs to select the supplier from the preferred supplier agreement – It makes it much easier to find reputable suppliers and reduces requests for information within the market – Exceptions normally need to be approved by an internal Procurement Department Adapted from PMBOK 4 th Edition Click on Next to continue. Previous Next

Introduction Tools and Techniques Inputs Outputs Procurement Management Plan 12. 1 Plan Procurements: Tools and Techniques Procurement Approach – Once the Buy decision has been made, many different approaches can be used to procure the required products or services – Three Quotes – traditionally three quotes are obtained for certain trades and then the cheapest is selected, depending on conditions – Previous Supplier – may be related to preferred supplier agreements, a well known supplier that has been used in the past is automatically chosen – Tender Processes – can be open to the entire market or closed to specific suppliers often from the preferred supplier list Adapted from PMBOK 4 th Edition Click on Next to continue. Previous Next

Introduction Tools and Techniques Inputs Outputs Procurement Management Plan 12. 1 Plan Procurements: Tools and Techniques Procurement Policies and Procedures – Most large organisations and all government departments will have extensive policies and procedures to govern purchasing – These often include – • Preferred Supplier Agreements • Purchase Ordering and Supply processes • Delegated authorities for approval of expenditure Contract Types 1. Fixed Price Click here to view different contract types in detail 2. Cost Reimbursable 3. Time and Materials Adapted from PMBOK 4 th Edition Click on Next to continue. Previous Next

Introduction Tools and Techniques Inputs Outputs Procurement Management Plan 12. 1 Plan Procurements: Outputs of this process include – – Procurement Management Plan – Procurement Statements of Work • Derived from the project scope baseline • That portion of project scope to be included in the particular contract – Make or Buy Decisions • Included as a table of decisions in the Procurement Management Plan – Procurement Documents • Requests for Tender • Seller Evaluations • Contracts Monitor Initiation – Source Selection Criteria: detailed in previous slides Planning Execution Control – Change Requests Click on Next to continue. Adapted from PMBOK 4 th Edition Previous Next Close

Introduction Tools and Techniques Inputs Procurement Management Plan Outputs 12. 1 Plan Procurements: Procurement Management Plan • The Procurement Management Plan describes how the procurement processes will be managed. • It is critical that it is linked to relevant industry regulations and organisational policies and procedures. • Common inclusions in the Procurement Management Plan – • Links to organisational procurement management policies and procedures • Types of contracts to be used and contract templates • Delegated authorities and required involvement from internal purchasing, finance and legal experts/departments • Tender document templates • Assumptions, constraints and risks related to procurement • Schedules of contracted deliverables • Preferred supplier lists • Procurement metrics and performance measurements Adapted from PMBOK 4 th Edition Click on Next to continue. Previous Next

Introduction Tools and Techniques Inputs Procurement Management Plan Outputs 12. 1 Plan Procurements: Procurement Management Plan • It is often very useful to document all procurement approaches and decisions in a table known as the Procurement Planning Register • Includes information about the sourcing approach, type of contract, selection criteria, requirements, risks etc • Content can be tailored to organisational policies and procedures Procurement Item Procurement Manager Name of the item being purchased Requirements Summary requirements for the product or service Name and position of the person responsible for managing the procurement – often NOT the Project Manager Sourcing Approach Summary Selection Criteria Contract Type Primary criteria on which the selection will be made Approach selected for the procurement e. g. – three quotes, preferred supplier, tender Summary of Risks Key Dates Next Budgeted Amount Major date and dependencies Fixed Price, Cost reimbursable or Time and Materials, often includes performance criteria Click on Next to continue. Previous Major Risks Budget estimate or allowance

Introduction Tools and Techniques Inputs Outputs Procurement Management Plan 12. 1 Plan Procurements: Procurement Management Plan • • Selection criteria are often included as part of tender documents and are used to rate or score different suppliers Facilitate and provides justification for procurement decisions Can be limited to purchase price for commodity type items or can also include other selection criteria such as reputation, financial viability, fit with requirements etc Management Often weighted based on relative importance Risk Approach Understanding Of Requirements Warranty Financial Viability Overall or Lifecycle Costs Production Capacity Previous Technical Capability Business Size & Type Technical Approach Past Performance & References Industry Experience Intellectual Property