Managing Project Procurements- Processes Policies and Closure

Managing Project Procurements- Processes Policies and Closure

Project procurement can be defined as part of a project plan that determines how the procured materials needed for giving deliverables are to be supplied in the shortest time possible and within the budget.  The task of procurement demands the managers to collaboratively work with the procurement department when managing the procurement (Araujo, Alencar, & Mota, 2017). The procurement process has five major steps: the specification, the selection, the contracting, the control, and the measurement step.

The specification is the first step that comprises the procurement department in liaison with the project manager in developing and approving the goods that should be procured to implement the project. The procurement team should specify the details of the items or materials to the external suppliers. Detailed specifications help suppliers not to supply items that are not required (Guth, 2009). The specification step helps the project manager present a great level of visibility of all the spending that would be needed since the prices of each item s would be estimated in this step (Buzzetto, Bauli, & Carvalho, 2020). Thus, the project managers can outline areas that can be reversed to cut costs and save money.

Selection is the second step in project management procurement. The selection process required the purchasing department to hunt for potential suppliers who could supply the necessary items according to their specifications (Guth, 2009).  Thus, the purchasing department should set the vendor selection criteria, including delivery, quality, and costs. Finding reliable suppliers for the project is very important. Therefore, it is not a task that should be taken lightly. Choosing unreliable suppliers may mess up the project implementation process. Project managers and the purchasing department should weigh up many options by making lists and comparing them (Araujo, Alencar, & Mota, 2017). Some of the parameters that should be checked when selecting suppliers are accountability, ethics, ease of communication, production capabilities, pricing, and more.

Contracting is the third step where the procurement team communicates to the suppliers on the delivery dates to ensure on-time dates of delivery. All the conditions that the suppliers must meet should be included in the procurement contracts (Guth, 2009). The contracting step is important since it is where the purchasing department has fair prices for both the suppliers and the department. The purchase department should always refer to the previous contracts to identify areas to cut costs.

The control step is the fourth step in the management procurement process. The procurement success depends on how the procurement team controls the delivery. The control step aims to ensure that the procurement process runs smoothly with minimal interruptions that could alter the costs and delivery timelines. Some of the activities in the control steps are organizing regular meetings with suppliers, tracking the progress of delivery, conducting the review of the items in reference to the specifications, and making adjustments to the contract.

Measurement is the last step in the procurement process. It refers to the use of indicator performance and assessing the entire process effectively. The project manager must set up the measurement systems, and the procurement team is supposed to use the system to measure the process (Buzzetto, Bauli, & Carvalho, 2020). Special meetings are necessary to check on intermediate results and performance procedures. The measurement step is also known as the auditing step, which aims to determine whether every process went according to the plans.

Contract administration is composed of all components of contract management. It entails ensuring that the contract is satisfactorily discharged and that all parties’ duties are well discharged to minimize problems, potential claims, and conflicts (Araujo, Alencar, & Mota, 2017). Contract administration policies include the following: First, all parties to the contract must participate in contract development. Both the contractor and the client should closely follow up with all the steps of contract development to avoid future challenges and misunderstandings.

The second policy in contract administration is that all parties to the contract should monitor performance to ensure that goods and services conform to the contract. Monitoring of the performance by the parties helps to correct any errors early enough so that it could not have much impact on the entire process (Guth, 2009). Maintaining contract records is the third policy of contract administration. The contractor and the clients engaged in the contract must keep and maintain contract records even after the project has been completed. The contract records sometimes help whenever a conflict arises regarding the project. 

The contract administration process has some procedures that need to be followed. These procedures are the appointment of the contract manager, planning and documentation, and administering the contract. The appointment of the contract manager as the first procedure is when the contract manager is selected for the contracts covered by the policy (Lindstrom, 2013). The contract manager is responsible for overseeing and initiating the procurement and performance (Buzzetto, Bauli, & Carvalho, 2020). The contract manager can delegate or reassign his duties to a staff member but remains a responsible manager as per the policy.

Planning and documentation, as the second procedure, entail conscious administration effort by evaluating the purchase complexity, delivery value, and performance schedule. Planning involves planning specific procedures to be applied by the contract manager to ensure that the contractor or the suppliers comply with the terms and are unique to every contract. Administering the contract is the last procedure in contract administration (Buzzetto, Bauli, & Carvalho, 2020). It ensures that the contract is valid and related to the contract terms and dates. The contract administration also involves ascertaining that the contractor and the supplier are providing timely materials and services according to the requirements of the contract. Additionally, other techniques and tools are used, including;

Contract change control process

The contract change control process is a process of modifying the contract to include other necessary elements. This process is facilitated by the contract change control system, a tool used to gather, track, and communicate all the changes to the management contract.

Procurement performance review      

A procurement performance review is a structured review of the progress of the project. The review assesses the quality of the products being delivered and the cost or expense being incurred compared to what had been budgeted.

Inspections and audits

Inspections and audits are the routine obligations required, which entails checking that compliance obligations have been met. In other words, it is the cross-checking of all the procedures whether they have complied with the necessary compliances.

Performance reporting

Performance reporting is the process that comprises the actual collection and distribution of the project’s total performance information to relevant parties. The performance reporting is put in the performance reporting plan. The quality of the performance reporting is among the factors that affect an organization’s competitiveness.

Payment process

The payment process ensures that the payments are made or collected against the product or service. Every good delivered must pay for, and the records kept. On the other hand, the payment terms are ways to indicate to customers how fast you expect them to pay the invoices (Lindstrom, 2013). Net 30 or Net 60 are symbols showing that one expects the customers to pay within 30 days or 60 days, respectively.

Records management system (RMS)

A records management system (RMS) is a system that offers the storage, retrieval, manipulation, retention, and archiving of the data, records in documents of the projects.

During contractual relationships, conflicts usually arise, and it is up to the managers to find resolutions to the conflicts before they escalate. There are various conflict resolution techniques that managers can use to bring harmony. Negotiation is one sure technique of conflict resolution that arises while managing contractual relationships (Proksch, 2016).  Negotiation entails bringing the conflicting parties to one table to discuss and negotiate on various issues causing conflicts. The conflicting parties raise their concerns, and they agree on the best resolution that is fair to all of them.

Forcing or using force is another conflict resolution technique that can apply to warring parties in a contractual relationship. If a conflict arises because one party is reluctant or refuses to do what was agreed in the contract, the force can be used to force the party to act accordingly. Withdrawing or avoiding is another best conflict resolution technique that could apply to a contractual relationship. When a conflict arises between parties to a contract, the plaintiff could decide to withdraw or avoid the contract, rendering it null (Proksch, 2016). If one party realizes that the other party to a contract is consistently not acting according to what was agreed in the contract, they have a right to withdraw or avoid. Withdrawing from a contract can be one powerful way of communicating disappointment and seeking resolutions.

Several steps should be taken to close the procurement process. These steps include, first, transferring all the deliverables to the client. The second step is confirming project completion; this involves everyone involved in the project agreeing that the project has been completed (Lindstrom, 2013). Thirdly, reviewing the contracts and documentation involves cross-checking the contracts’ terms and ensuring that all the documents involved are available and filed. Releasing the resource is the fourth step, which entails notifying the stakeholders, such as contractors, suppliers, and other partners, that this is the end of the project. Lastly, conducting post-mortem. This is the project review process; it involves reviewing the project’s successes, failures, and challenges.

The importance of closing the project procurement is that it helps in documenting l the documentation and agreements to act as future references. The closure process gives the client a sense of trust that the company is serious about helping them with their objectives and that the company is accountable (Guth, 2009). Numerous external factors can influence the process of procurement. These factors include environmental issues, political issues, cost, and scheduling. These factors can cause delays in delivery or may trigger prices increase, making the costs of the goods or materials higher than expected. (Achilles.com, 2021). The risk response plan is related to external influences. This relationship is because many risks emanate or are caused by external occurrences. Thus, the contractor’s risk response plan should consider external factors such as the environment, politics, economic forces, and more.

References

Achilles.com. (2021). How external factors can affect procurement. Retrieved from https://www.achilles.com/industry-insights/how-external-factors-can-affect-procurement

Araujo, M., Alencar, L & Mota, C. (2017). Project procurement management: A structured literature review. International Journal of Project Management Vol. 35(3) DOI:10.1016/j.ijproman.2017.01.008

Buzzetto, R., Bauli, M & Carvallho, M. (2020). The key aspects of procurement in project management: investigating the effects of selection criteria, supplier integration, and dynamics of acquisitions. Produção Vol. 30(7)

Guth, S. (2009). Project Procurement Management: A Guide to Structured Procurements. Lulu.com. Print.

Lindstrom, D. L. (2013). Procurement project management success: Achieving a higher level of effectiveness. Plantation, FL: J. Ross Pub Print.

Proksch, S. (2016). Conflict Management. Cham: Springer International Publishing

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Write a 1,400- to 1,750-word paper in which you explain the process for conducting and closing procurements.

Include the following:

Outline and explain high-level process steps for conducting project procurements.
Outline and explain contract administration policies and procedures.

Describe the tools and techniques for the contract administration process, including the following:
Contract change control process
Procurement performance reviews
Inspections and audits
Performance reporting
Payment process (n/30, n/60, and so forth)
Records management system (RMS)
Describe conflict resolution techniques used while managing contractual relationships.
Outline steps to be taken to close out project procurements.
Explain the importance of closing project procurements and accounts.
Examine external influences on the procurement and risk management process.
Analyze the relationship between the risk response plan and the external influences.