Project procurement management processes
March 5, 2014Overview
Procurement was once merely considered a supporting function to operational areas. Now, as organisations restructure to focus on core competencies, more project areas are being outsourced.
Well managed procurement of goods and services is integral to successful project management. Procurement has become a strategic function which is expected to add value to the project and the organisation
Project procurement management includes the processes required to plan for, and manage, the purchase and acquisition of goods and services to perform project tasks and activities. The processes involve selecting goods and services, writing and evaluating tenders and estimates, negotiating contracts to obtain goods and services, and managing contracts to ensure the supply of goods and services.
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Conducting procurements
Conducting procurements involves obtaining seller responses, selecting sellers and awarding contracts.
Contract planning
Contract planning involves preparing several documents needed for potential sellers to prepare their responses, and determining the evaluation criteria for awarding the contract. The documents include Requests for Proposals (RFPs) and Requests for Quotations (RFQs).
Requests for proposals
RFPs are used to solicit proposals from prospective sellers. The proposal is prepared by a seller when there are different approaches for meeting buyer needs.
RFPs are generally issued for high value goods or service contracts that require goods or services to be customised to fit the project’s unique circumstances.
Requests for quotations
RFQs are used to solicit quotes or bids from prospective sellers. A quote is prepared by sellers providing pricing for standard items that have been clearly defined by the buyer.
These documents request price and commercial terms for goods or services that meet standard specifications and are readily available in the market.
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