PROCUREMENT MANAGEMENT PLAN
Intelligence Network Proof of Concept
Cambridge, MA 02135
PMGT 530 Procurement Management Plan Template
Table of Contents
Procurement Management Approach 3
Procurement Definition 4
Type of Contract to be Used 4
Procurement Risks 5
Procurement Risk Management 5
Cost Determination 6
Standardized Procurement Documentation 6
Procurement Constraints 7
Contract Approval Process 8
Decision Criteria 9
Vendor Management 9
Performance Metrics for Procurement Activities 9
Sponsor Acceptance 11
Description of Change
Updated Introduction, Procurement management approach, Procurement definition, Types of Contracts to be Used
Procurement Risk Management
Standardized Procurement Documentation
Standardized Procurement Documentation,
Contract Approval Process
Performance Metrics for Procurement Activities
The motivation behind the Procurement Management Plan is to diagram the acquirement necessities for the given venture and how it will be overseen from creating acquisition documentation through contract conclusion.
This document will provide the following information shown below.
· Items that will be procured and its appropriate timeframe
· Various type of contract in use.
· Any risks that may be associated with the plan.
· Mitigation steps via contract perf metrics, insurance etc.
· Using costs as the criteria for evaluation.
· Management plan for multiple vendors
· Approval process for the contract
· List the constraints that are associated with the procurement management.
· Performance identification criteria for the activities involved in procurement.
· Determining the sellers who could be prequalified for the contracts.
This is a plan that is drafted in the initial process i.e. the planning phase of the project. The stakeholders who would hold interest in this would be the project sponsor, project team, the project manager, other internal and external stakeholders.
2. 0 Procurement Management Approach
This Procurement Management Plan lays a framework for the project that we are undertaking. This plan will serve as a guide to manage the procurement lifecycle of the project and will be modified in as and when required. This plan will clearly identify the items that required to be procured, various types of contracts that requires to be supported, the approval procedure for the contracts, and the criteria based on which the decision was made. The significance of planning obtainment exercises, building up firm contract expectations, and measurements in estimating acquisition exercises is incorporated. Other information a procurement management plan consist of is procurement risk and its considerations, the method in which the cost will be derived, the method in which the standard procurement documentation is used and some of its constraints.
The Project Manager will give oversight and the executives to all acquisition exercises under this venture. The Project Manager will work with the venture group to distinguish all things to be acquired for the successful closure of the project. The Project Management Office (PMO) will at that point audit the acquirement list before submitting it to the agreements and obtaining division. The agreements and buying office will survey the acquisition things, decide if it is favorable to make or purchase the things, and start the merchant determination, obtaining and the contracting procedure.
The information shown below details the individual roles and their responsibilities in the procurement management process.
· Facilitates the business insight for procurement management process.
· Authorizes the plan.
· Decision maker on choosing the vendors
· Gate keeper for the budget and approver for extra cost involved in plan.
Maintains best practices in the entire lifecycle of the procurement management.
Authority for approving the budget already allocated for the procurement management.
Facilitates in choosing the vendors
Resource allocation and availability maintainer.
Responsible of schedule maintenance and ensuring the team and vendors abide by the schedule.
Checks and provides reports on the performance of the vendors and contractors.
Responsible for vendor contracts management.
· Responsible to facilitate the procurement process
· Responsible to work in conjuncture with the project manager.
· Responsible for communicating with vendors and contractors.
· Responsible for reviewing the SOW and sending request for proposals.
· Responsible for negotiating the contracts with vendors and contractors.
· Responsible for proper documentation of all documents related to the procurement process.
2.1 Procurement Definition
The below items/services are to be procured by the team to finish this project successfully. These items that are listed requires project management office’s review so it could be submitted to the procurement department for contracts and then purchasing.
Needed for deploying IP software to build an intelligent network
Needed to protect the SISO hardware and IP software
Hardware Installation service
Needed for deploying the hardware on the servers
In addition to the above list of procurement items, the following individuals are authorized to approve purchases for the project team:
Donald Hung Project Manager
Ed Lawrence Procurement Officer
3.0 Type of Contract to be Used
Taking into consideration the project scope, time and cost all the items/services that are required by the project are solicited below the Firm-Fixed price contract. This was chosen as F-F price contract are easy to handle and involved risks thereby proving beneficial for the IP Inc. company.
It is the responsibility of the project manager, procurement officer and the team to work with the
Contracts and purchasing teams to determine what type of hardware, software and services is required along with the quantity. They also need to agree upon a fixed date by which all of these are required. Post which the contract and purchasing team will try to contact multiple vendors and contractors to place their bids so procurement can be done on time, within the budget and under the contract type which the IP Inc. company is looking for which is firm-fixed price contract. The current time frame for which the IP Inc. company is looking for is 2 years.
4.0 Procurement Risks
When we have the procurement process, we will have many kinds of procurement risks. When we identify the needs of the customers and plan the purchase, we will have the risk whether what we buy will eventually matches what we need to deliver to the customers. We need to select the purchase method and might make mistakes. When we require the purchasing documentations internally from the team and externally from the customers and vendors, we might misunderstand the information.
After we received the quotation from the vendors, we need evaluation the cost of raw materials, shipping, duty, documents fees, packaging cost and other related fees which might have the errors. For the strategic sourcing, we need to have the contract with the vendors and might choose the exclusive manufacturing contract for the company which also have the risk for the company. We need to have the better negotiation skills during the procurement process and need to have better process to improve the operations efficiency.
4.1 Procurement Risk Management
There are many kinds of the risks that we need to consider when we think about the procurement activities. The potential risks include technical risk, cost risk, schedule risk, client risk, financial risk, political risk, environmental risk, people risk and so on.
When we consider the risk management, we need think about how to collect enough information, how to determine the risk area, how to find the skilled people. Managing risks is related to the learning process and we need to understand the project, customers, and industry very well. We need to have good hiring process to find the best skilled person who can manage the projects, negotiate with the vendors, and send the purchase order and sign the contract for the company.
A good risk plan can help the company reduce the risk of the projects so the company can have the actions plan to eliminate or lower down the possibility of the risk. The approval from the project manager and program manager is required within the organization.
5.0 Cost Determination
When we need to have the cost of the product, we will send the Request for Proposal (RFP) to different vendors to have the quotation and find the best one for the company. We will require the year cost and ask the vendor to have the line-item breakdown of all costs involved. We need to consider manufacturing cost, shipping cost, packaging cost, duty, documentations cost, and so on.
We will require the vendor to provide the work breakdown structures (WBSs) and work schedules to make sure the vendor understand what we are looking for. We will cross check the information with the customers’ request and compare with what our competitors have and send the request to the vendors for the missing information.
6.0 Standardized Procurement Documentation
We need to have the following standard documents such as Standard Request for Proposal Template, Internal source selection evaluation forms, Non-disclosure agreement (NDA), Firm fixed price contract and exclusive manufacturing contact if needed, Procurement audit form, Procurement performance evaluation form. In addition, it is good for the long-term benefit of the company to have Lessons learned form so we can have the good training session for the procurement team after having all of this information.
The director of supply chain and the direct of quality department will be in charge of all of these documents after working with operations team and customer service team. The documents need to be stored electronically on the company service drive and have the hard copy on the company folder and quality folder, and also need to save with the training documentation of the purchasing or supply chain department.
7.0 Procurement Constraints
Project team need to consider these constraints during projects’ procumbent management process:
Schedule: Procurement team should leave enough time to plan, and to purchase.
Cost: Procurement team should provide budget range after thorough research
Scope: Procurement team should have a scope about the procurement plan after team discussion and under the supervision of project manager.
Resources: Procurement team should research all the possible resources which could be used for procurements.
Technology: Procurement team should think through all the technology challenges and prepare for them in advance.
Buyer/ Seller relationships: Procurement team should pay attention to relationships between buyer/seller.