If you aren't managing your procurements effectively you could be loosing money on your project. Our Procurement Management Plan template helps you to think through the procurement processes for your project and plan for the most effective management of procurements. This template is based on the procurement guidelines according to the PMBOK Guide Fourth Edition.
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|Procurement Management Plan|
The purpose of the Procurement Management Plan is to define the procurement requirements for the project and how it will be managed from developing procurement documentation through contract closure. The Procurement Management Plan defines the following:
This Procurement Management Plan sets the procurement framework for this project. It will serve as a guide for managing procurement throughout the life of the project and will be updated as acquisition needs change. This plan identifies and defines the items to be procured, the types of contracts to be used in support of this project, the contract approval process, and decision criteria. The importance of coordinating procurement activities, establishing firm contract deliverables, and metrics in measuring procurement activities is included. Other items included in the procurement management plan include: procurement risks and procurement risk management considerations; how costs will be determined; how standard procurement documentation will be used; and procurement constraints.
Procurement Management Approach
The Procurement Management Plan should be defined enough to clearly identify the necessary steps and responsibilities for procurement from the beginning to the end of a project. The project manager must ensure that the plan facilitates the successful completion of the project and does not become an overwhelming task in itself to manage. The project manager will work with the project team, contracts/purchasing department, and other key players to manage the procurement activities.
The Project Manager will provide oversight and management for all procurement activities under this project. The Project Manager will work with the project team to identify all items to be procured for the successful completion of the project. The Project Management Office (PMO) will then review the procurement list prior to submitting it to the contracts and purchasing department. The contracts and purchasing department will review the procurement items, determine whether it is advantageous to make or buy the items, and begin the vendor selection, purchasing and the contracting process.
The purpose of procurement definition is to describe, in specific terms, what items will be procured and under what conditions. Sometimes items which must be procured for a project can be made internally by an organization. Additionally, procurement deadlines are usually affected by the project schedule and are needed by certain times to ensure timely project completion. This section is where these items must be listed, justified, and the conditions must be set. Any important technical information should also be included. Individuals may also be listed with authority to approve purchases in addition to or in the absence of the project manager.
The following procurement items and/or services have been determined to be essential for project completion and success. The following list of items/services, justification, and timeline are pending PMO review for submission to the contracts and purchasing department:
In addition to the above list of procurement items, the following individuals are authorized to approve purchases for the project team:
Type of Contract to be Used
The purpose of this section of the procurement management plan is to describe the type of contract to be used so the contracts and purchasing department can proceed accordingly. There are many different types of contracts like firm-fixed price, time and materials (T&M), cost-reimbursable, and others. Different procurement items may also require different contract types. A well defined product may be a firm-fixed price while a product which will require a research and development effort may be a T&M contract.
All items and services to be procured for this project will be solicited under firm-fixed price contracts. The project team will work with the contracts and purchasing department to define the item types, quantities, services and required delivery dates. The contracts and purchasing department will then solicit bids from various vendors in order to procure the items within the required time frame and at a reasonable cost under the firm fixed price contract once the vendor is selected. This contract will be awarded with one base year and three option years.
The purpose of this section is to identify any potential risks associated with procurement for the project. Depending on the contract type, items or services being purchased, vendor history, or uncertainties in the project’s scope, schedule, or budget, potential risks may require more detailed planning and mitigation strategies. For instance, if an organization has a close relationship to a particular vendor but there is a chance that vendor will no longer to be able to provide goods or services needed, this represents a significant risk to the project’s procurement activities that must be managed.
All procurement activities carry some potential for risk which must be managed to ensure project success. While all risks will be managed in accordance with the project’s risk management plan, there are specific risks which pertain specifically to procurement which must be considered:
These risks are not all-inclusive and the standard risk management process of identifying, documenting, analyzing, mitigating, and managing risks will be used.
Procurement Risk Management
The purpose of this section is to describe how risks related specifically to procurement activities will be managed. All projects should have an independent and thorough risk management plan. However, much like there are risks which pertain only to procurement, there are risk management considerations which may also be unique and apply only to procurement. This may include involvement of specific personnel in managing procurement risks or obtaining approval on mitigation steps from a particular management level within the organization.
As previously stated, project risks will be managed in accordance with the project’s risk management plan. However, for risks related specifically to procurement, there must be additional consideration and involvement. Project procurement efforts involve external organizations and potentially affect current and future business relationships as well as internal supply chain and vendor management operations. Because of the sensitivity of these relationships and operations the project team will include the project sponsor and a designated representative from the contracting department in all project meetings and status reviews.
Additionally, any decisions regarding procurement actions must be approved by the project sponsor or, in his absence, the Vice President of Contracts before implementation. Any issues concerning procurement actions or any newly identified risks will immediately be communicated to the project’s contracting department point of contact as well as the project sponsor.
The purpose of this section is to describe how costs will be determined and if/how they will be used as part of the selection criteria. For procurements seeking goods and/or services from an outside vendor, costs are usually provided in response to a Request for Quote (RFQ), Request for Proposal (RFP), or a Request for Bid (RFB). Vendors submit quotes, proposals, or bids which describe the costs of the good or service in detail to aid the customer in their decision making. Costs are almost always used as part of the procurement decision criteria but may be prioritized differently depending on the organization.
For this project we will issue a Request for Proposal (RFP) in order to solicit proposals from various vendors which describe how they will meet our requirements and the cost of doing so. All proposals will include vendor support for items A, B, and C (from procurement definition paragraph) as well as the base and out-year costs. The vendors will outline how the work will be accomplished, who will perform the work, vendors’ experience in providing these goods, customer testimonials, backgrounds and resumes of employees performing the work, and a line-item breakdown of all costs involved. Additionally, the vendors will be required to submit work breakdown structures (WBSs) and work schedules to show their understanding of the work to be performed and their ability to meet the project schedule.
All information must be included in each proposal as the proposals will be used as the foundation of our selection criteria. Proposals which omit solicited information or contain incomplete information will be discarded from consideration.
Standardized Procurement Documentation
The purpose of this section is to describe what standard procurement documentation will be used as part of the procurement. For large complex projects, standardization makes work across all project process areas easier to manage. When organizations utilize standard forms, templates, and formats, there is commonality across different projects as well as different groups within the organization.
The procurement management process consists of many steps as well as ongoing management of all procurement activities and contracts. In this dynamic and sensitive environment, our goal must be to simplify procurement management by all necessary means in order to facilitate successful completion of our contracts and project. To aid in simplifying these tasks, we will use standard documentation for all steps of the procurement management process. These standard documents have been developed and revised over a period of many years in an effort to continually improve procurement efforts. They provide adequate levels of detail which allows for easier comparison of proposals, more accurate pricing, more detailed responses, and more effective management of contracts and vendors.
The PMO maintains a repository on the company’s shared drive which contains standard project management and procurement documentation that will be used for this project. The following standard documents will be used for project procurement activities:
The purpose of this section is to describe any constraints which must be considered as part of the project’s procurement management process. These constraints may be related to schedule, cost, scope, resources, technology, or buyer/seller relationships. As constraints are identified, they must be considered every step of the way as procurement activities are planned and conducted. Every effort must be made to identify all constraints prior to any project or procurement planning as constraints identified later in the project lifecycle can significantly impact the project’s likelihood of success.
There are several constraints that must be considered as part of the project’s procurement management plan. These constraints will be included in the RFP and communicated to all vendors in order to determine their ability to operate within these constraints. These constraints apply to several areas which include schedule, cost, scope, resources, and technology:
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