PROJECT
PROCUREMENT
MANAGEMENT
INTRODUCTION:
• Project procurement management
involves the process of acquiring
goods and services from external
sources to meet the needs of a
project.
• It includes identifying vendors,
negotiating contracts, and
ensuring that the resources
obtained align with the project's
objectives.
• This management process is
crucial for industries like
construction, manufacturing, and
technology, where external
materials or services are often
required.
• It helps in controlling costs, reducing risks,
and ensuring quality by carefully planning
and managing procurement activities.
• Procurement management is alternatively
coined as the source-to-settle process.
• It comprises certain tasks that are
associated with the procurement method,
such as assessment, selection, and
development of official contracts. It also
covers ensuring continued supplier
relationships for the business.
• Procurement management is a part of the
procurement management process, which
interfaces with accounts payable to
complete the source-to-settle cycle by
supplying additional documentation to aid
in the preparation of vendor invoices for
reimbursement.
KEY PROCESSES:
1. PLAN PROCUREMENT:
• This step involves identifying
what goods and services are
needed for the project and
deciding whether to procure
them externally or use
internal resources.
• It includes defining
procurement requirements,
creating a procurement plan,
and determining the budget
and timeline.
KEY PROCESSES:
2. CONDUCT PROCUREMENT:
• In this phase, the focus is on
selecting vendors or suppliers.
• It involves sending out
requests for proposals (RFPs),
bids, or quotations, evaluating
responses, and awarding
contracts to the chosen
vendors.
• Negotiation is also crucial here
to ensure favorable terms.
KEY PROCESSES:
3. CONTROL
PROCUREMENT:
• Once contracts are in
place, this step ensures
that the vendors are
delivering as agreed.
• This includes monitoring
progress, managing
changes, resolving
disputes, and ensuring
quality and compliance
with contractual terms.
KEY PROCESSES:
4. CLOSE
PROCUREMENT:
• The final phase involves
formally closing contracts
and ensuring all
deliverables have been
met.
• This includes reviewing
the procurement process,
settling payments, and
completing any
documentation required.
“Effective project procurement
management helps ensure that resources
are delivered on time, within budget, and
meet quality standards. It also minimizes
risks associated with procurement, such
as cost overruns or delays.”
REAL-LIFE EXAMPLES AND CHALLENGES IN
PROJECT PROCUREMENT MANAGEMENT:
• Retail
Sector: Amazon's
acquisition of Whole
Foods Market involved
complex procurement
negotiations. Amazon
leveraged its expertise
in supply chain
management to
streamline operations
and improve efficiency.
REAL-LIFE EXAMPLES AND CHALLENGES IN
PROJECT PROCUREMENT MANAGEMENT:
• Technology Sector: Apple
and Samsung engaged in
procurement negotiations
for critical components
like semiconductors.
• These negotiations
showcased the
importance of strategic
supplier relationships and
competitive pricing.
REAL-LIFE EXAMPLES AND CHALLENGES IN
PROJECT PROCUREMENT MANAGEMENT:
• Healthcare Sector:
Memorial Hospital of
Sweetwater County faced
procurement challenges
due to system failures.
• By upgrading their
general ledger system,
they improved workflows
and minimized
interruptions.
“These examples highlight how
procurement management can
address challenges and
optimize operations across
various industries.”
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