Before you try to figure out the functions or process of procurement management, you must understand what it means.
So, what is it?
Procurement is an act of acquiring goods, supplies, and services. If you ask, what is project procurement? It means acquiring the materials and services required for the project. The project manager needs to follow many procedures and processes to complete the project.
How does it work?
The project procurement includes
three main processes. They are:
●
Plan Procurement
●
Conduct Procurement
● Administer/Control Procurement
These processes can be explained as below:
- Plan for
Procurement
To complete your project
successfully, you need to ask the following questions.
●
What are the materials required
for the project?
●
Do you have to purchase from place
A or place B?
●
What are the contract
requirements?
●
Do you have any delivery
deadlines?
●
Do you want a cost-reimbursable
contract or a fixed-price one?
●
The legal terms and conditions to
be met.
●
Where to search for suppliers?
●
Do you have a preferred supplier?
●
Criteria for selecting the
supplier.
● Any other way to evaluate the bidder?
If you have all the answers to
these questions, you have the right plan for procurement.
- Conduct
Procurement
This is the execution phase of the project. Here, all the processes on different stages are monitored and analyzed. After the RFP (Request for Proposal) forms are released, the bids are gathered, and selections are made. The vendor's negotiation will happen during this phase, and then the agreed contracts are signed.
Two key steps that are vital in this process are:
- Status or progress and update from the vendors.
- Quality checks of services and products delivered.
Cost monitoring is also a part of
this process.
- Administered/Control
Procurement
A big organization will have a procurement team within the company. The team will have a team leader and they work closely with the project manager. Here, one can see the importance of project managers.
The team is responsible for monitoring and controlling the procurement process.
The roles of the procurement team are:
●
The planning process
● Controlling of procurement
The project manager usually doesn't conduct the procurements. However, she/he is still responsible for completing the overall process. This is how the procurement process works.
The procurement process can further be broken down into
ten steps.
●
Identification of the requirement
●
Calculating the specific of the
request
●
Sourcing
●
Negotiation and finalizing of
terms and price
●
The purchase requisition and order
●
Delivering of the purchase order
●
Expediting
●
Service/product supply and
inspection
●
Payment
● Record keeping and reviewing
These are the steps that you must follow in project procurement management.
Now, every process has some
components in them. The project procurement also has some crucial components in
it, which can be classified into three.
- People
The number of people directly
involved in the process depends on the procurement orders and scale of the
manufacturing. For small companies, procurement personnel is less in number,
and for large companies, the whole procurement team will be working together.
- Process
The procurement process should be
organized and designed to function efficiently.
- Paperworks
and Records
This step is crucial for the process of procurement. Though some steps of the process are digitized, the recording of all information at each stage is relevant and vital for both seller and buyer.
These are the process, functions,
and components of procurement management. There are many more detailed studies
on procurement that you can refer to from management books.
