WOLKITE UNIVERSITY

COLLEGE OF COMPUTING AND INFORMATICS

DEPARTMENT OF INFORMATION SYSTEMS
Information project management system
INDIVIDUAL ASSIGNMENT
Name ID
sileshi alelign-----------------------------id/149/10

SUMMITED TO: -Mr. Musa A.

SUMMTIED DATE: -19/08/2013
 Introduction to procurement management
The new millennium began with the global marketplace in an economic and political quandary.
The business world today is considerably different and more complex than it was before the turn
of the century. In addition to the significant events that have impacted the world’s business
environment, organizations have had to transform radically in response to burgeoning technologies
and the changes in social, cultural, demographic and environmental variables.
Project procurement management is when you have both a process to fill the holes in your
resources, and a way to manage that process with proper techniques and project
management tools. Procurement is just one aspect of your project.
Today, different organizations employ various management techniques to carry out the efficient
functioning of their departments. Procurement management is one such form of management,
where goods and services are acquired from a different organization or firm. And to use every
people percolate to each other. Procurement management is known to help an organization to save
much of the money spent when purchasing goods and services from outside. It also has several
other advantages.

Process of procurement management

There are six types of project procurement management process those are: -
1.procurement Planning or identify what’s needed: -determining what to procure and when.
procurement planning is the process of identifying which project needs can be best met by
procuring products or services outside the project organization. It involves consideration of
whether to procure, how to procure, what to procure, how much to procure, and when to procure
it. Before you can have something procured, there has to be a need for it. Hence, the first stage in
the procurement process is recognizing the need for a product (a brand-new item, or something the
company is re-ordering) or a service. Business owners, executives, department heads, employees,
and procurement managers can all handle this step.
This process is used to input and output those are: -
 Scope statement, product description, procurement process, market, constraint’s,
assumption. Those are an input of procurement planning.
  Procurement management plan, Statement(s) of work those are output of procurement
management.
2. Solicitation Planning: -documenting product requirements and identifying in potential
sources.
Solicitation is to use same activates those activity is: -
 Conduct market analysis.
 Establish degree of uncertainty in scope.
 Document time and cost objectives.
 Document assumption and constraint.
 Document beast.
This process is used to some input and output those are: -
 Procurement management plan, Statement(s) of work, Other planning outputs those are
input of solicitation planning.
 Procurement documents, Evaluation criteria, Statement of work updates and also those are
output of solicitation planning output.
3. Solicitation: -obtaining quotations, bids, offers, or proposals as appropriate.
Solicitation involves obtaining information (bids and proposals) from prospective sellers on how
project needs can be met. Most of the actual effort in this process is expended by the prospective
sellers, normally at no cost to the project.
4. Source Selection: -choosing from among potential sellers.
Source selection involves the receipt of bids or proposals and the application of the evaluation
criteria to select a provider. This process is seldom straightforward:
Price may be the primary determinant for an off-the-shelf item, but the lowest proposed price may
not be the lowest cost if the seller proves unable to deliver the product in a timely manner.
Proposals are often separated into technical (approach) and commercial (price) sections with each
evaluated separately.
5. Contract Administration: -managing the relationship with the seller.
Contract administration is the process of ensuring that the seller’s performance meets contractual
requirements. On larger projects with multiple products and service providers, a key aspect of
contract administration is managing the interfaces among the various providers. The legal nature
of the contractual relationship makes it imperative that the project team be acutely aware of the
legal implications of actions taken when administering the contract. Contract administration
includes application of the appropriate project management processes to the contractual
relationship and integration of the outputs from these processes into the overall management of
the project. This integration and coordination will often occur at multiple levels when there are
multiple sellers and multiple products involved.
6.Contract Close-out: -completion and settlement of the contract, include resolution of any open
items. Contract close-out is similar to administrative closure in that it involves both product
verification (Was all work completed correctly and administrative close-out (updating of records
to reflect final results and archiving of such information for future use). The contract terms and
conditions may prescribe specific procedures for contract close-out. Early termination of a contract
is a special case of contract close-out
Discuss Tools and Techniques
The above process is working on different tools and techniques those tools and techniques are
identify for each process, and for each process working on input and out
A. tools and Techniques for Procurement Planning.
1.Make-or-buy analysis: - This is a general management technique which can be used to
determine whether a particular product can be produced cost-effectively by the performing
organization. Both sides of the analysis include indirect as well as direct costs. For example, the
“buy” side of the analysis should include both the actual out of-pocket cost to purchase the product
as well as the indirect costs of managing the purchasing process. A make-or-buy analysis must
also reflect the perspective of the performing organization as well as the immediate needs of the
project.
2.Expert judgment: - Expert judgment will often be required to assess the inputs to this process.
Such expertise may be provided by any group or individual with specialized knowledge or training
and is available from many sources including:
 Other units within the performing organization.
 Consultants.
 Professional and technical associations.
 Industry groups.
3.Contract type selection: -Different types of contracts are more or less appropriate for different
types of purchases. Contracts generally fall into one of three broad categories:
  Fixed price or lump sum contracts—this category of contract involves a fixed total price
for a well-defined product. To the extent that the product is not well-defined, both the buyer
and seller are at risk—the buyer may not receive the desired product or the seller may need
to incur additional costs in order to provide it. Fixed price contracts may also include
incentives for meeting or exceeding selected project objectives such as schedule targets.
 Cost reimbursable contracts—this category of contract involves payment to the seller for
its actual costs. Costs are usually classified as direct costs or indirect costs. Direct costs are
costs incurred for the exclusive benefit of the project (e.g., salaries of full-time project
staff). Indirect costs, also called overhead costs, are costs allocated to the project by the
performing organization as a cost of doing business (e.g., salaries of corporate executives).
Indirect costs are usually calculated as a percentage of direct costs. Cost reimbursable
contracts often include incentives for meeting or exceeding selected project objectives such
as schedule targets or total cost.
 Unit price contracts—the seller is paid a preset amount per unit of service (e.g., $70 per
hour for professional services or $1.08 per cubic yard of earth removed), and the total value
of the contract is a function of the quantities needed to complete the work.
B. Tools and Techniques for Solicitation Planning.
1. Standard forms: -Standard forms may include standard contracts, standard descriptions of
procurement items, or standardized versions of all or part of the needed bid documents
Organizations that do substantial amounts of procurement should have many of these documents
standardized.
2. Expert judgment: - Expert judgment is to judges the sonication planning

C. Tools and Techniques for Solicitation.

1.Bidder conferences: - Bidder conferences (also called contractor conferences, vendor
conferences, and pre-bid conferences) are meetings with prospective sellers prior to preparation of
a proposal. They are used to ensure that all prospective sellers have a clear, common understanding
of the procurement (technical requirements, contract requirements, etc.). Responses to questions
may be incorporated into the procurement documents as amendments.
2.Advertising: -Existing lists of potential sellers can often be expanded by placing advertisements
in general circulation publications such as newspapers or in specialty publications such as
professional journals. Some government jurisdictions require public advertising of certain types of
procurement items.
D. Tools and Techniques for Source Selection.
1.Contract negotiation: -Contract negotiation involves clarification and mutual agreement on the
structure and requirements of the contract prior to the signing of the contract. To the extent
possible, final contract language should reflect all agreements reached. Subjects covered generally
include, but are not limited to, responsibilities and authorities, applicable terms and law, technical
and business management approaches, contract financing, and price. For complex procurement
items, contract negotiation may be an independent process with inputs (e.g., an issues or open
items list)
2.Weighting system: -A weighting system is a method for quantifying qualitative data in order to
minimize the effect of personal prejudice on source selection. Most such systems involve
1. assigning a numerical weight to each of the evaluation criteria,
2. rating the prospective sellers on each criterion,
3. multiplying the weight by the rating, and
4. totaling the resultant products to compute an overall score.
3.Screening system: - A screening system involves establishing minimum requirements of
performance for one or more of the evaluation criteria. For example, a prospective seller might be
required to propose a project manager who is a Project Management Professional (PMP) before
the remainder of their proposal would be considered.
4.Independent estimates: -For many procurement items, the procuring organization may prepare
its own estimates as a check on proposed pricing. Significant differences from these estimates may
be an indication that the SOW was not adequate or that the prospective seller either misunderstood
or failed to respond fully to the SOW. Independent estimates are often referred to as “should cost”
estimates.

E. Tools and Techniques for Contract Administration.

1.Contract change control system: - A contract change control system defines the process by
which the contract may be modified. It includes the paperwork, tracking systems, dispute
resolution procedures, and approval levels necessary for authorizing changes. The contract change
control system should be integrated with the overall change control system
2. Performance reporting: -Performance reporting provides management with information about
how effectively the seller is achieving the contractual objectives. Contract performance reporting
should be integrated with the overall project performance reporting. Payments to the seller are
usually handled by the accounts payable system of the performing organization. On larger projects
with many or complex procurement requirements, the project may develop its own system. In
either case, the system must include appropriate reviews and approvals by the project management
team.
F. Tools and Techniques for Contract Close-out
1. Procurement audits: -A procurement audit is a structured review of the procurement process
from procurement planning through contract administration. The objective of a procurement audit
is to identify successes and failures that warrant transfer to other procurement items on this project
or to other projects within the performing organization.