Procurement Planning Paper
December 14, 2015
Procurement Planning Paper
The needs of a project must be carefully identified, sourced and acquired to have a successful procurement process. Procurement planning is essential to the overall success of a project. It involves identifying the materials and services, finding the suppliers, and properly documenting the transactions. This paper includes a description of the procurement planning process. The most valuable output of the plan procurement process will be identified. Furthermore, the various contract types will be explained. A source criterion that would be applicable to any project will be ...view middle of the document...
The bidder who can satisfy what the project needs will be chosen. Then the bidder will be signing the contract. An organization can improve alignment between procurement and project management by having close coordination between the procurement team and project management team. This will avoid conflicts and to ensure that the resources will be delivered on time with the cost that is within the project budget.
The types of contract include time and material contracts, cost-reimbursable contracts, and, fixed-price contracts. The defined products from fixed total price are used by Fixed-price contracts which provides service, or results. The seller has the most risk in this contract type because they are obligated to complete the contracts and they will have to pay financial damages if they do not complete it. In the cost-reimbursable contracts, cost reimbursements are involved with additional fee that represents seller profit. This contract type is flexible especially when the project scope changes. Buyers have the most risk in this contract because it is possible that sellers increase prices and fees in the process. The time and material contracts is a hybrid of the fixed-price contracts and cost-reimbursable contracts. Buyers have the most risk in this contract type because the contracts can be open-ended allowing the sellers to increase the price of materials or services.
A source criterion that would be applicable to any project is supply price. This is the main concern for a firm because it needs to get supplies at the most competitive price. This can be a good basis when selecting a supplier in the short and long term project management process.
The three criteria that would apply to most projects include payment terms, on-time delivery performance, and reputation. It is important for a company to use the reputable supplier and the one who it has partnered in past projects. These criteria are essential in the project success because these could affect the quality and timeliness of task deliverables. If the supplier does not deliver on time, the completion of tasks will also be delayed. If the price is not competitive, the allocated budget may not be enough. If this evaluation leads to a tie between suppliers, a firm must inform them and let them bid on the project. This could help to further reduce the price.
The procurement planning process must also consider ethical issues that may...