Conduct Procurements

Conduct Procurements is a process in project management where you select sellers, vendors, or contractors to provide goods or services for your project. It’s about managing the steps needed to choose the best supplier or service provider, negotiating terms, and finalizing agreements to ensure the project’s needs are met effectively.

Think of it as hiring someone to help with a specific part of your project, like finding a contractor to build part of a building or a vendor to supply materials.

Breaking it Down into Simple Steps

1. Prepare to Find the Right Supplier:
   • Before you start, you need a clear plan. You’ll know what you want to buy, how you’ll evaluate proposals, and the criteria for selecting the best supplier.
2. Engage with Potential Sellers:
   • Reach out to potential vendors or suppliers, often by advertising or sending out request-for-proposal (RFP) documents.
   • Organize meetings (bidder conferences) to answer their questions.
3. Evaluate Proposals:
   • Review the proposals or bids submitted by sellers to decide who is best suited for your needs.
   • Use techniques like comparing costs, experience, and delivery timelines.
4. Negotiate Terms:
   • Work with the selected seller to finalize the details of the contract, ensuring both parties agree on terms like pricing, delivery, and responsibilities.
5. Sign the Agreement:
   • Once everything is finalized, sign the agreement and formally select the seller to start working on your project.

Why is Conduct Procurements Important?

• Ensures you get the right supplier for your needs.
• Helps you manage project costs by choosing a cost-effective supplier.
• Reduces risks by selecting reliable vendors or contractors.
• Establishes clear expectations and formal agreements, minimizing disputes.

Examples to Illustrate Conduct Procurements

Example 1: Construction Project

• Scenario: You’re managing a project to build a new office building.
• What Happens:
  1. Identify Needs: You need to hire a contractor to install HVAC systems.
  2. Send Out RFPs: You send detailed documents to several HVAC companies, explaining the requirements, budget, and timeline.
  3. Bidder Conference: Organize a meeting to clarify details about the HVAC installation for interested vendors.
  4. Evaluate Proposals: Review bids from three contractors based on cost, experience, and ability to meet deadlines.
  5. Negotiate Terms: Negotiate the final price and delivery schedule with the selected contractor.
  6. Sign Agreement: Sign a contract with the chosen contractor, agreeing to deliver the HVAC system by a specific date.

Example 2: IT Project

• Scenario: Your team is building a mobile app but needs an external company to develop a payment gateway.
• What Happens:
  1. Identify Needs: You determine the payment gateway integration needs to be outsourced.
  2. Procurement Documents: Write an RFP that includes technical requirements, budget, and timeline.
  3. Advertising: Post the RFP on platforms where software companies can apply.
  4. Proposal Evaluation: Compare proposals based on cost, security features, and compatibility with your app.
  5. Negotiations: Finalize terms like payment structure, milestones, and support services.
  6. Agreement: Sign a service agreement with the selected software company.

Tools and Techniques Explained with Examples

1. Bidder Conference:
   • A meeting where you answer questions from potential suppliers.
   • Example: In the construction project, vendors ask questions about building specifications and timeline expectations.
2. Proposal Evaluation Techniques:
   • Methods to compare bids objectively, such as scoring them based on cost, quality, and delivery time.
   • Example: Assign scores to proposals for the HVAC system based on energy efficiency, cost, and maintenance plans.
3. Independent Estimates:
   • Comparing bids to a pre-determined estimate to see if the proposals are realistic.
   • Example: Before evaluating HVAC bids, you create an internal estimate of the expected costs.
4. Procurement Negotiations:
   • Discussions to finalize terms with the selected seller.
   • Example: Negotiate with the software company to include free maintenance for six months post-delivery.

What Happens After Conduct Procurements?

1. Selected Sellers: You finalize who will provide the goods or services.
2. Agreements: Contracts are signed with the selected seller(s).
3. Resource Calendars: Update schedules to align with vendor timelines.
4. Change Requests: If procurement decisions affect the project scope, budget, or timeline, adjustments are made.
5. Document Updates: Project plans and related documents are updated to reflect the procurement agreements.

Why Conduct Procurements Matters

This process ensures that you:

• Choose the right partners for your project.
• Get competitive pricing and quality services.
• Clearly define expectations, reducing the risk of misunderstandings or disputes.

By following the Conduct Procurements process, project managers ensure they align external resources with project needs effectively, driving the project toward successful completion.

Knowledge Area

Procurement Management

Process Group

Executing

Conduct Procurements Inputs

• Procurement Management Plan
• Procurement Documents
• Source Selection Criteria
• Seller Proposals
• Project Documents
• Make-or-buy Decisions
• Procurement Statement of Work
• Organizational Process Assets

Conduct Procurements Tools and Techniques

• Bidder Conference
• Proposal Evaluation Techniques
• Independent Estimates
• Expert Judgement
• Advertising
• Analytical Techniques
• Procurement Negotiations

Conduct Procurements Outputs

• Selected Sellers
• Agreements
• Resource Calendars
• Change Requests
• Project Management Plan Updates
• Project Documents Updates