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Managing procurement for Projects

With variety of projects going all around, it is becoming very difficult to track procurement activities. Projects with varied nature like Investments, Marketing, Customer Projects, Services and IT Projects have different tasks and their tracking of procurement tasks is different . Procurement experts view:
"Project procurement management begins at the point when the new project is initiated and detailed decisions are starting to be made as to what portion of the project will be performed with one's own staff, and what portion will be sent to another company for performance."

On deciding what the project will procure: "You do not procure a complex new item without having a precise technical definition, and that job will
be assigned to the technical staff, not to the buying staff."
There is perhaps no single issue more critical to successful project procurements than the early assignment of technical responsibilities without adequate knowledge many engineers write a procurement specification which leads to strained relationship between an engineer and buyer. So the major challenges for procurement professionals are reducing project cost, schedule, and quality risks.
The approach to acquire all these is acquisition management and contract management. In a typical complex project, numerous and large acquisitions; multiple subcontractors; diverse requirements and administration are required to cater to all these stringent area of definition should be defined to consolidate the requirement of complex project.

The key areas that should be looked upon when dealing with project procurement are:
1) Procurement Planning - This is one of the most important activity where identification of all contract actions should be clearly defined, understanding business requirements and objectives, estimating fluctuations of currency, lead times, realization of upfront issues, and risk management actions; obtain approvals from the stakeholder with a complete plan for better supplier negotiations and use peer review to verify realism and identify
additional risks.
2) Procurement Process - Using knowledge of project management for analysis to budget and schedule for procurement tasks will help to define requirements, establish contract types, write SOWs, generating sourcing base to develop selection criteria enabling you to create a contract from an RFx, auction, or master agreement and establish contract administration between a purchasing enterprise and a supplier, by dictating buying, payment and delivery terms over time. Clauses containing variables that are automatically replaced with terms and other detailed information taken directly from a sourcing like RFx or auction or from a specific agreement. These features enable streamlined contract creation that saves time and eliminates repetitive tasks
3) Procurement Liaison - The key for establishing a connection is by having a dedicated procurement official integral to project team who will review and approve procurement plans and assumptions.
4) Contract Administration - Managing and administrating this contract is the key by establishing project office function to track contract modifications, deliverables (receipt, review, comments, and acceptance), and contract correspondence; establish subcontract management role. This will help to track cost and resources for a specific project activity
5) After the contract has been closed the quality and quantity of the supply of products and services require close monitoring to support its clients in order to realize the most important success of the procurement process: supply in accordance with contract conditions, both on time as well as technical aspects.
6) Aftercare - Reliable aftercare and administrative follow-up are important for the success of the procurement process too, employing experts from the financial and legal settlement of purchases. Moreover the performance of the suppliers is evaluated and, where necessary, adjustments are accomplished. offers these services, taking responsibility for either one or more parts of the scope, both in a managing, guiding, coaching and supporting
role, depending on the requirements of the client.

With all these prominent areas, procurement management success is gauged by its savings, and delivery acceptance


Hi Nilesh, nice post, can you please elaborate on how you would go about dealing with this if the procuring organization was a government or public sector and they had some specific methodologies for project framework
Do you have any idea how such procurement is handled for turnkey Government contracts


Thanks for your comments, talking about experience in Government contracts their functioning is similar but majorly they dont use any project management tool as such to track the cost assignments but they have a documented appraoch where majorly all billing is happening based on milestones achieved in project their contracts are very stringent with lot of clauses associated and their vendor selection criteria is different as they look for vendors having more experience in Givernment assignments as their way of functioning is different. Please tell me if you have any other throughts

Hi Nilesh,

Nice post ... covering the entire process in a quick snapshot overview.

Since I had been associated with core Mfg. companies into project business, in my opinion the key role in project procurement is to envisage and plan with a timeline, & stick religiously to it - to ensure actions happen in-line to the base plan. Many a times I have observed that in the initial stages, people tend to be at ease considering the long term timeline of the project, however this ease-off virtually eats up all the buffer time at the later stage, and all end up in firefighting and face-saving situation.
Similarly, the last point mentioned in this posting " Aftercare" is of equal importance and must not be taken in relaxing spirits.

Look forward for more such informative and thought provoking posts.

Nice post..!!
Describe all the important points..really satisfy with this post.

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