LUNAR INTERNATIONAL COLLEGE

PROJECT PROCUREMENT MANAGEMENT

INDIVIDUAL ASSIGNMENT TWO

Submitted by: Mulugeta Yirdaw ID No: GSR/0647/12

Submitted to: Dr. Magutu, Peterson Obara MSPM: online section 03

30 July 2020
 Project Procurement Management

1. Explain a project procurement management lifecycle, ideally using an example from

within your organization or one that you have researched on the Internet

A Project Procurement management lifecycle is a process or step a procurement process follows

in order to achieve success on project procurement.
The project procurement management lifecycle includes five major steps, as follows:
 Specification. This step involves the purchasing department in communicating with the
project manager to develop and approve a list of procurement items necessary for project
implementation. The department must specify the approved items to external vendors.
 Selection. This step of the project procurement process requires the department to find
potential suppliers which can procure the necessary items, according to the specifications.
For this purpose, the department needs to set vendor selection criteria, which may include
such measures as Delivery, Service Quality, Cost, and Part Performance.
 Contracting. The department must communicate with the suppliers on delivery dates and
payment conditions in order to ensure “on-time” delivery of the ordered items within the
stated project budget. All the conditions should be listed in a procurement contract. Also
a detailed delivery schedule should be negotiated with the procurers and approved by the
purchasing department.
 Control. Success of the procurement management process depends on how the
purchasing department controls the delivery and payment processes. Through arranging
regular meetings with the vendors, tracking delivery progress, reviewing the ordered
items against the approved product specifications, and making necessary changes to the
procurement contract, the department can control the process and ensure successful
accomplishment.
 Measurement. The final step of the project procurement management process refers to
using a system of performance indicators and measures for assessing the effectiveness
and success of the entire process. The project manager needs to set up such a system and
the purchasing department needs to use it in measuring the process. Special meetings and
workshops can be conducted to view KPIs, intermediate results of staged delivery,
performance of procurers, adherence to product specifications, communications with
suppliers, and the like. In case any deviations or gaps are revealed the department should
notify the project manager and make necessary changes to the procurement plan.

Individual Assignment Two

 Project Procurement Management

2. When suppliers are pre-qualifying to receive an Invitation to Tender, what six areas of
capability would you expect to probe as a project procurement specialist?
In order to select suppliers for procurement we first asses some capabilities of suppliers. Six
areas of capabilities expected to be fulfilled will be listed below:
 Price - the goal of most firms is to get the maximum value of items with the lowest possible
cost. Also the supplier will submit the least price for each items in order to be well qualified
for the bid.
 Quality of the product /service/ - price doesn’t matter if the quality of the product
/service/ is low. In order to know that the firm request their previous works for the last few
years and also by getting a sample of items and evaluating the quality that the firm
demand.
 Eligibility - technical competence, financial resources, facilities, reliability, experience and
reputation of product and personnel to perform the contract, legal capacity solvency,
fulfillment of tax and social security obligations, absence of criminal record, satisfactory
past performance; these are the main criterion for a supplier in order to proceed.
 General Experience - usually indicate the minimum qualification requirements for Annual
turnover, Successful project experience of similar nature and complexity (Annual
production rate for the key construction activity; Project experience in the country
concerned and in similar countries, if applicable)
 Financial Position - Cash Flow Capacity, Soundness of Financial Position. This will
assure the firm the economic performance and financial stability of the bidder. This will
assure that if the supplier can achieve and complete the firms request with the specified
time.
 Warranties and claim policies - This Warranty Claim Policy describes the normal
business cooperation between a Buyer and the company. The Buyer is obliged to get acquainted
with Warranty Claim Policy and General Terms and Conditions of Sale before
ordering any goods from the firm By accepting goods from the Seller, the Buyer agrees
with the Warranty Claim Policy outlined below. Should the goods not be taken over by the
Buyer personally, the handover of goods shall be understood as the moment the goods
are handed over to the carrier.

Individual Assignment Two

 Project Procurement Management

3. What should a Project Procurement Initiation Document include and why is it

important?
A few types of project procurement initiation documents may include:
 Scope: project scope statement is the part where detailed idea and requirements about the
procurement, also it helps to avoid proliferating problems and questions in the project
lifecycle. That part of procurement initiation document explaining in depth what the
project is delivering for stakeholder and customer. Proposed solution explains what
innovations, changes and aspects the project will bring within the environment and the
society and which changes and renewals it will cause.
 RFP - A request for proposal is an early stage in a procurement process issuing an
invitation for suppliers, often through a bidding process, to submit a proposal on a
specific commodity or service.
 RFI - A request for information (RFI) is a proposal requested from a potential seller or a
service provider to determine what products and services are potentially available in the
marketplace to meet a buyer's needs and to know the capability of a seller in terms of
offerings and strengths of the seller.
 RFQ - A request for quotation (RFQ) is used when discussions with bidders are not
required (mainly when the specifications of a product or service are already known) and
when price is the main or only factor in selecting the successful bidder.
 Solicitations: These are invitations of bids, requests for quotations and proposals. These
may serve as a binding contract.
 Offers - This type of procurement documents are bids, proposals and quotes made by
potential suppliers to prospective clients.
 Contracts - Contracts refer to the final signed agreements between clients and suppliers.
 Amendments/Modifications - This refers to any changes in solicitations, offers and
contracts. Amendments/Modifications have to be in the form of a written document.
 Project Background- project background establish why and how the project was
created. It is rational way of making the specific project above others emphasize the
attention of participation of most active candidate of a team. The result should be that
the resources and equipment are made available to you to ensure your project happens.
 Project Controls - Project Controls include Budget Actuals and forecasts produced for
each financial period, Exceptions to be escalated to the Corporate Program Manager,
Product reviews from the Quality Plan, Project Tolerance, Risk Mitigation Plan,
identifying project risks and plans for their mitigation.
 Quality plan – this part of the procurement initiation document determines the end stage
assessment will be taking place. There are basically check points during the life of the
project which ensure that a quality product is being delivered. The completion
assessment implies meetings where considering baselined project plan to ensure it is up
to date and on schedule.

Individual Assignment Two

Project Procurement Management

Individual Assignment Two