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Challenges in project procurement
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In my current project, we are in the process of creating the procurement statement of work. Since I was never involved with procurement before, I would like to get some clarifications from those project managers who are involved in procurement process. Anyway my understanding is that it is the responsibility of the project manager to make sure that both the product scope and project scope are addressed in the contract. This means that the project manager should be involved in preparing the procurement statement of work, procurement negotiations and the contract that includes what products or services the vendor will provide.

Do you just rely on your procurement administrator or do you involve in procurement process? Also, Is risk a key concern for procurement?
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We have a procurement manager who partners with us . The procurement manager also runs the terms and conditions past the legal team to make sure that our interests as a buyer are protected.
As you rightly pointed out Anish, The PM is responsible to ensure that the Project and the Product Scope are well covered in the procurement statement of work.
The PM must understand at a very high level about the contract terms and conditions and the implications and risks of the type of the contract that is being negotiated .

For Example , Fixed Price contracts need an absolute clarity of the Project Statement of Work because there is not much margin of error and the risk to the buyer will increase if there is scope creep because of buyer's Scope not being defined clearly.

The selection of a contract type therefore introduces the element of risk.

Cost Plus type contracts start out as being high risk to the buyer and low risk to the seller. Cost Plus / Time and Materials contracts often require a high degree of auditing on the part of the buyer to make sure that the seller is producing high quality work / filling the time sheets appropriately by justifying the time spent .

PMBOK guide procurement management chapter and the corresponding chapter in Rita Mulcahy's book give a good overview of the procurement management process.
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1 reply by Anish Abraham
Dec 03, 2017 11:21 PM
Anish Abraham
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Thanks Deepesh for your quick response.
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Dec 03, 2017 9:17 PM
Replying to Deepesh Rammoorthy, PMP®
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We have a procurement manager who partners with us . The procurement manager also runs the terms and conditions past the legal team to make sure that our interests as a buyer are protected.
As you rightly pointed out Anish, The PM is responsible to ensure that the Project and the Product Scope are well covered in the procurement statement of work.
The PM must understand at a very high level about the contract terms and conditions and the implications and risks of the type of the contract that is being negotiated .

For Example , Fixed Price contracts need an absolute clarity of the Project Statement of Work because there is not much margin of error and the risk to the buyer will increase if there is scope creep because of buyer's Scope not being defined clearly.

The selection of a contract type therefore introduces the element of risk.

Cost Plus type contracts start out as being high risk to the buyer and low risk to the seller. Cost Plus / Time and Materials contracts often require a high degree of auditing on the part of the buyer to make sure that the seller is producing high quality work / filling the time sheets appropriately by justifying the time spent .

PMBOK guide procurement management chapter and the corresponding chapter in Rita Mulcahy's book give a good overview of the procurement management process.
Thanks Deepesh for your quick response.
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The project manager should be somehow involved in the procurement statement and negotiations.
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PM should involve in procurement process, as he is fully aware of his project, numbers of risk identified in project and their response strategy and is a best person to provide information to procurement manager. Which risk is transfer to third party, all these information should be share to procurement manager. He should also participate in negotiation and bidder conference
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1 reply by Anish Abraham
Dec 06, 2017 11:22 AM
Anish Abraham
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Thanks Mansoor for your response.
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It is not possible for procurement admin or staff to know all types of work in the org

Therefore, it has to be a partnership among:
1. PM / PMT
2. Technical team
3. Procurement
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The PM has to be involved in the procurement process, since they are still managing the project, which includes the resources and suppliers involved in those procurements.
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All related to product scope is responsability of business analyst. All related to project scope is responsability of project manager. From product scope the project scope is defined. About SOW the project manager is responsible if the activities to create it are inside the project schedule. If no activities related to it have been defined then project manager has nothing to do. The same for all related to project procurement. The project manager is accountable for activities and those activities will be performed by the subject matter experts of people assigned to those activities.
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Thank you all for your comments and suggestions.
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First the PM need be involved, to what level can varies but a lot.
What kind of projet? IT? Construction?
Do you subcontract all or most of the project? Make sure all is accounted for in you various contracts, no scope missing in between contracts.
Risk should be involve, evaluate financial of subs for one. What are the risk that are mitigated using procurement?
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1 reply by Anish Abraham
Dec 04, 2017 10:58 AM
Anish Abraham
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Thanks Vincent for your feedback. This would be basically a Time and Material contract.
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The PM will be responsible for ensuring that requirements, constraints, assumptions and other critical info is incorporated into the work which a procurement analyst will be performing.

Risk is absolutely a key consideration in procurement planning - everything from picking the best contract type to specific terms & conditions will be influenced.

Kiron
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1 reply by Anish Abraham
Dec 06, 2017 11:21 AM
Anish Abraham
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Thanks Kiron for your response on this.
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