The ACME Development Corporation has charged me with the task of standardizing their procurement processes and practices. In order for me to accomplish this, it is imperative that all project managers understand why a standardize procurement process is an important part of the project management lifecycle and what negative impact would occur if we continue to do ‘business as usual’.
Let’s start by taking a look at how procurement fits into the project management lifecycle. As one of many subsidiary plans of the Project Management Plan, the Procurement Management Plan is the organization of processes of all purchases and acquisitions of external resources (products and/or services) which are needed to perform work and complete the project. (PMI, 2004) These processes can be separated into six different process areas: 1. Plan Purchases and Acquisitions
2. Plan Contracting
3. Request Seller Responses
4. Select Sellers
5. Contract Administration
6. Contract Closure (PMI, 2004)
Each of these processes interacts with the other Knowledge areas at various times during the lifecycle of the project.
Contracts are typically drawn up to secure products and/or services that conform to and fulfill the project’s needs and are usually scrutinized by specialists in contracting, purchasing and the law. This is important as a contract is a legally binding document, so we want to be sure that the wording in that contract accurately defines how, when and what it is we are trying to acquire. If a contract does not accurately spell out the terms of an agreement, disagreements and frustration can lead to project delays and unsatisfactory outcomes, or worse yet, law suits can plague a project. We see this all the time in the news. For example: In the small town of Adelphia, Ohio, a dispute between a sewer contractor and the city erupted when the contractor developing a sewer system for the...