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solved assignments semester 4 Q. Explain the plan procurement project process.


Answer: Plan procurement
Plan procurement is a process for determining what goods and services to purchase and when, how and from where to purchase them. This process includes the documenting the purchasing decisions, selecting the approach and identifying potential sellers. This process involves the following activities:


1. Performing a make or buy decision: When a company decides to complete a project, it also decides if they would complete the project themselves or outsource the work. The company identifies those project needs which can be met by acquiring from outside the project team versus those project needs which can be accomplished by the project team. The make or buy decisions are done based on the cost involved in managing procurement and the direct cost of the product and services to de procured.

2. Creating a procurement management plan: Once the make or buy decision is made, the project manager should create a plan to manage these procurements. The procurement plan will describe how to execute procurement, control and close the procurement process.

3. Creating a procurement statement of work: The project manager must determine the scope of the procurement. This can be done by breaking down the project scope into the work done by the projet team and the work that will be purchased. The work to be done by each procurement is called the “procurement statement of work”. The procurement statement of work must be clear, complete and detail. It must clearly describe all the activities to be performed by the seller.

4. Selecting a contract type: There are different types of contracts that can be chosen to acquire goods and services required for the project. Contracts can be categorised into:

Fixed price: In this contract a fixed price will be ensured for products and services to be provided. This contract incorporates financial incentives for better product production and also exceeding selected project objectives.

Cost reimbursable: This contract involves payments for actual cost of the product and fee indicating seller profit. There is also an option of cost reimbursement to the seller’s if the price falls below the defined objectives

Time and material: This is a blend of both cost reimbursable and fixed price contracts. They are often used for staff allocation, and any support from outside.
The contract type can be selected on the basis of the what is being purchased, the scope of work, marketplace and economy, level of expertise of the seller and industry standards.

5. Creating the procurement documents: Once the contract type is selected and the procurement statement of work is created, the project manager can create the procurement document which decribes the procurement requirements to the seller. Following are some of the types of procurement documents:

Request for Proposal (RFP): It is an invitation for suppliers, requesting for detailed proposal on how the work will be accomplished, company experience, price, and so on.

Invitation for Bid (IFB): It is a request for the total price to do the work.

Request for Quotation (RFQ): It is a request for the price quote per items.

6. Determining the source seletion criteria: The source selection criteria is included in the procurement documents to give the seller a clear understanding of the project requirement. The source selection criteria includes:

○ Number of years in business.
○ Understanding of requirements.
○ Price or life cycle cost.
○ Technical ability.
○ Quality of past performance.
○ Ability to complete the work on time. 

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