Project Integration & Procurement Management
Assignment Description
MAN5410: Project Integration and Procurement Management Assignment
Project Integration (Individual
Assignment)
Consider the
attached given Case study (Sustainability at Coles). Begin by reading the unit
material, unit textbook and other relevant sources from ECU library. Having
done this, please answer the following questions from the perspective of Australian
supermarket suppliers:
1.
Describe the retail trade market in Australia. You should
consider private and business customers, and how they purchase now and how it
may change in future. Support your answer using publicly available
data/statistics. Ensure your answer include recent actions that have taken
place by various stakeholders as set out in the current news and explain how
this could influence buyer actions in future.
2.
Outline possible sustainable procurement practices for
Coles. You should consider its approach to capital, maintenance and operating
activities. You should also consider project versus operating activities.
3. Consider new technologies and the impact they are having
on procurement, both for end customers and for producers in the supply chain.
Using material from current business literature or journal articles, describe
what the future might look like for an organisation such as Coles.
4. Develop a project integration management plan that emphasises
the procurement aspects, and that could allow other supermarkets to transition
from traditional approaches to sustainable procurement strategies. See the
sample Procurement Management Plan template as a guide.
•
This is an
individual piece of work, not a group activity.
• You can find a lot of information on the web about this.
Do lots of Google searches & news article searches.
• Support your assignment answers using data from public
sources including percentages and numbers for the facts you use. Reference your
sources.
•
Use in-text citations. Reference MUST be relevant to your
written work and the context in which you use them. Use APA 6th
referencing standards.
• You should have at least 10 current references (journal
papers and books) from the last 5 years. In addition to these, you can also
cite websites.
• The report should be no more than 2000 words in length
(excluding references), so you will need to be concise.
• Provide specific answers to the above questions. You don’t
need to provide an essay style report, and there is no need for introductions,
abstracts or summaries.
• Submit your final document through the link provided on
Blackboard by the due date.
Introduction
The purpose of
the Procurement Management Plan is to define the procurement requirements for
the project and how it will be managed from developing procurement
documentation through contract closure. The Procurement Management Plan defines
the following:
1.Items to be
procured with justification statements and timelines 2.Type of contract to be
used
3.Risks
associated with procurement management
4.How
procurement risks will be mitigated through contract performance metrics,
insurance, or other means
5.Determining
costs and if/how they’re used as evaluation criteria
6.Any
standardized procurement templates or documents to be used
7.How multiple
suppliers will be managed if applicable
8.Contract approval
process 9.Decision criteria
10.Establishing
contract deliverables and deadlines
11.How
procurement and contracts are coordinated with project scope, budget, and
schedule
12.Any
constraints pertaining to procurement
13.Direction to
sellers on baseline requirements such as contract schedules and work breakdown
structures (WBSs)
14.Vendor
Management
15.Identification
of any prequalified sellers if applicable
16.Performance
metrics for procurement activities
This
Procurement Management Plan sets the procurement framework for this project. It
will serve as a guide for managing procurement throughout the life of the
project and will be updated as acquisition needs change. This plan identifies
and defines the items to be procured, the types of contracts to be used in
support of this project, the contract approval process, and decision criteria.
The importance of coordinating procurement activities, establishing firm
contract deliverable, and metrics in measuring procurement activities is
included. Other items included in the procurement management plan include:
procurement risks and procurement risk management considerations; how costs
will be determined; how standard procurement documentation will be used; and
procurement constraints.
Procurement Management Approach
The Procurement
Management Plan should be defined enough to clearly identify the necessary
steps and responsibilities for procurement from the beginning to the end of a
project. The project manager must ensure that the plan facilitates the
successful completion of the project and does not become an overwhelming task
in itself to manage. The project manager will work with the project team,
contracts/purchasing department, and other key players to manage the
procurement activities.
The Project
Manager will provide oversight and management for all procurement activities
under this project. The Project Manager will work with the project team to
identify all items to be procured for the successful completion of the project.
The Project Management Office (PMO) will then review the procurement list prior
to submitting it to the contracts and purchasing department. The contracts and
purchasing department will review the procurement items, determine whether it
is advantageous to make or buy the items, and begin the vendor selection,
purchasing and the contracting process.
Procurement Definition
The purpose of
procurement definition is to describe, in specific terms, what items will be
procured and under what conditions. Sometimes items which must be procured for
a project can be made internally by an organization. Additionally, procurement
deadlines are usually affected by the project schedule and are needed by
certain times to ensure timely project completion. This section is where these
items must be listed, justified, and the conditions must be set. Any important
technical information should also be included. Individuals may also be listed
with authority to approve purchases in addition to or in the absence of the
project manager.
Type of Contract to be Used
The purpose of
this section of the procurement management plan is to describe the type of
contract to be used so the contracts and purchasing department can proceed
accordingly. There are many different types of contracts like firm-fixed price,
time and materials (T&M), cost-reimbursable, and others. Different
procurement items may also require different contract types. A well defined
product may be a firm-fixed price while a product which will require a research
and development effort may be a T&M contract.
All items and
services to be procured for this project will be solicited under firm-fixed
price contracts. The project team will work with the contracts and purchasing
department to define the item types, quantities, services and required delivery
dates. The contracts and purchasing department will then solicit bids from
various vendors in order to procure the items within the required time frame
and at a reasonable cost under the firm fixed price contract once the vendor is
selected. This contract will be awarded with one base year and three option
years.
Procurement Risks
The purpose of
this section is to identify any potential risks associated with procurement for
the project. Depending on the contract type, items or services being purchased,
vendor history, or uncertainties in the project’s scope, schedule, or budget,
potential risks may require more detailed planning and mitigation strategies.
For instance, if an organization has a close relationship to a particular
vendor but there is a chance that vendor will no longer to be able to provide
goods or services needed, this represents a significant risk to the project’s
procurement activities that must be managed.
All procurement
activities carry some potential for risk which must be managed to ensure
project success. While all risks will be managed in accordance with the project’s
risk management plan, there are specific risks which pertain specifically to
procurement which must be considered:
· Unrealistic schedule and cost expectations for vendors
Manufacturing capacity capabilities of vendors
·
Conflicts with current contracts and vendor relationships
· Configuration management for upgrades and improvements of
purchased technology Potential delays in shipping and impacts on cost and
schedule
·
Questionable past performance for vendors
·
Potential that final product does not meet required
specifications
·
These risks are not all-inclusive and the standard risk
management process of identifying, documenting, analyzing, mitigating, and
managing risks will be used.
Procurement Risk Management
The purpose of
this section is to describe how risks related specifically to procurement
activities will be managed. All projects should have an independent and
thorough risk management plan. However, much like there are risks which pertain
only to procurement, there are risk management considerations which may also be
unique and apply only to procurement. This may include involvement of specific
personnel in managing procurement risks or obtaining approval on mitigation
steps from a particular management level within the organization.
As previously
stated, project risks will be managed in accordance with the project’s risk
management plan. However, for risks related specifically to procurement, there
must be additional consideration and involvement. Project procurement efforts
involve external organizations and potentially affect current and future
business relationships as well as internal supply chain and vendor management
operations. Because of the sensitivity of these relationships and operations
the project team will include the project sponsor and a designated
representative from the contracting department in all project meetings and
status reviews.
Additionally,
any decisions regarding procurement actions must be approved by the project
sponsor or, in his absence, the Vice President of Contracts before
implementation. Any issues concerning procurement actions or any newly
identified risks will immediately be communicated to the project’s contracting
department point of contact as well as the project sponsor.
Cost Determination
The purpose of
this section is to describe how costs will be determined and if/how they will
be used as part of the selection criteria. For procurements seeking goods
and/or services from an outside vendor, costs are usually provided in response
to a Request for Quote (RFQ), Request for Proposal (RFP), or a Request for Bid
(RFB). Vendors submit quotes, proposals, or bids which describe the costs of
the good or service in detail to aid the customer in their decision making.
Costs are almost always used as part of the procurement decision criteria but
may be prioritized differently depending on the organization. For this project
we will issue a Request for Proposal (RFP) in order to solicit proposals from
various vendors which describe how they will meet our requirements and the cost
of doing so. All proposals will include vendor support for items A, B, and C
(from procurement definition paragraph) as well as the base and out-year costs.
The vendors will outline how the work will be accomplished, who will perform
the work, vendors’ experience in providing these goods, customer testimonials,
backgrounds and resumes of employees performing the work, and a line-item
breakdown of all costs involved. Additionally, the vendors will be required to
submit work breakdown structures (WBSs) and work schedules to show their
understanding of the work to be performed and their ability to meet the project
schedule.
All information must be included in
each proposal as the proposals will be used as the foundation of our selection
criteria.
Proposals which omit solicited
information or contain incomplete information will be discarded from
consideration.
The purpose of
this section is to describe what standard procurement documentation will be
used as part of the procurement. For large complex projects, standardization
makes work across all project process areas easier to manage. When
organizations utilize standard forms, templates, and formats, there is
commonality across different projects as well as different groups within the
organization.
The procurement management process consists of many steps as well as ongoing management of all
procurement activities and contracts. In this dynamic and sensitive
environment, our goal must be to simplify procurement management by all
necessary means in order to facilitate successful completion of our contracts
and project. To aid in simplifying these tasks, we will use standard
documentation for all steps of the procurement management process. These
standard documents have been developed and revised over a period of many years
in an effort to continually improve procurement efforts. They provide adequate
levels of detail which allows for easier comparison of proposals, more accurate
pricing, more detailed responses, and more effective management of contracts
and vendors.
The PMO
maintains a repository on the company’s shared drive which contains standard
project management and procurement documentation that will be used for this
project. The following standard documents will be used for project procurement
activities:
Standard
Request for Proposal Template to include o Background
o Proposal
process and timelines
o Proposal guidelines
o Proposal
formats and media
oSource selection criteria
o Pricing forms
o Statement of work
o Terms and Conditions
Procurement Constraints
The purpose of
this section is to describe any constraints which must be considered as part of
the project’s procurement management process. These constraints may be related
to schedule, cost, scope, resources, technology, or buyer/seller relationships.
As constraints are identified, they must be considered every step of the way as
procurement activities are planned and conducted. Every effort must be made to
identify all constraints prior to any project or procurement planning as
constraints identified later in the project lifecycle can significantly impact
the project’s likelihood of success.
There are several
constraints that must be considered as part of the project’s procurement
management plan. These constraints will be included in the RFP and communicated
to all vendors in order to determine their ability to operate within these
constraints. These constraints apply to several areas which include schedule,
cost, scope, resources, and technology: Schedule:
Project
schedule is not flexible and the procurement activities, contract
administration, and contract fulfillment must be completed within the established
project schedule.
-
Cost:
o Project budget has contingency and management reserves built in;
however, these reserves may not be applied to procurement activities. Reserves
are only to be used in the event of an approved change in project scope or at
management’s discretion.
-
Scope:
o All procurement activities and contract awards must
support the approved project scope statement. Any procurement activities or
contract awards which specify work which is not in direct support of the
project’s scope statement will be considered out of scope and disapproved.
-
Resources:
o All procurement activities must be performed and managed with current
personnel. No additional personnel will be hired or re-allocated to support the
procurement activities on this project.
-
Technology:
o Parts specifications have already been determined and will be included
in the statement of work as part of the RFP. While proposals may include
suggested alternative material or manufacturing processes, parts specifications
must match those provided in the statement of work exactly.
Contract Approval Process
This section of
the procurement plan template defines the process through which contracts must
be approved. This process may vary greatly from company to company but it is
important to define the process within your organization and who is involved in
the decision-making. Typically large purchases follow an established bidding
process and follow a formal selection and approval process. Smaller purchases
can be less formal and can be approved by the Project or Program Manager. This
portion of the procurement management plan should clearly identify the rules
for all procurement within your organization.
The first step in the contract approval process is to
determine what items or services will require procurement from outside vendors.
This will be determined by conducting a cost analysis on products or services
which can be provided internally and compared with purchase prices from
vendors. Once cost analyses are complete and the list of items and services to
be procured externally is finalized, the purchasing and contracts department
will send out solicitations to outside vendors. Once solicitations are complete
and proposals have been received by all vendors the approval process begins.
The first step of this process is to conduct a review of all vendor proposals
to determine which meet the criteria established by the project team and the
purchasing and contracts department. Purchases less than $x,xxx only require
the approval of the Project Manager; whereas, purchases greater than $x,xxx
must be approved by the Contract Review Board. For these larger purchases the
contract review board will meet to determine which contract will be accepted.
The Contract Review Board consists of representatives from the project team,
purchasing and contracts department, finance, and the PMO.
Decision Criteria
The purpose of
this part of the procurement management plan is to define the criteria used by
the contract review board to decide on what contract(s) to award. Again, these
criteria may vary between organizations but must be defined as part of the
Procurement Management Plan.
The criteria
for the selection and award of procurement contracts under this project will be
based on the following decision criteria:
-
Ability of the
vendor to provide all items by the required delivery date
-
Quality
-
Cost
-
Expected
delivery date
-
Comparison of
outsourced cost versus in-sourcing
-
Past
performance
-
These criteria will be measured by the contracts review
board and/or the Project Manager. The ultimate decision will be made based on
these criteria as well as available resources.
Vendor Management
The purpose of
this section of the Procurement Management Plan is to describe the roles and
actions the project team and purchasing and contracts department will take to
ensure that the selected vendors provide all of the products/services agreed
upon and that the appropriate levels of quality are maintained.
The Project
Manager is ultimately responsible for managing vendors. In order to ensure the
timely delivery and high quality of products from vendors the Project Manager,
or his/her designee will meet weekly with the contract and purchasing
department and each vendor to discuss the progress for each procured item. The
meetings can be in person or by teleconference. The purpose of these meetings
will be to review all documented specifications for each product as well as to
review the quality test findings. This forum will provide an opportunity to
review each item’s development or the service provided in order to ensure it
complies with the requirements established in the project specifications. It
also serves as an opportunity to ask questions or modify contracts or
requirements ahead of time in order to prevent delays in delivery and schedule.
The Project Manager will be responsible for scheduling this meeting on a weekly
basis until all items are delivered and are determined to be acceptable.
Performance
Metrics for Procurement Activities
Here the
Procurement Management Plan describes the metrics to be used for procurement
activities associated with the project. These metrics may be used to ensure the
project stays on schedule regarding procurement activities. They may also be
used to compile data on the performance of various vendors in order to assist
with future procurement activities’ vendor selection criteria.
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