Evaluation of a Procurement Plan for Project-Based Organization - Assignment Example

Evaluation of a Procurement Plan for use in a Project-based Organization Introduction Procurement is one of the most important processes used in business to ensure efficiency in acquiring goods and services. This process involves the preparation and processing of a demand as well as the end receipt and the approval of payment. From procurement to be good, then planning for purchases should be done in an appropriate manner using the correct tools in order to come up with an appropriate procurement management plan as an output. This calls for an appropriate procurement process before contracting the project at hand. Below is the process followed in the preparation of a procurement plan for Maverick consultation firm in Nairobi, Kenya Step 1. The Procurement Plan development The process of procurement of this project starts with selecting a committee and a project manager. The project manager is given the mandate to document the selection process. The committee selected should have three to five people. Cost estimation is done with reference to other consultation firms that have done similar projects. Thereafter, a procurement schedule comprising the steps in the procurement process is prepared. Step 2. Development of the Initial Scope of Services, Project Schedule, and Cost Estimate/Budget The initial scope of services includes the following information; 1. The limits of the schedule. 2. The Project schedule. 3. Project Need Form. 4. A cost estimation of the project 5. Previous study reviews done concerning the project. Step 3. Preparation of request for responses (RFR) It should have adequate information about the qualification and willingness of the consultants in pursuing the project and their responses about the project also the evaluation criteria. These are the items which should be contained in the RFR. • Qualification of the committee members. • The description of the project • Initial Scope of Services • Qualification presentation format. • Insurance details • Contract forms needed by the consultancy firm. • Selection and weighing Criteria • Submission Requirements. QUESTION 1: Reviewing the Concept of Purchase Planning Planning purchases is the process of determining what to purchase, when and how to purchase or acquire it. Purchase Planning singles out the project whose needs can be met by buying or acquiring services, products and results outside the project organization. Planning purchases also can be used to establish which project needs can be met by the project team during project execution. Mainly, the Purchase Planning includes reviewing the risks found in each make-or-buy decision, and reviewing the kind of contract planned to be used.1 One of its major targets is to reduce risks and to transfer risks to the seller. Make-or-buy analysis is the collection and comparison of opportunities and threats evoked by the make and buys solutions. To the buyers, Purchase Planning assists in cutting down impulsive buying of products and reducing overexploitation of the consumers or the buyers’ decisions by attractive advertisements of the products. There are different tools and techniques, which are used in Purchase Planning , with each aiming at proper planning. Contract type is one of the tools used in Purchase Planning . Different types of contracts are deemed to be suitable for different kinds of purchases. In the identification of the correct type of documentation of a project before contracting, the planner should be aware of the different types of contracts in order to select the most appropriate type of contract for program procurement. Expert judgment plays a vital role in planning for purchases. It can be used as an input and an output of the planning purchases process, therefore crucial in the make and buy analysis. The expert judgment is vital in business, legal and technical areas of jurisdiction. After the proper tools are used in Purchase Planning, it helps to generate the procurement management plan, which becomes an input to plan program contracting. The purchase planning process in a project-based organization includes the following; Creating purchasing projects and tasks as well as providing related information about planning for purchases, which include files, links and notes. The process also entails assigning purchasing tasks to the concerned people (buyers), setting task priorities entails setting up starting and finishing dates of the planning purchases, assigning supervisors who are involved supervision over the planning purchases process, and it aims at ensuring proper cover of the process and setting reminders. Setting reminders help the planner to be time conscious and know exactly when to start the planning and lastly control and evaluation.2 This process assists in coming up with an ultimate decision on planning purchases. Question 2: Discuss the general purpose of a procurement plan Procurement planning is the process of coming up with a decision of what to buy, when to buy it and from whom to buy. In this process of procurement, the procurement method is assigned and the expectations of fulfilling the procurement requirements are determined. The Procurement Plan is the product from the process of procurement preparation.3 It, therefore, can be developed for a specific requirement, a particular project, or for a number of requirements for one or many entities in the public or private sectors. One of the purposes of a procurement plan is elucidating and quantifying the technical problems, cost and schedule objectives of the process. The aims of procurement are clearly stated in the preparation process and quantified to the extent possible in order to make the procurement plan a success. It generally accounts for the cost to be incurred in procuring and the technical problems which are going to be incurred during the process. In procurement, the aims of securing are normally listed down and analyzed.4 During the planning process, the objectives listed are generally scheduled, which establishes the timelines for carrying out each step to contract award and the fulfillment of the requirement. Procurement plan aims at defining the design for accomplishing the objectives. The objectives declared for the procurement plan cannot be met without an appropriate plan. Planning to accomplish the set objectives is thus important if the procurement process is to be successful. This is because it helps in finishing the process on time and also to produce quality planning.5 Procurement plan helps in determining the appropriate method for gauging performance in line with the set objectives during the period of executing the contract. This allows for the supervision over the procurement process to find out how actual performance compares with the planned activities.6 This, therefore, calls for an alert to the departments to adjust the procurement plan according to the desired objective. From the number of requirements of the procurement plan, the procurement entity can decide any need for additional staffing and external assistance for completing all procurement requirements listed in the procurement plan.7 As a result, a procurement plan can help in determining the number of workers needed in any organization in order to reach the organizational optimal goals and objectives. A procurement plan allows the combination of related necessities into one contract or for the purposes of economies of scale, it provides for subdivision of the necessities into numerous contract packages. A procurement plan enhances the transparency to in the entire procurement process. Since everything is projected and scheduled in the procurement plan, it makes it easy for the planners to determine what they need in order to complete a project.8 The clarity of the procurement plan makes it mostly reliable as a sure way of ensuring transparency. Procurement plan can be used in predicting the requirements needed to complete a given project. The predictability of procurement activities makes it to be a sure way of enhancing transparency to the planning process.9 Basically, procurement planning is a key process in a business organization since it boosts transparency and ensures efficiency within an organization.10 It provides a timeframe in achieving the organizational goals and aims, planning for the objectives and how those objectives are going to help with the business growth through the provision of quality services. Therefore, generally procurement assists in attaining efficiency within the organization in all its undertakings.11 QUESTION 3: Identify and analyze three key components of a typical procurement plan A project procurement plan records the purchases made from suppliers who are core in completion of the project to create a budget and a well-organized plan. Taking an example of a consulting firm, procurement plan has the following components: the project requirements, the procurement team, the justification for the procurement, time line and lastly the explanation of the supplier selection process, outlines of exact actions to start and to complete purchases.12 The outline of precise actions to start and complete purchases ensures that bids are fair and are made to benefit the company at large. The same process can be used in firms, which have complex procurement projects. However, there are three key components of a typical procurement plan. They include the following; project requirement, the procurement team, the justification for the procurement.13 The project requirement gives a description of what is needed for the procurement plan for it to be a success. It includes the estimated cost of the scheme and the programmed ways in which the quality standards are going to be maintained. Diana Lindstorm who was the president of Los Lobos Consulting firm suggests that the budget may signify distinctive things to a distinct company, but in other companies, if you are putting your time to specific internal projects or the business unit, the budget does become important. The easiest way of coming up with a budget was to tie it to the schedule. She further said that a quality plan laid out how you are going to maintain the standards and requirements for a good procurement.14 The procurement team is composed of the personnel entrusted in the procurement plan. In this component, the personnel chosen should be qualified for the tasks in place. It explains more of the work breakdown, and the precise steps required to complete the procurement.15 Each activity is broken down into small tasks, then assigned a fixed amount of time estimated to finish each task in order to ensure the project termination up in time. Lindstorm explained that you could get the people you want if you can state exactly why you need them for. Justification for the procurement explains more about why the procurement was conducted and what it aims to achieve. One of the reasons for procurement justification is to show that a competitive procurement is impractical because it not possible for every product to meet the required needs but only one. The purpose is not to use to avoid usual purchasing process, neither for a price-based validation. Here selection of the appropriate relationships and the contract approaches for each type of purchasing goods or outsourced service is done. The project planning, management team answers the following questions about this process: What type of relationship is needed: supplier, vendor, or partnership? How the supplier, vendor, or potential partner should be approached: request for quote (RFQ), request for proposal (RFP), or personal contact? How well known is the scope of work? How important is it to be sure of the cost in advance? Conclusion To sum up, it is essential that organizations have a good procurement planning process in order to obtain good contracts that minimize risks while ensuring optimal results through effective contract administration. Using the appropriate procurement process and understanding the purpose of a procurement plan, a better management plan is made which has low risks. This leads to automatic efficiency of the firm, facilitating a firm towards realization of organizational goals and objectives. Bibliography Booth, Caroline. Strategic Procurement: Organising Suppliers and Supply Chains for Competitive Advantage. Philadelphia : Kogan Page, 2010. Bovis, Christopher. EU Public Procurement Law. London: Edward Elgar Publishing, 2012. Bower, Denise. Management of Procurement. London: Thomas Telford, 2005. Brian Greenhalgh and Graham Squires. Introduction to Building Procurement. London: Routledge, 2011. Dominick, Charles, and Sohelia Lunney. The procurement game plan. Boca Raton, Fla: J. Ross, 2012. Louise Knight. Public Procurement: International Cases and Commentary. London: Routledge, 2012. Masterman, J Jack. An Introduction to Building Procurement Systems. Taylor & Francis, 2005. Nicola Dimitri, ‎Gustavo Piga, ‎and Giancarlo Spagnolo. Handbook of Procurement. Cambridge: Cambridge University Press, 2006. Sollish, Fred and Semanik, John. The procurement and supply desk reference. Hoboken, NJ : Wiley, 2012. Thai, Khi V. International Handbook of Public Procurement. New York: CRC Press, 2008. Read More