Department Of Computer Science

Software project management

Title: project procurement management
Team members
Name Id
Baslael Tagesse Uu
Bezawit Alemayehu Uu
Bezawit Tsebelu Uu
Eliyas Mekonen Uu
Fikir kindu Uu
Hildana Asfaw Uu

I. ACKNOWLEDGEMENT
First of all we would like to express our special thanks of gratitude to our software project
management teacher Mr. NAHOM who gave us this wonderful project on the topic project
procurement management.

Secondly, we would like to thank all our supporters who have helped and motivated us to fulfill
our project on time.

TABLE OF CONTENT
Project procurement management………………………..
Important of procurement……………………………….
Type of procurement…………………………………….
Process of procurement………………………………….
Conclusion………………………………………………
References……………………………………………….
 Project procurement management
Procurement is the process of purchasing goods or services, usually in reference to business
spending. Procurement means acquiring goods and services from an outside source.
Procurement management is a term that describes the process of managing and optimizing a
project’s budget as it applies to the goods, services, and resources you’ll need to complete your
project.

Procurement is important to project managers because -

-it ensures that the right equipment and materials are purchased for a project, at the right price.
-procurement can help to ensure that project are completed on schedule and within budget.
-Procurement can also be a critical part of ensuring that the quality of a project is high.
-Procurement is an essential part of any project. Without a clear plan for acquiring the necessary
resources, your project will likely fail. Procurement can help you avoid costly mistakes and
ensure that you receive the correct items or services at the right price.

When planning your procurement process, keep these four tips in mind:

1.Assessyourneeds
Before you can begin shopping for items or services, you need to understand what you need. Do
some research to determine what options are available and which are the best fit for your project.

2.Plan Ahead
Make sure that you have enough information to shop intelligently. Plan ahead by creating a
purchase order (PO) or requisition (RQ) that lists all of the items and services that you need. This
will help reduce confusion and chaos during your procurement process.

3.Negotiate Prices Wisely

Don’t be afraid to negotiate prices with suppliers. You may be able to get a better deal if you’re
willing to haggle. But make sure that you’re aware of the contract terms and conditions before
signing anything! Failure to read the fine print could lead to costly penalties down the road.

4. Request Quotations ASAP!

Once you have determined what you need, send out request for quotes (RFQs) as soon as
possible. This will speed up the bidding process and allow you to compare prices more easily. Be
sure to include important

Type of procurement
There are three main types of procurement: direct procurement, indirect procurement and service
procurement.
Direct procurement- involves the direct purchase of raw, goods, machinery and wholesale
goods that directly contribute to the company finished product.
Indirect procurement- it is a process to purchase goods like office supplies which don’t directly
after the company’s end product or bottom line, but they support the day-to-day management of
the business.
Service procurement- this type of procurement can involve hiring temporary staffers, leasing
software and bringing short team vendors to work at an event project or seminar.

Project Procurement Management Processes

Project Procurement Management includes the processes required to acquire goods
and services, to attain project scope, from outside the performing organization.
1.Procurement planning
determining what to procure and when. It involves consideration of whether to
procure, how to procure, what to procure, how much to procure, and when to
procure.
Inputs to Procurement Planning
Scope statement
Product description
Procurement resources
Market conditions
Other planning outputs
Constraints
Assumptions.
Tools and Techniques for Procurement Planning
 1. Make-or-buy analysis
 Determining whether a particular product or service should be made or
performed inside the organization or purchased from someone else. Often
involves financial analysis (a product can be produced cost effectively by the
performing organization).

2. Expert judgment
Expert technical judgment will often be required to assess the inputs to this
process.
3. Contract type selection
Different types of contracts are more or less appropriate for different types
of purchases. Contracts generally fall into one of three broad categories:

Types of Contracts
 Fixed price or lump sum: involve a fixed total price for a well-defined product
or service
 Cost reimbursable: involve payment to the seller for direct and indirect costs
Cost Reimbursable Contracts
 Cost plus incentive fee (CPIF): the buyer pays the seller for
allowable performance costs plus a predetermined fee and an
incentive bonus
 Cost plus fixed fee (CPFF): the buyer pays the seller for
allowable performance costs plus a fixed fee payment usually
based on a percentage of estimated costs
 Cost plus percentage of costs (CPPC): the buyer pays the seller
for allowable performance costs plus a predetermined
percentage based on total costs
 Unit price contracts: require the buyer to pay the seller a predetermined
amount per unit of service. Sometimes, it is also known as Time and Material
Contract
Outputs from Procurement Planning
1. Procurement management plan
The procurement management plan should describe how the remaining
procurement processes will be managed.
2. Statement(s) of work
a description of the work required for the procurement.
2.Solicitation Planning
Solicitation planning involves preparing documents needed to support solicitation.
Inputs to Solicitation Planning
1. Procurement management plan
2. Statement(s) of work
3. Other planning outputs.
Tools and Techniques for Solicitation Planning
 1. Standard forms include standard contracts, standard descriptions of
procurement items, or standardized versions of all or part of the
needed bid document
2. Expert judgment

Outputs from Solicitation Planning

1. Procurement documents: Procurement documents are used to solicit
proposals from prospective sellers.
2. Evaluation criteria: Evaluation criteria are used to rate or score
proposals.
3. Statement of work updates

3. SOLICITATION
Solicitation involves obtaining responses (bids and proposals) from
prospective sellers on how project needs can be met.
Inputs for solicitation
1. Procurement documents
2. Qualified seller lists
Tools and Techniques for Solicitation
1. Bidder conferences Bidder conferences (also called contractor conferences,
vendor conferences, and pre-bid conferences) are meetings with
prospective sellers prior to preparation of a proposal.
2. Advertising
Outputs from Solicitation
1. Proposals: are seller-prepared documents that describe the seller’s ability and
willingness to provide the requested product.
4. Source selection
involves the receipt of bids or proposals and the application of the evaluation
criteria to select a provider.

Inputs to Source Selection

1. Proposals
2. Evaluation criteria
3. Organizational policies.
Tools and Techniques for Source Selection
1. Contract negotiation: Contract negotiation involves clarification and
mutual agreement on the structure and requirements of the contract
prior to the signing of the contract.
2. Weighting system: A weighting system is a method for quantifying
qualitative data to minimize the effect of personal prejudice on source
selection.
 3. Screening system: A screening system involves establishing minimum
requirements of performance for one or more of the evaluation
criteria.
4. Independent estimates
Outputs from Source Selection
1. Contract: A contract is a mutually binding agreement that obligates the
seller to provide the specified product and obligates the buyer to pay
for it.

5. CONTRACT ADMINISTRATION
Contract administration is the process of ensuring that the seller’s
performance meets contractual requirements.
Inputs to Contract Administration
1. Contract
2. Work results: The seller’s work results
3. Change requests: Change requests may include modifications to the
terms of the contract or to the description of the product or service
to be provided.
4. Seller invoices: The seller must submit invoices from time to time to
request payment for work performed.
Tools and Techniques for Contract Administration
1. Contract change control system: A contract change control system
defines the process by which the contract may be modified.
2. Performance reporting
3. Payment system
Outputs from Contract Administration
1. Correspondence
2. Contract changes
3. Payment requests.

6. Contract Closeout
Contract closeout is similar to administrative closure in that it involves both product
verification and administrative closeout.

Inputs to Contract Closeout

1. Contract documentation
Tools and Techniques for Contract Closeout
1. Procurement audits: A procurement audit is a structured review of the
procurement process from procurement planning through contract
administration.
Outputs from Contract Closeout
1. Contract file
2. Formal acceptance and closure
 Conclusion
Procurement is important to project management for a few reasons. First, procurement helps
ensure that all required resources are available when the project needs them.
Second, procurement helps manage expectations by ensuring that all stakeholders know what
they need to do in order to get their part of the project done. Finally, procurement can help
identify and avoid potential problems before they become big headaches. By understanding why
procurement is so important to Project Management and taking steps to include it into your
team’s workflow, you can smoothly execute your projects and keep everyone on track.