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Effective Project Procurement


Procurement if been managed well will play a crucial role in the overall effectiveness of the project management. Procurement management requires a good historical database, availability of expertise, subject matter experts. Proper thought process is required to arrive at conclusion and taking appropriate decisions. Procurement professionals are busy. Between juggling multiple projects and communicating across departments, there are many factors that make it necessary to streamline processes to maximize efficiency.

Here are seven ways project procurement professionals can drive more efficiency among their teams and in their own work.

1. Think Carefully Before Making a Purchase - Procurement reduces costs while obtaining the items a company needs. Yet simply creating a purchase order for every request that comes in doesn’t mean costs are actually being reduced, in fact, often it means the opposite. Continually surveying what is being used and communicating with whoever is using those products keeps the company running faster and smarter. With contracts being such a huge part of the purchase process, it’s important to ensure that a simple, comprehensive system is in place both to create and review orders. This helps the process move smoothly once a decision is made to purchase, and makes it easy to review contracts and ensure all orders are up to date.

2. Build Virtuous Supplier Relationships - One of the main components of being a procurement professional is being surrounded by a group of trustworthy suppliers. Building and maintaining good supplier relationships streamlines the procurement process and eliminates the need to start from scratch on every bid request. Fair, detailed, and straightforward negotiations and RFPs increase efficiency and make suppliers happier.

3. Expand Your Network - It may seem easiest just to take charge of projects and not involve other teams, but working efficiently means involving key stakeholders. Input from other departments widens the perspective on good suppliers, quality, and pushes projects to completion faster. Building close relationships throughout an organization speed up processes build trust and increase efficiency. With so many new tools for communication, involving other people is easier than ever before. Both internal and external parties will need access to any contracts that are created for orders, and having a platform in place that allows everyone to communicate in a single source will speed up the process and make sure all the right people are included.

4. Use Your Analytical Skills to Make the Right Decisions - Between project planning, vetting vendors and bids, and negotiating the best deals, being in procurement means having top-notch analytical skills. Having a full perspective on every part of the process keeps projects on track and finances in check. Most modern contract management platforms have extensive analytics that will make gathering metrics and reporting back simple and effective.

5. Sharpen Your Negotiating Skills - Part of developing good relationships is negotiating well. Making a good deal for an organization while keeping suppliers happy can be a fine line to walk, but developing strategies to make both parties happy is vital to becoming efficient. Negotiations always involve a contract, and in the past, this meant emailing or even mailing documents back and forth. This often muddled conversations and could lead to confusion as different people were involved in different email chains or conversations. Implementing a contract management platform makes negotiation much simpler as everyone is now able to redline, edit, and comment in one place.

6. Think Globally - Today’s economy is global. Often the best deals in the business area are in an unexpected location. Building relationships with global partners increases flexibility and options for an organization. Global supply chains often provide more options and better prices than limiting the search to close locations. An important part of thinking globally is timing. An organization needs supplies as soon as possible, and suppliers want to get a deal signed as soon as possible. If teams are emailing documents back and forth and not all parties have immediate access, the process is significantly slowed down. A contract lifecycle management platform ensures all the necessary parties have access as soon as the contract is created so that signatures happen faster.

7. Move Forward with Technology - Digitizing processes is one of the fastest ways to increase efficiency and be successful. Moving contracts and documents to the Cloud is essential for speeding up processes and becoming a forward-thinking company. Having an automated contract lifecycle management platform in place will help contract creation, real-time negotiations, faster signatures, and automated reminders to increase compliance. The skills are there and the tools are all within reach. Following these steps will help maximize efficiency and keep procurement departments working faster and smarter. Procurement management is the process of ensuring that everything required from outside the organization is in place when it is needed so the project can proceed successfully. A ‘make or buy decision will need to be taken where the option exists to do the work in-house as part of the project or to purchase some products or services from outside suppliers. A procurement management plan describes: what will be procured for the project, the types of contract used, how suppliers will be selected, how their performance will be measured, and how supplier risk is to be managed. Procurement management documents are used to solicit proposals from prospective suppliers. These must be detailed enough to ensure consistent, appropriate responses, but flexible enough to allow consideration of suggestions for better ways to satisfy the same requirements.


TRENDS AND EMERGING PRACTICES IN PROCUREMENT MANAGEMENT


There are a number of major trends in software tools, risk, processes, logistics, and technology with different industries that can affect the success rate of projects. Trends and emerging practices for Project Procurement Management include but are not limited to: Advances in tools - There has been significant improvement in the development of tools to manage the procurement and implementation phases of a project. Online tools for procurement now give the buyers a single point where procurements can be advertised and provide sellers with a single source to find procurement documents and complete them directly online. In the construction/engineering/infrastructure field, the increasing use of the building information model (BIM) in software tools has been shown to save significant amounts of time and money on projects using it. This approach can substantially reduce construction claims, thereby reducing both costs and schedule. Major companies and governments worldwide are beginning to mandate the use of BIM on large projects.

More advanced risk management - An increasing trend in risk management is to write contracts that accurately allocate specific risks to those entities most capable of managing them. No contractor is capable of managing all the possible major risks on a project. The buyer will be required to accept the risks that the contractors do not have control over, such as changing corporate policies in the buying organization, changing regulatory requirements, and other risks from outside the project. Contracts may specify that risk management is performed as part of the contract.

Changing contracting processes - There has been significant growth in mega projects in the past several years, particularly in the areas of infrastructure development and engineering projects. Multibillion-dollar projects are now common. A large proportion of these involve international contracts with multiple contractors from many countries and are inherently more risky than projects using only local contractors. Increasingly, the contractor works closely with the client in the procurement process to take advantage of discounts through quantity purchases or other special considerations. For these projects, the use of internationally recognized standard contract forms is increasing in order to reduce problems and claims during execution.

Logistics and supply chain management - Because so many large engineering, construction infrastructure projects are done through multiple international contractors, the management of the flow of materials becomes critical to successful completion. For long-lead items, both the manufacture of the items and their transportation to the project site become schedule drivers. In the IT field, a long-lead item may require ordering 2 to 3 months in advance. In complex construction projects, long-lead items may require ordering 1 to 2 years in advance or longer. For these projects, long-lead items may be procured in advance of other procurement contracts to meet the planned project completion date. It is possible to begin contracting for these long-lead materials, supplies, or equipment before the final design of the end product itself is completed based on the known requirements identified in the top-level design. The management of the supply chain is an area of increasing emphasis by the contractor's project team. Not only are primary sources of supplies identified early in the project, but secondary, backup sources are also generally identified. Many countries around the world require international contractors to purchase certain minimum percentages of material and supplies from local vendors.

Technology and stakeholder relations - Publicly funded projects are under increasing scrutiny. A trend in infrastructure and commercial construction projects is the use of technology including web cameras (webcams) to improve stakeholder communications and relations. During construction, one or more webcams are installed on the site, with periodic updates to a publicly available website. The progress of the project can be viewed on the Internet by all stakeholders. Video data can also be stored, allowing analysis if a claim arises. Some projects have discovered that the use of webcams minimizes disputes relating to the construction work on-site, as the webcam has recorded the events, so there should be no disagreement about the facts of the matter.

Trial engagements - Not every seller is well suited for an organization's environment. Therefore, some projects will engage several candidate sellers for initial deliverables and work products on a paid basis before making the full commitment to a larger portion of the project scope. This accelerates momentum by allowing the buyer to evaluate potential partners, while simultaneously making progress on project work.

 

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