Having a detailed procurement management plan in place is essential to the overall success of a project. As well as enabling you to identify and document how the project will conduct its procurements, a plan will also outline the overall strategy and management approach with vendors, suppliers, and contractors. You should list all the procurements necessary for the project and identify the requirements associated with each of them. Create a timeline and use this to monitor the procuring process and track progress. Crucially, this allows you to effectively budget and ensure that you are able to keep to the project schedule. Here are eight key steps to help you create a successful procurement management plan.
1. Define Terms and Responsibility
The first step for creating a procurement management plan that works is to identify and list specifically what you need to procure. Create an associated timeline, so that you can plan when each procurement will need to be ordered and subsequently used. Outline and define the boundaries of authority and the responsibilities of each team member, so it’s clear who on the team is authorized to make required purchases.
2. Define Types of Agreement
Decide on the type of agreement and/or contracts that will be used and how these will be managed. Although there are different types of contracts, the most common tend to be fixed-price contracts, cost-reimbursable contracts, and time and materials-based contracts. Clearly identify and come to agreements with all stakeholders on which type(s) will be used.
3. Follow the Project Schedule
The work supplied by external contractors, suppliers, vendors, and other service providers can significantly impact the project schedule.
“A project should be divided into tasks,” says Donald Gilbert, a tech writer at Writinity. “Ideally, a contractor should only be assigned to one task on the project schedule. The only exception would be when the same contractor is performing two parallel tasks. You should produce a statement of work in which you clearly describe the work the contractor is required to perform and the contractor in turn should provide a schedule and price.”
4. Identify Costs
Thoroughly identify and estimate the costs involved with all procurements. These numbers will need to be calculated prior to requesting bids from suppliers to ensure that the money required is available. Any changes to the statement of work during the project should be budgeted for and estimated, as needed. Once the work is complete, you should always analyze the final cost for comparison and future reference.
5. Identify and Manage Risks
Rather than wait for risks to show themselves, identify potential risks and get a jump start on planning how to resolve them. Assigning a team member to create a mitigation strategy can be particularly effective and will provide them with the necessary ownership to follow through with the planned strategies as issues arise.
6. Identify Project Constraints
It’s essential to identify any constraints or limitations to the project early on in order to prevent problems with project execution. Constraints relating to procurements can include legal or environmental issues, budget or schedule constraints, and technical specifications/standards, as well as scope or limited resource challenges. Make sure to review these throughout the project.
7. Address Legal Issues
Any legal issues should be addressed up front within the procurement plan itself. All stakeholders should be aware of minimum legal requirements, and standards should be in place to ensure everything is done accordingly. Any legal issues should also be stated and translated into all the contractual documents so that all contractors, suppliers, and/or vendors are made aware of these legalities and abide by them.
8. Establish Payment Schedules
All payment methods and currencies should be clearly stated in the procurement management plan.
“Make sure that all contracts clearly state a payment schedule. Usually, external contractors are paid based on progress or milestones,” explains Sarah McKenna, a manager at DraftBeyond. “It’s really important to state and define the amount of work that’s expected to be completed, the time-frame for this, and the quality of the standard of work before payments are made. This will help prevent and resolve any conflicts and disputes.”
There are many factors to consider when creating a procurement management plan. Investing time and effort into creating a strong procurement management plan; however, will ensure that the process runs smoothly and ultimately leads you to a success.