12.2 Conduct Procurements The process of obtaining seller responses, selecting a seller and awarding the contract The team applies selection criteria to the bids or proposals received from the various sellers The process is sometimes repeated in more detail for major procurements once a short list of qualified vendors is identified Often referred to as the tender process Occurs during Execution Initiation Planning Execution Close Monitor Control Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Inputs to Conduct Procurements Procurement Management Plan Procurement Documents Source Selection Criteria Seller Proposals Project Documents: Risk Register Make or buy decisions Procurement Statement of Work Organisational Process Assets – Preferred supplier lists Preferred supplier agreements Lessons learned on past procurements Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Tools and techniques to Conduct Procurements – Bidder Conferences Proposal Evaluation Techniques Independent Estimates or Review Expert Judgement Advertising Procurement Policies & Procedures Procurement Negotiations Internet Search Analytical Techniques Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Bidder Conferences Also known as Contractor Conferences, Vendor Conferences, Pre-Bid Conferences Meetings with all prospective sellers and representatives from the buyer Used to clarify requirements and answer questions prior to the submission of bids or proposals Ensure that all sellers have a clear and common understanding of the requirements and that no bidder receives preferential treatment Buyers must ensure that all prospective sellers hear every question and receive every answer Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Expert Judgement Consulting procurement and legal professionals May be internal or external to the project organisation Establishing multi disciplined review team for the proposals Proposal Evaluation Techniques Used for complex purchasing decisions where the selection is made using pre-defined and weighted selection criteria Requires complex spreadsheet and calculations of the responses of a selection committee The selection committee normally consists of project team members, key stakeholders and subject matter experts who independently rate the selection criteria Results are then calculated and presented to the selection committee who may alter the outcome based on other considerations Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Independent Estimates and Review The purchaser may elect to have an independent specialist prepare an estimate of costs to provide a benchmark for the seller responses Significant variations in the cost estimates of the different proposals can indicate deficiencies with the requirements or statement of work Can also use independent experts to review the outcomes of selection processes Advertising Advertisements for prospective sellers are often placed in major newspapers or on specific websites that are regularly reviewed by the providers of commonly purchased products and services Low cost means of expanding the pool of prospective sellers Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Analytical Techniques – Identify the readiness of a vendor Determine expects costs Examine past performance – may need to be closely monitored Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Internet Search Now a major tools and influence on the availability of prospective sellers and the outcomes of procurement decisions Many commodities and off the shelf items can be quickly located and secured at a fixed price on the internet Not very useful for high risk and complex procurements, except for the location of potential sellers Procurement Negotiations Many large organisations and government departments will have a specific negotiation process to ensure a fair outcome Can include assistance from legal and purchasing professionals Can also include pro forma contracts and mandatory clauses Adapted from PMBOK 5th Edition

12.2 Conduct Procurements Procurement Policies and Procedures Most large organisations and all government departments will have comprehensive policies and procedures It is critical that the project team are aware of these and that they are followed, otherwise approval may not be obtained for purchasing requirements and timeframes can be severely impacted These procedures will also impact the project schedule during the planning stage as critical internal specialist may not be available when required by the project It is often mandatory to engage internal purchasing professionals and either internal or external legal professionals Purchasing decisions may need to be escalated to senior management or even the Board for approval, depending on the overall cost. This can also impact timelines. Adapted from PMBOK 5th Edition

12.2 Conduct Procurements: Tools and Techniques Procurement policies and procedures vary from organisation to organisation but they govern the procurement within the organisation. They should cover: how to manage the buying and selling of items establish a purchasing criteria and decision making process internal controls relationship management with external parties contract approval contract review Remember they should be specific - who will do each of these things and on what authority? Monash University has a clear procurement procedures with clear responsibilities for procurement. The Commonwealth Governments Procurement Guide provides a good example of some procurement policies.

12.2 Conduct Procurements Contract Management policies and procedures could cover any of the following activities (S.Hartley, 2009 p.211): delivery of the agreed goods and services efficient handling of any requests for additional information regular comparisons of performance against the plan accurate reporting of performance problems information on objectives achieved timely implementation of any corrective action required compliance with quality standards and definitions updates on milestones and/or deadlines met documented and authorised requests for changes to scope (variations) prompt payment for progress claims resolution of disputes, escalation and other conflicts secure tracking, filing, destruction and archiving of documents managing supplier-buyer workplace relations.

12.2 Conduct Procurements Outputs of this process include – Selected Sellers Procurement Contract Statement of Work, deliverables and requirements Timeline and pricing Performance and reporting procedures Roles and responsibilities Incentives and penalties Acceptance criteria Warranty and insurances Confidentiality and intellectual property Resource Calendars Change Requests Project Management Plan updates Cost, Scope and Schedule baseline Procurement Management Plan Project Document Updates Requirements documentation and Risk Register Adapted from PMBOK 5th Edition