American Property Development Corporation Project Management Procurement Procedures American Property Development Corporation

Strategy for Failure Reasons for Previous Failures No procurement or contract strategy plan has in place. When procurement or contract strategies was used, the plans was substandard making the project a failure. Inferior procurement and contract strategy plans used. Projects were finished after completion date, costing the company millions. Failures were commonplace due to the lack of a proper procurement procedures, as each division ran the projects how it wanted. The following presentation will highlight what the company needs to do to follow a path to success and streamline the procurement and contract strategy processes for APDC to increase revenues and decrease failures. How can we succeed when there is no regulation? It is near impossible. In today’s business world, there is no room for failure, as the competition is strong and one too many mistakes can cause the company to falter. Procurement procedures must be implemented to prevent this from happening. The company must have one set of rules for procurement and contract strategy to keep the company strong. If one division does not know what the other division is doing, the strategy for failure will begin. Too many failures and our clients will look elsewhere. I, as the Project Manager, cannot let this happen.

Role of the Project Manager in relation to Procurement Overview Role of the Project Manager in relation to Procurement The value of the procurement professional to an organization is enhanced by: Understanding the project management process. Utilization of specific procurement tools at specific steps during the project life cycle. These steps include Negotiation, Solicitation Methods, Cost/Price Analysis and Total Cost of Ownership An understanding of the benefit of integrating the procurement tools, as opposed to having the procurement process occur in isolation, i.e., the project manager and the procurement professional working in “silos”. (Hairston 2005) Knowing our company has many procedures in relation to purchasing for projects, this overview discusses the path the company is going to follow for future projects. The company will have one project management policy and one policy only. Procurement within the organization is a sign of mutual respect for project management as procurement develops. Working in harmony needs to be more than a corporate value; it needs a basis. The integration of the Procurement Process and the Project Management Process provides this basis. This type of plan has worked successfully for many construction projects, capital acquisitions, plant start-ups and implementation of strategic procurement processes will assist our company by taking the procedural process to a corporate level. As other practices in the company are standardized, such as work hours, pay scales and benefits, this practice will also become standardized. The benefits are clear as they lie in the elevated regard for Procurement within the technical community of an organization and gives mutual respect for project management and procurement develops.   “Working in harmony needs to be more than a corporate value; it needs a basis. The integration of the Procurement Process and the Project Management Process provides this basis. It has worked successfully within Corning Incorporated for construction projects, capital acquisitions, plant start-ups and implementation of strategic procurement processes.” (Hairston 2005)

The Five Steps of the Procurement Process Procurement Chart Define Requirements Select Supplier Produce Agreement Administer Daily Assess Performance These five steps are crucial to the project’s survival. If one of the steps in the ladder are broken, the project will falter.   First and foremost, the project needs to be defined. If the project is not properly defined, the project manager cannot properly plan for completion. Selecting the right supplier is also a key factor. There are many suppliers to choose from, but it is important to make sure we choose the right one. Personal interests must be pushed aside and the interest of the project comes first. No longer are we to use a friend of a friend. All supplier agreements will be reviewed in a bidding process and the lowest bid wins. Once the suppler is chose, the agreement will be drawn up. The agreement will outline, in detail, what the ramifications of the project are and what is expected of the supplier. Pricing will be finalized and the contract will enforced. The day to day operations will be met with daily updates on the project’s status. In the beginning, the first 20 days, emails will suffice for communication. From the 21st day to the end of the project, daily 15 minute phone calls will take place to ensure movement and to assess performance. These steps are clear and concise and will be followed accordingly.

Project Management Process Initiation Planning Execution Control Closeout These steps are crucial to the success of the overall project. Without initiation, there can be no planning. With no planning there can be no execution. With no execution there can be no control and with the project is out of control, there can be no closeout. These steps will be followed and followed accordingly and will work hand in hand with the procurement process. The projects initiation will be the starting point. Once the initiation has begun, the team will step into the planning phase. This phase is the most significant as the entire aspect of the projected will be implemented at this stage. The planning will involve goals and benchmarks for success. If the goals are not met, management needs to know why and quickly. During the planning stage, daily contact will be made within the team to avoid such mishaps. The execution step is the most rewarding. The project has been initiated and planned and now the execution process begins. During this stage, daily communication with the project manager and the team will take place to ensure the next step in the ladder is met. That step is: Control. If the project is not controlled, the project’s costs can skyrocket. Control will be kept through communication and process. The process will be in the planning document and that document is to be followed accordingly. The final step is the closeout. This is the step that states “All requirements have been met and the project is now closed.”

Desktop Scheduling Tool Linked Fast Integrated The scheduling tool will be used for all cost profiles and will be used as a tool to provide desktop functionality. This will be integrated between procurement and project management. The user will be able to reschedule an item and all parties involved will know what item is being rescheduled and why.   The supply chain must always be in order. Global bidding and sourcing is crucial. The project management supply chain will assist with bidding, supplier selection to make the process seem seamless. The scheduling tool will enhance our CRM or Customer Relationship Management process by improving the front end of the spectrum. “Technology has played a crucial role in the evolution of supply chain relationships. Different capabilities, which are considered strategic for many companies, have emerged from the integration of systems. Procurement was once seen as an operational function with very little added value, but mass customization and dynamic demand environments have transformed the objectives of procurement departments in many large companies.” (Davidson 1995)

Lean Solutions ROI Achievable Reduce Cycle Time Increased Profitability and Quality Learn Understand the workflow. Define the areas of waste & complexity. Develop a Value Stream Map to pinpoint opportunities Improve - Analyze for cause of variation & time bottlenecks. Develop action plan and mistake-proof the processes. Define criteria for evaluating & measuring success. Sustain. Eliminate or reduce barriers to success. Monitor performance and make on-going changes. Modify systems & procedures To achieve our ROI, we must reduce the cycle time to increase profitability and quality. Lean Solutions will take the project there through proper procurement procedures. Procurement and Lean are like cousins. They’re related but vastly different. When the two are together, they become a family.

Roles and Responsibilities Team Project Manager Project Team Members Project Sponsor Proposal Team Selection Committee Customer Reps Final Customer Decision Maker The roles are vase in Project Management as each team member plays an important role in the process. The company’s new plan will implement this structure and it will be adhered to. With one team not following the procedure, we will not be able to make it to the final customer decision maker. Through proper planning and the proper implementation of procurement, we can get through each step until we reach the final step of the contract. One slip up, the contract could be denied. The importance of procurement procedures are greatly significant. The roles and responsibilities of the process will be followed. “The purpose of Project Origination is to evaluate projects proposed for the next planning cycle and to reach a consensus on the projects to be selected. During this phase, the strength of a project’s Business Case is tested, and the viability of the Proposed Solution is explored. A determination is made as to whether the project is consistent with the agency’s strategic plan and affordable within budget guidelines. The Project Proposal process may actually be part of the budget cycle, serving as the justification for budget requests. In this case, Project Proposals may need to be created a full budget cycle prior to the project’s anticipated initiation. “ (Kaufmann 1999)

Discussion Points There is commonality between the processes and there is a need for both processes. (Parker 1998) In the execution of a project, procurement value comes from understanding. Project execution must be understood. Procurement value must be understood. These two factors are understood through the project management process, as both functions work simultaneously throughout the process to enhance the process through the process. Currently, the company has no process. Our project management style is similar to a crap shoot. Every time we toss the dice with a project, we are basically taking a gamble. We can no longer gamble with the company’s reputation or with our client’s. Taking gambles can only lead to failure, as gambling one too many times can lead to a loss. The company has been lucky so far, but the luck will eventually cease. Proper procedures are never a gamble, as they enhance the situation. The standardized project management procedures set forth will bring stability to the company, stability to the project and stability to the process. The project management process and procurement process is vast and can be confusing at times. To avoid the confusion, the company will be holding training seminars to assist all project managers and staff on what to and what not to do. We must leave the gambling to the gamblers.

References Hairston, Robert J. (2005) Integrating Procurement & Project Management, retrieved from the worldwide web on January 19, 2009 from www.ism.ws/files/pubs/proceedings/behairston.pdf Project Management Handbook, Project Management Institute/Jossey-Bass Publishers, 1998 Glenn M. Parker, Cross-Functional Teams, Jossey-Bass Publishers, 1994 J. Davidson Frame, Managing Projects in Organizations, Jossey-Bass Publishers, 1995 Jack R. Meredith/Samuel J. Mantel, Jr, Project Management: A Managerial Approach, John Wiley & Sons, Inc., 2000 A Guide to the Project Management Body of Knowledge (PMBOK Guide), Project Management Institute, 2000 Joseph L. Cavinato, Ralph G. Kauffman, The Purchasing Handbook 6th Edition, 1999 Guiding Successful Six Sigma Projects, Oriel Incorporated, 2002