1. Projects and procurement

2. Procurement
Acquiring hardware, software, materials, services, spare parts, skills, workforce etc. which are necessary for the project.
It is more than purchasing. Organisation of:
Transport
Arrangement of accommodation for staff away from home
Hiring specialists or consultants
Renting (building, equipment etc.)
Documentation

3. Procurement (or acquisition) is…
vital for projects concerned with a hardware product.
The commitment for materials, goods and services should be made before their use in the project.
Procurement can set the course of the project.

4. Responsibility on procurement
Project manager:
for the most important actions and for supervision
Procurement executive or procurement office:
Operative planning and operative tasks
Other:
Legal experts (contracts), experts of special machinery and activities etc.
If special skill are needed
If previous project experience is needed

5. Autonomy of the procurement group is often limited
Of the various functions used in projects, it fits least easily. Possible sources of problems:
Significant capital investment (decision is above the project manager)
Supply needed only by the project (the mother organization is not prepared)
Availability of the resources can be difficult
Procurement from different (esp. new) sources needs various experience and knowledge
Sometimes two procurement group is needed:
One at the HQ, one at the project site

6. Sources of information
Design/engineering departments specify the material required.
Quality of these specifications will affect the quality of the project product and processes.
The project team itself.
Project plans, scheduling etc.
Finance department:
Availability of money and financial stability of potential suppliers.

7. Tasks of the procurement executive/group
Finding and approving suppliers
Ensuring the availability and use of adequate specifications
Purchasing at least total cost
Vendor surveillance: ensuring delivery time
Warning all concerned if delivery specifications are not going to be met
Secure storage and accurate control of material
Organising all discussions with actual and potential suppliers
Advising on prices
Acting as a window on the world
Post-project disposal of unrequired material and equipment

8. Organising all discussions with actual and potential suppliers
Different specialist project team members often have to meet with the suppliers.
Attendance on these meetings is also advisable.
Do always update the contact lists.

9. Window on the world
Through contacting suppliers, information can be collected on many areas:
Materials used
Processes
Equipment
Price level
etc.

10. Finding and approving suppliers
Goods or services
Technical capabilities: quality
& financial stability: supporting the contract
Choosing between alternative suppliers: weighted average of measures like:
Design competence
Technical competence
Previous experience (even with projects)
Financial stability
Perceived quality
Delivery promise
Price
Terms of payment

11. Ensuring the availability and use of adequate specifications
Use of appropriate standards
International
National
Company or project

12. Purchasing at least total cost
Tendering
Weighted average of many factors: price of the resource is only one of them
Other factors can affect other types of costs
(Product) Life-cycle costing is a possibility
Target price is an important basis
Caution on too low offers

13. Vendor surveillance Orders need to be chased (progressed)
Telephone,
Personal visit (manufacturing progress)
Ask for help from specialists

14. Warning all concerned if delivery specifications are not going to be met
Informing the project manager on every significant change is obligatory
Changes (delays) can have an impact on other activities.
Early delivery is unwanted, too (storage costs, risk).

15. Reading
Textbook chapter 6