1. Projects and procurement (lecture)

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 accomodation for staff away from home – Hiring specialists or consultatnts – Rentin (building, equipment etc.) – Documentation

3. Procurement (or acquisition) is… vital for projects concerned with a hardware product. Tha commitment for materials, goods and servces 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 expert (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. Pssible sources of problems: – Significant capital investment (decision is above the project manager) – Supply needed only by the project (the mother organisation is not prepared) – Availability of the resources can be diffuicult – 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 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 meeting is also advisable. 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 experice (even is projects) – Fianncial 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 – Other factors can affect other types of costs 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, e-mail – 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 (dalays) can have an impact on other activities. Early delivery is unvanted, too (storage costs, risk).

15. Reading Textbook chapter 6