Contracting and Procurement in Project Management - Essay Example

Project procurement management is "the process of purchasing goods or services from the vendors" (Phillips, 2003). This very definition of the process suggest that the procurement is the process which involves external organizations as well as persons in the whole project management process. It therefore not only makes it more complicated but also a delicate job too as maintaining relationships with the vendors and suppliers sometimes become a very important element for the overall success of the project.

Thus, it is of great importance that the procurement management should effectively be integrated into the overall process of project management so that project can get completed within budgeted times, costs and schedules. It is also important to understand that the process of procurement management is a phased process therefore it is not only time consuming but also need to have a more strategic outlook as it also provides an opportunity to develop long term relationships with the vendors. This presentation will present an overview of how the process of procurement management can fit into the whole project management besides discussing the various other aspects to get a braoder view of the whole process.

Procurement is a process which requires the involvement of different resources including people, goods, services as well as other resources. It also involves the evaluation of tenders as well as estimation of different costs involved in the procurement process. This therefore requires that the project managers must take extreme care to manage different risks involved in the process. Since the process of procurement management involves different persons outside the project therefore project managers need to follow a systematic procedure.

A procurement management process generally involves following processes:1) Purchase and acquisition decisions2) Contract Planning3) Solicitation of seller responses4) Selection of sellers5) Administrating the contract6) Contract closure The first phase of purchase and acquisition is about the determination of the different goods and services required to complete the project. This therefore requires that the project managers must clearly identify which project needs can be fulfilled through the procurement process.

The emphasis, during this phase of the procurement, is mostly on what, how and when to acquire the resources required for the project. (Ghosh, 2007).Contract planning is the next important steps which require not only close monitoring of the existing policies and procedures of the firm but also require that the organization's strategic objectives and aims are achieved.It is important to understand that the very crux of the procurement management process is to make a conscious decision of whether to buy or build the resources required for the project to complete.

It has also often been argued that the while planning for contracting, project managers must also take into account the various legal aspects of the contracting and that the drafting of the same should be done after taking into different legal as well as operational aspects of the contracting. While at the phase of the purchase and acquisition decisions, it is also important that the project managers must evaluate the seller responses after making acquisition decisions. It is quite possible that the project