Purpose:
Prepare a solicitation package, select one or more suppliers to deliver the product or service, and establish and maintain the supplier agreement.
Objective:
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Description:
The Solicitation and Supplier Agreement Development process provides a set of practices that enables the acquirer to initialize and formalize a relationship with the supplier for the successful execution of the project. A supplier agreement is an agreement between the acquirer and supplier. This agreement can be a contract, license, or memorandum of agreement. The acquired product or service is delivered to the acquirer from the supplier according to the supplier agreement.
A supplier agreement created using these practices enables the acquirer to monitor and control supplier activities using other processes, such as the Project Monitoring and Control and Agreement Management processes.
The activities described in Solicitation and Supplier Agreement Development apply equally to initial supplier agreements and to subsequent change orders, task orders, or amendments related to those agreements.
The acquirer is responsible for establishing and maintaining ground rules for communicating with the supplier, documenting decisions, and resolving conflict through the life of the agreement. The acquirer facilitates these activities with relevant stakeholders. Roles and responsibilities of relevant stakeholders during the interaction with suppliers are defined, coordinated, and adhered to.
The Prepare for Solicitation and Supplier Agreement Development and its associated specific practices identify potential suppliers and develop and distribute the solicitation package, including evaluation criteria and the statement of work. The solicitation package is developed using work products from other processes (e.g., requirements and design constraints from Acquisition Requirements Development processes, supplier project and technical measures and objectives from Project Planning and Measurement and Analysis processes).
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Process and Procedures:
Tailoring Guidelines:
Process Verification Record(s)
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References:
Read and Understand Some Basics of Procurement
Procurement refers to obtaining goods and services from outside companies. This specifically refers to vendors and suppliers. It does not refer to other internal organizations within an organization. This is an area that project managers need to understand at some level, and it is an area where the project manager will give input. However, in many, and perhaps most organizations, procurement is an area that the project manager does not own. Usually, a vendor management or procurement group has overall ownership. Project managers cannot usually sign contracts on behalf of the company.
Suppose you are purchasing goods or services for a project. In that case, you should determine whether you will follow the procurement contracts your company or your organization already established.
Examples
- You may purchase hardware from companies using a pre-existing company contract.
- You may acquire contractors using a pre-selected preferred vendor list.
Sometimes, vendor identification and selection processes occur at an organizational level. For instance, your organization may purchase a Customer Relationship Management (CRM) system based on high-level management requirements. This CRM system would then be used on all subsequent projects, regardless of the specific needs of each project.
Suppose your project team is actually conducting the vendor identification and selection process. In that case, you have some flexibility on when it is done. Many project teams perform the vendor identification and selection processes during the project Analysis Phase. This will be the case if you need to understand your business requirements better before you determine the vendor that can best meet the requirements.
Once the vendor is chosen, many procurement processes are part of project management monitoring and control. This includes monitoring the vendor’s progress, answering questions, validating invoices, paying invoices, managing contractual issues, etc. Ultimately the procurement process concludes when all project contracts are closed.
In general, the processes and techniques for procurement are not so hard. Still, it is an area where many project managers don’t have much experience. Many project managers only acquire procurement knowledge to pass the PMP Exam.
Six Components of a Procurement Management Plan
The Procurement Plan is a part of the overall Project Management Plan. The document describes how items will be procured during the project and the approach you will use to manage vendors on the project. Specific areas to describe include:
Procurement process. This section provides a brief overview of the process requirements to manage the procurement of the identified needs. This process should include:
- Initiating a request
- Development of requirements (technical, timing, quality, constraints)
- Request approval
- Purchasing authority
- Bid/proposal review
- Contract management responsibility
- Contract closure requirements
- Procurement process flowchart
Roles and responsibilities. This section describes the various roles on the project that have some connection to procurement. This section should describe who can request outside resources, who can approve the requests, any secondary approvers, etc.
Identified procurement needs. This section details the material, products, or services identified for outside procurement. Each listed item should include a justification statement explaining why this should be an outside purchase if there is the possibility of inside sourcing (make vs. buy decision).
Timing. This section will describe the timeframe that resources are needed. This will provide a better sense of when the procurement process needs to be started for each item.
Change review and approval process. Describe how changes are made to procurement documents to ensure the changes are valid, understood, and approved by the appropriate people.
Vendor processes. Describe the vendors’ processes for timesheet approval, invoice processing, contract renegotiation, status reporting, scope change requests, etc.
There may also be additional information in the plan to ensure the procurement process is understood and managed effectively.
