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The Evaluation Of A Procurement Plan For Use In A Project Based Organization

2616 words - 11 pages

The Evaluation of a Procurement Plan for use in a project based organization.

SID: 17896432

Nowadays, organisations are becoming increasing specialised and collectivised, requiring more sophisticated management of project, leading to the increasing significance of procurement. Procurement, referring to acquiring goods and/or services externally, is widely used in the government agencies. Other terms include purchasing, used in many private corporations, and outsourcing, used by information technology professionals (Schwalbe 2004). Its processes are shown in Figure 1. This essay will identify the concept of planning purchases and acquisitions, that is, ...view middle of the document...

Inputs to purchases and acquisitions planning
Inputs are significant to determine what goods and services are to be acquired, including enterprise environmental factors, market conditions, organisational process assets, project scope statement, product description, work breakdown structure and project management plan (Project Management Institute 2004). For example, the Boots Company, an English pharmacy and health care company, based on its purchases and acquisitions planning inputs outsourced its information technology (IT) operation systems to IBM to improve its cost efficiencies and customer experience in October 2002 (IBM 2002).

Tools and techniques for purchases and acquisitions planning
Tools and techniques include make-or-buy analysis, expert judgment, and contract type selection.
* Make-or-buy analysis
Make-or-buy analysis is a technique used by organisations to decide which goods or services are made internally and which project needs can be acquired from outside the project team (Schwalbe 2004). Reasons for deciding to make or buy are shown in Figure 2.

* Expert judgment
Expert judgment is an important resource in the process of making purchases and acquisitions decisions. Experts both in and outside the organisations with specialised knowledge or training can provide expert judgment (Schwalbe 2004).

* Contract type selection
Different types of purchases are suitable for different types of contracts require. Contracts are divided into four main types: fixed price or lump sum contracts, cost reimbursable contracts, time and material contracts and unit price contracts (Schwalbe 2004).

The process of purchases and acquisitions planning generates three major outputs. Firstly, the procurement management plan. It describes how the rest five processes—from solicitation planning through contract close-out—are managed. It includes type of contract, standard procurement documents, management procedures of multiple providers, constraints and assumptions that relate to planned purchases and acquisitions, handling the make or buy decisions and linking them to resource schedules and so on (Schwalbe 2004). Secondly, statement of work (SOW). It addresses these subjects: purpose, scope of work, location of work, period of performance, deliverables schedule, applicable standards, acceptance criteria, special requirements, type of contract/payment schedule, and miscellaneous. The level of detail of SOW is determined by the nature of procurement work, that is, the nature of item, needs of buyer, and contract form (Schwalbe 2004). Lastly, make or buy decisions, as mentioned above.

The general purpose of a procurement plan:
In order to achieve the success of the whole project procurement and the corporate operations, a procurement plan is significant.

A procurement plan is a project management tool identifying a lot of issues (State Supply Commission 2005), including the external supply market analysis,...

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