Procurement Management | Project Management

Running Head: PROJECT MANAGEMENT
PROJECT MANAGEMENT
Name of the Student
Name of the University
Author Note:

PROJECT MANAGEMENT1
PART A
Introduction
The study defines and demonstrate Procurement management along with its
application in project management. The entire study demonstrates the definition of
procurement management and its importance. Kerzner (2017) mentioned that the term
procurement refers to acquiring something positive or good from an external source. It is a
mutual business between two parties to perform an interaction for market segmentation
(Fleming, 2019). Both the parties included in this interaction procedure obtain different
objectives. In this section a reflect on the entire knowledge of procurement management and
its implication on project management.
Discussion
Definition
The definition states that procurement is the process of interaction between two
parties for increasing profit of a particular organization. an effective procurement practice can
provide the organization an interesting amount of discounts, it can reduce the cash flow, and
address any problems associated with the suppliers. The alternative terms used for
procurement are – acquisition, purchasing, and contracting. In simpler terms procurement
demonstrate the relationship with the buyers or the consumers with the seller or the contractor
(Kisomi, Solimanpur & Doniavi, 2016). For the contractor the contract is the entire project
whereas for the consumers it is the subproject.
Project procurement management
In the management of project, the procedure of procurement includes some specific
stages that include – Planning of the procurement management, conducting the procurements,
and controlling the procurements.

PROJECT MANAGEMENT2
Procurement strategy
According to the study there are two basic strategies for procurement. Firstly, the
strategy for corporate use where the profitability is linked with the strategy (Ferri et al.,
2016). Secondly, the project procurement strategy defines its relationship with the operating
environment.
Procurement environment
There are two types of environment of procurement that includes macro and micro
environment. Macro environment refers to the external variables and micro environment
includes the internal factor including – planning, conduction, administer, and closure.
Procurement process
There are two types dedicated for buyers and sellers. The seller’s procurement process
includes the following steps – presales activity, Bid or No Bid decision making, Negotiation
of the contract and formulation, administration of the contract, and contract closeout. The
buyers process includes the following steps – planning, solicitation, selection source,
administration of the contract, and contract closeout.
Project contract
The contract refers to the agreement between the two parties of the procurement
management. There are three types of project contract namely – fixed price contract, cost plus
contract, and time and material contract (Ferri et al., 2016). In the fixed price contract, the
contractor carefully estimates the target cost. In the cost-plus contract the contractor
demonstrates the situational pricing of the contracts.