Procurement Management Plan for ABZ Construction Company

This procurement management plan is prepared for developing the contract closure with the contractor and sub-contractor. The purpose of this paper is to develop a procurement management plan and statement of work to specify the role and responsibilities of the participating parties and team members.

Project Management

Contents
1. Introduction.........................................................................................................................2
2. Project Background.............................................................................................................2
3. Procurement Management plan..........................................................................................2
Procurement management approach.......................................................................................2
Procurement definition...........................................................................................................3
Type of contract to be used....................................................................................................4
Procurement risks...................................................................................................................4
Procurement risks management..............................................................................................6
Procurement constraints.........................................................................................................9
Contract approval process......................................................................................................9
Decision criteria....................................................................................................................10
Vendor management.............................................................................................................11
Project Stakeholder Sign off.................................................................................................12
4. Statement of Work Agreement.........................................................................................12
Scope of Work......................................................................................................................13
Approach..............................................................................................................................13
Time Table............................................................................................................................14
Terms and Conditions...........................................................................................................15
Role and Responsibilities.....................................................................................................16
5. Performance Requirement................................................................................................17

Performance Matrix..............................................................................................................17
6. IN REFERENCES............................................................................................................19

1. Introduction
The procurement management plan is prepared for developing the contract closure with the
contractor and sub-contractor. The timelines and type of contract should be specifically
mentioned so that the chaotic environment can be avoided at top priority. The contractor
should comply with terms and condition of the client to manage the supply of resources on
time. The purpose of this paper is to develop a procurement management plan and statement
of work to specify the role and responsibilities of the participating parties and team members.
2. Project Background
The ABZ private limited is the construction company which is going to plan to renovate their
existing societies so that customers are provided with the quality of service and new
advanced features in their apartments. The organization wants to develop a procurement plan
so that contract can be signed with the contractor and sub-contractor to avoid conflict and
chaos during the project development lifecycle.
3. Procurement Management plan
Procurement management approach
The procurement team is constructed for managing the demand and supply of the resources at
the construction site. The key players of the procurement team are buyer, procuring officer,
procurement manager, purchasing director, and procurement analyst. The strong
communication links between the member participants are developed so that flow of
information and handling of purchasing operations can be effectively done which helps in

maintaining the working operations on the construction site by making the balance between
the supply and demand of resources and raw material1.
Procurement definition
The table below shows the list of item which is required to complete the renovation program
of the undertaken project of ABZ Company.
Procurement Items Quantity Project Phase
Bricks 2000 Construction Phase
Cement 100 kg Construction Phase
Sand 100 kg Construction Phase
Road Rollers 4 Construction Phase
Cranes 6 Construction Phase
Cement Mixers 6 Construction Phase
Excavators 3 Construction Phase
Electrical Equipment 10 Construction Phase
Insurance Cover 2 Designing fees
Engineering fees 5000 per head Cost estimation plan
Human Resource 35 During the project
initiation phase
1 Awozum, S. The impact of procurement planning on the supply chain management in public
organization. Ebook. 1st ed. Aston university.2016

Type of contract to be used
The fixed type of contract should be signed with the contractor and sub-contractors so that
the supply of resources can be maintained on the construction site2. The 2 years contract
should be signed between the client and contractor so that demand of the resources can be
fulfilled adequately. The resources are required according to the work breakdown structure
developed for the proposed project. The contract can be extended for 3 years if the project
owner wants for controlling the project monitoring and maintenance phase.
Procurement risks
 Payment is not specified during the project initiation phase and in the contract: The
quotation for completing the project is not clearly specified which can result in the
loss of tender. The contract is signed with the parties whose quotation value is lowest.
 Terms and conditions are not clearly defined: The scene of chaos and contradiction
occurs between the contractor and client due to the unclear terms and condition in the
project procurement plan
 Historical records of the contractor are not searched and analysed: The client
company does not searched the historical records of the contractor which can create
incompetence among the working parties
 Scarcity of raw material availability: The availability of the raw material is not
checked before signing the contract
 Timeline of the project is not specified: The project start and finish date of the project
is not mentioned in the contract which can directly affect the delivery of the end
product3
 Division of role and responsibilities is not done: The distribution of responsibilities
not done will create the scenario of chaos and contradictory environment
 Delivery date of the project is not compiled: The proper scheduling of activities is not
done since no proper work breakdown structure is developed
 Insurance cover terms and conditions is not properly defined: It can create the chaos
and conflict since terms and condition for getting insurance cover is not given
 Working hours of the labour is not specified: The labour can present their resistance
since they are not known about their dedicated working hours4
2 Habib, M. 2014 Supply chain management: Its future implications. Open journal of social
science, 2014(2)
3 Halil, F., Nasir, N., Hassan, A., Shukur. Feasibility study and economic assessment in green
building projects. International journal of social and behavioural science. 2016.
4 Hyari, K, and Kandil, A. Validity of feasibilities studies for infrastructure construction
projects. International journal of civil engineering 3 (1). 2009.

Procurement risks management
Identified
Risks
Risks
Severity
Risks
Likelihood
Risk
Ranking
Risk
Priority
Risk
Management
plan
Payment is not
specified
during the
project
initiation phase
and in the
contract
3 3 6 Medium The quotation
for the
proposed
project should
be clearly
defined in the
procurement
management
plan
Terms and
conditions are
not clearly
defined
2 1 3 Low The terms and
condition
should be
clearly defined
Historical
records of the
contractor are
not searched
and analysed
1 4 5 Medium Market
analysis of
historical
record should
be done so that
good will and
reputation of
the contractor

can be judged
Scarcity of raw
material
availability
4 3 7 High Material
Availability of
the raw
material
should be
measured
before signing
the contract
Timeline of the
project is not
specified
1 2 3 Low Start and finish
date of the
project should
be clearly
defined by
developing the
effective Work
breakdown
structure
Division of role
and
responsibilities
is not done
3 1 4 Medium Stakeholder
register should
be developed
Delivery date
of the project is
not compiled
2 4 6 Medium Start and finish
date of the
project should

be clearly
defined by
developing the
effective Work
breakdown
structure
Insurance
cover terms
and conditions
is not properly
defined
2 1 3 Low Terms and
condition of
the insurance
cover should
be clearly
mentioned
Working hours
of the labour is
not specified
4 4 8 High Working hours
of the labour
should be
clearly
defined5
Procurement constraints
Procurement constraints of the project are mentioned below:
 Project Schedule: The start and finish date of the activities is not clearly mentioned
 Project Cost: The cost estimation plan is not accurately prepared due to the difference
between estimated cost and market cost of the resources used
5 Jackson, J., and Ombui, K. "Effects Of Procurement Planning on service delivery in state
corporation". International Journal Of business and change management 5 (3). 2012.

 Scope: The in-scope and out-of-scope activities is not clearly defined
 Resources: The criteria of resource selection process is not developed6
 Technology: The resistance can be shown by the employees for not using the new
technology
 Client-contractor relationship: The relationship between the working parties can be
get chaotic due to the unavailability of resources and raw material.
Contract approval process
The contract approval process is depends on workflow management plan for tracking the
request and response on the new contact. The review form should be filled by the stakeholder
on the contract signed with the contractor.
6 James, A. A new Introduction To Supply Chain And Supply Chain Management: Definition
And Theories Perspectives. International Journal Of International Business Research 5 (1).
2012

(Source: James, A. A new Introduction To Supply Chain And Supply Chain Management:
Definition And Theories Perspectives. International Journal Of International Business
Research)
Decision criteria
Decision criteria for the procurement management plan depend on the following factors:
 Delivery Speed: The historical records of the contractors are checked to analyse the
speed of raw material and resources delivery at site location

 Price: The quotation of price to complete the undertaken project is taken from the
contractor. The contractor who quote minimum price for the project will be selected
 Time: The date of project delivery with the specification of start and finish date of the
project should be given by the contractor
 Flexibility: The construction design can be changed according to the desire of the
project owner
 Division of role and responsibilities: The stakeholder register with the specification of
role and authorised responsibilities should be clearly mentioned7
 Grievance handling program: The grievance handling program used by the contractor
for managing the disputes of its working authorities should be analysed
 Quality: The reputation and good will of the contractor company should be analysed
so that the quality of output can be measured
 Risk Identification: The contractor should be highly skilled and expert so that the
risks can be identified in the project initialization and respective action plan can be
prepared to resolve it.
Vendor management
 Buyer: He is responsible for the selection of the desired contractor and issuing
relevant purchasing orders. The strategic plans are developed so that procurement
procedures and processes can be effectively completed.
 Procuring officer: He directly communicate with the contractor for negotiating price
and cost of the resources
7 Joesbury, P. Improving The Effectiveness Of Procurement. Ebook. 1st ed. Aston university.
2016.

 Procurement manager: He directly communicate with the contractor for negotiating
price and cost of the resources
 Purchasing director: He develops the long term strategic plan to manage the
operational plan of the organization
 Procurement analyst: He is responsible for keeping the status of the procurement
process.
Project Stakeholder Sign off
The approval of the procurement plan is completed with the sign off process. The project
manager and contractor should sign off the procurement management plan for making the
service level agreement between them.
4. Statement of Work Agreement
The statement of work is prepared to avoid conflict and contradiction between the client and
contractor. The terms and condition of the undertaken project are specifically mentioned in
the contract so that misunderstanding can be avoided at top priority.
Scope of Work
The activities which are in the scope of developing and renovating the existing societies and
apartment of ABZ Construction Company are highlighted below:
 Assessment of the cost estimation plan
 Designing of the construction program
 Development of the cost benefit model
 Designing of the implementation and deployment plan
 Procurement negotiation services

 Calculation of the net operating costs
Approach
The meetings should be arranged with the team members for developing the construction
program and delivery management system so that conflict and contradiction can be avoided
at top priority8. The role and responsibilities should be clearly defined and given to the team
members according to their expertise and their approval should also be taken to analyse their
level of satisfaction. The sequential series of activities are given below:
 The kick off meeting is arranged with the team members so that goal and objectives
is clearly defined to them
 The review meeting is arranged for developing the contract and understanding the
working schedule of the proposed work
 Weekly meetings and session of interview are arranged with the stakeholder to gather
relevant information and status report of the undertaken project
 The stakeholder level of satisfaction should be analysed
 Audio and video conferencing session are managed with the selected contractor so
that delivery of the raw material can be done on time9
 Risks register is prepared for the identified risks so that the priority can be set by
analysing its severity and impact on the working processes of the project
 The risks management policies and strategies are designed so that risks can be
handled precisely which results in maintaining good and healthy relationship with the
contractor
 The risk acceptance, avoidance, and mitigation policies and strategies are approved
by the project sponsor
8 Kang, B. Research support building and infrastructure modernization. Ebook. 1st ed. 2010.
9 Kharaiweish, M. Project Monitoring and control measures. International Journal of
computer science and information technology, 5(5). 2013

 Drafting of the review report
 Arrangement of on-site meetings
 Development of the Improvement policies and plans
Time Table
Project Activities Duration Start Date Finish Date
Project Proposal 3 days 15 April, 2019 17 April, 2019
Approval of the project
proposal
4 days 18 April, 2019 21 April, 2019
Preparation of the tender 7 days 22 April, 2019 28 April, 2019
Approval of the tender 4 days 29 April, 2019 2 May, 2019
Advertisement 6 days 3 May, 2019 8 May, 2019
Collection of contract from
vendors
7 days 9 May, 2019 15 May, 2019
Setting of Evaluation score 3 days 16 May, 2019 18 May, 2019
Setting of Evaluation
weightage
5 days 19 May, 2019 23 May, 2019
Selection of the vendor 3 days 24 May, 2019 26 May, 2019
Developing service level
agreement
5 days 27 May, 2019 31 May, 2019
Signing agreement 2 days 01 June, 2019 02 June, 2019
Terms and Conditions
 The project should start in the month of July, 2019
 The project should be completed within the period of 6 months
 Expertise labour should be appointed

 Quality of work and end product
 Insurance cover to the staff member of $ 50,000.
 Contract should be signed for 2 years
 The contract can be extended for the period of 4 years if project monitoring and
maintenance program is required10
 Project should be calculated under the estimated cost of the project
 Project should be delivered within the timeline otherwise penalty can applicable
 Unethical behaviour of the team members will not be tolerated and their term can be
terminated
 The agreement can be terminated if quality of work is not provided
 Change of request should be proceed
Role and Responsibilities
Name Role Responsibilities
Mr. K. D. Burman Buyer He is responsible for the
selection of the desired
contractor and issuing
relevant purchasing orders.
The strategic plans are
developed so that
procurement procedures and
processes can be effectively
completed.
10 Lockamy, A., McCormack, K. The development of a supply chain management process
maturity model using the concept of business process orientation. Ebook. 1st ed. 2015.

Mr. R. M. Lui Procuring officer He directly communicate
with the contractor for
negotiating price and cost of
the resources
Miss Maggie Rose Procurement manager He distribute the
responsibilities of purchasing
among the team members
Mr John Michael Purchasing Director He develops the long term
strategic plan to manage the
operational plan of the
organization
Mr. S.S. Thomson Procurement analyst He is responsible for keeping
the status of the procurement
process.
5. Performance Requirement
Performance Matrix
The performance of the contractors is measured according to the performance indicators
developed for making selectin procedures easier. The table below shows the list of
performance indicators which are used for evaluating the performance of the suppliers.
Performance
indicators
How it works Description Category of
performance
indicators
Variation in Price The price of the The variation Cost estimation

and cost of resources resources should be
aligned with the
international price of
the commodity
between the actual
cost and the
international cost of
the resources should
be find out so that the
performance can be
analysed
Terms and condition
of the contract
Procurement process
should comply with
the term and
condition of the
contract
Purchase of the raw
material should be
registered to estimate
the cost of the annual
purchase
Cost
Term Expiry The contract can be
terminated if good
raw material is not
supplied, on-time
supply of resources
not done, poor
quality, and unethical
behaviour11
The term should be
completed by
providing quality of
service and raw
material to the
construction site
Quality of service
Behaviour and
Performance
The ethical behaviour
should be followed
by the contractor to
give best quality
The project should be
completed within the
mentioned deadline
according to the
Time
11 Onyango, C. "Effects Of Procurement Planning On Institutional
Performance". International Journal Of Science And Research 3 (5). 2012

performance to
deliver the project on
time
project schedule
Payment The raw material
should be delivered
on time if the
payment is not
completely done or it
is in-process
The contractor
should not focus on
the payment
Price
Handling of
emergency situation
The resources should
be delivered on time
to the construction
site if emergency
situation
Meet the supply and
demand of resources
in emergency
situation
Production
Transparency Clean and transparent
working format
should be followed
by the contractor
Handling of the
processes can be
smoothly done
Process
Grievance handling The grievances of the
employees should be
effectively handled
Priority should be set
for handling the
grievances of the
employees
Quality of work
6. IN REFERENCES
Awozum, S. The impact of procurement planning on the supply chain management in public
organization. Ebook. 1st ed. Aston university. 2016

https://www.academia.edu/19704707/THE_IMPACT_OF_PROCUREMENT_PLANNING_
ON_THE_SUPPLY_CHAIN_MANAGEMENT_IN_PUBLIC_ORGANIZATIONS_A_CAS
E_OF_THE_MINISTRY_OF_HEALTH_BY_SWANZY_AWOZUM.
Habib, M. Supply chain management: Its future implications. Open journal of social science,
2014(2). 2014. https://www.worldcat.org/title/purchasing-and-supply-chain-management/
oclc/967523255.
Halil, F., Nasir, N., Hassan, A., Shukur, A. Feasibility study and economic assessment in
green building projects. International journal of social and behavioural science. 2016.
https://core.ac.uk/download/pdf/82616822.pdf.
Hyari, K, and Kandil, A.. Validity of feasibilities studies for infrastructure construction
projects. International journal of civil engineering 3 (1). 2009.
https://pdfs.semanticscholar.org/90e4/d6cf49e287b6b6bb3d0c091f7e85a4aecf5c.pdf.
Jackson, J., and Ombui, K. "Effects Of Procurement Planning on service delivery in state
corporation". International Journal Of business and change management 5 (3). 2012.
https://pdfs.semanticscholar.org/8be4/9d38c0e4576571c75aa6a26726237275119a.pdf.
James, A. A New Introduction To Supply Chain And Supply Chain Management: Definition
And Theories Perspectives. International Journal Of International Business Research 5 (1).
2012. https://www.worldcat.org/title/purchasing-and-supply-chain-management/oclc/
967523255.
Joesbury, P. Improving The Effectiveness Of Procurement. Ebook. 1st ed. Aston university.
2016. http://publications.aston.ac.uk/30386/1/Joesbury_P_2017.pdf.

Kang, B. Research support building and infrastructure modernization. Ebook. 1st ed. 2010.
https://www-ssrl.slac.stanford.edu/lcls/reviews/rsb_project/2009_rsb_may18-19/
supporting_docs/rsb_risk_management_plan.pdf.
Kharaiweish, M. Project Monitoring and control measures. International Journal of computer
science and information technology, 5(5). 2013.
http://airccse.org/journal/jcsit/5513ijcsit03.pdf
Lockamy, A., McCormack, K. The development of a supply chain management process
maturity model using the concept of business process orientation. Ebook. 1st ed. 2015.
https://pdfs.semanticscholar.org/c5cf/b8482b9644502f55256e9adbd708001179b1.pdf
Onyango, C. "Effects Of Procurement Planning On Institutional Performance". International
Journal Of Science And Research 3 (5). 2012.
https://www.ijsr.net/archive/v3i11/T0NUMTQ1MDQ=.pdf.