Procurement Management Plan: Construction of a Green Building Project

This report presents a comprehensive procurement management plan tailored for the construction of a green building. It begins with an introduction to green building concepts and the importance of a well-defined procurement strategy. The plan outlines the procurement management approach, emphasizing quality, reliability, and quantity of materials. It defines procurement needs, categorizing items and specifying approval authorities. The report explores various contract types, recommending a lump-sum and scheduled contract. It identifies potential procurement risks, such as fraud and poor quality, and proposes risk management strategies. Cost determination methods are discussed, advocating for accurate estimations. Standardized procurement documentation and potential procurement constraints are also addressed. The contract approval process, decision criteria, vendor management strategies, and performance metrics for procurement activities are also analyzed, providing a holistic view of the procurement process.

PROCUREMENT MANAGEMENT PLAN
<CONSTRUCTION OF GREEN BUILDING>
COMPANY NAME
STREET ADDRESS
CITY, STATE ZIP CODE
DATE

PMGT 530 Procurement Management
Plan Template
Table of Contents
1.0 INTRODUCTION...........................................................................................................................3
2. 0 PROCUREMENT MANAGEMENT APPROACH...............................................................................3
2.1 PROCUREMENT DEFINITION.......................................................................................................3
3.0 TYPE OF CONTRACT TO BE USED...............................................................................................4
4.0 PROCUREMENT RISKS................................................................................................................4
4.1 PROCUREMENT RISK MANAGEMENT.........................................................................................4
5.0 COST DETERMINATION...............................................................................................................4
6.0 STANDARDIZED PROCUREMENT DOCUMENTATION...................................................................5
7.0 PROCUREMENT CONSTRAINTS...................................................................................................5
8.0 CONTRACT APPROVAL PROCESS................................................................................................5
9.0 DECISION CRITERIA....................................................................................................................5
10.0 VENDOR MANAGEMENT...........................................................................................................6
11.0 PERFORMANCE METRICS FOR PROCUREMENT ACTIVITIES......................................................6
SPONSOR ACCEPTANCE....................................................................................................................7
References........................................................................................................................................8
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PMGT 530 Procurement Management
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1.0 INTRODUCTION
This project is based on the construction of a green building. Green buildings are those, which
are constructed using “green” or sustainable and rapidly recycling materials. Moreover, the main
objective of constructing green buildings is to reduce pollution that is a huge problem in regular
buildings. Pollution not only means contamination of only air or water but also negative impacts
on the environment and the natural habitats (Larson & Gray, 2013). Green buildings have
become extremely popular nowadays due to low cost as well as environment friendly nature.
In this report, a project management plan for the construction of a green building has been
prepared including an in-depth analysis of the type of contract that may be used for the
construction process.
2. 0 PROCUREMENT MANAGEMENT APPROACH
Procurement is an important part of any construction project and several factors are to be
considered for preparing the procurement plan of a project. For this particular project, the
procurement management approach should include the following important considerations.
Quality – Quality of the materials and resources is to be ensured in any type of project. For this
project, it should be ensured that the best quality of construction materials is procured through
reliable vendors. However, it should also be ensured that the costs of the materials are not too
high as it will risk overshooting of the overall project budget.
Reliability – Reliability of the vendor should also be analyzed before the contract is handed over
to them for procurement of the materials (Phillips, 2013). Before handing the contract, a
background check should be conducted on the vendor in order ensure the vendor will not
perform any fraud while delivering the materials.
Quantity – Before handing the contract, it should be ensured that the vendor will be able to
provide sufficient amount of materials throughout the course of the project as changing vendors
during the project will be very inconvenient, time consuming as well as expensive.
2.1 PROCUREMENT DEFINITION
Due to the scale of the construction of the green building, a large number of materials should be
procured for the project. However, for the convenience of listing, the materials are divided into
several categories and listed in the following table.
Item/Service Justification Needed By
Construction Vehicles
like Cranes, Bulldozers,
Construction Trucks,
etc.
These vehicles are used for various purposes including
digging of foundation soil, mixing of cement, lifting of
structures and others.
Construction Team
First and Hospitality
Vehicles include
Ambulance
Large scale construction projects have high risks that may
also cause loss of life of the on-site workers; hence,
immediate healthcare response is necessary.
Emergency Response
Team
Construction Materials
(Cement, Bricks,
Mortars, Sand, Iron
Bars, etc.)
Construction materials will be required for constructing the
building stage by stage.
Construction Team
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PMGT 530 Procurement Management
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In addition to the above list of procurement items, the following individuals are authorized
to approve purchases for the project team:
Name Role
Project Manager Approval of Project Plan
Procurement Manager Approval of Construction Materials
Construction Manager Approval of Construction Vehicles
3.0 TYPE OF CONTRACT TO BE USED
There are several types of contracts that are generally in use in the construction industry. The
type of contract used depends on the type and scale of the construction. Furthermore, the type of
contract also varies depending on the number of contractors to be appointed for the project. The
authority of choosing the type of the contract is on the project manager. In this particular project,
the type of project required is lump sum and scheduled contract (Schwalbe, 2015). In this
contract, the agreement will be made based on a lump sum that the owner will pay the contractor
at the end of the project. However, in order to receive the sum, the contractor will need to
provide a cost breakdown to the owner/project manager.
4.0 PROCUREMENT RISKS
There are several procurement risks associated with the project. These are as follows.
Fraud – The vendor from which the materials will be procured may turn out to be fraud by either
charging high price for low quality materials or not providing materials at all after payment is
made (Walker, 2015). In order to avoid this, a background check will have to be done on the
vendor as well as a contract is to be signed before any payment is made.
Poor Quality – The procured materials may be of very poor quality and as a result, the quality of
the constructed building will be poor. This will in turn cause life risks for the residents. Hence,
the quality must be ensured while procuring the materials from the vendor.
4.1 PROCUREMENT RISK MANAGEMENT
In order to manage procurement risks, several steps are to be taken that are as follows.
Background Check – In order to avoid or minimize risks from the vendor’s side, a background
check must be conducted in order to ensure the vendor do not have past fraud records and is
sufficiently reliable.
Quality – During procurement of the materials, the materials should be checked for the quality as
well as quantity. It should be ensured that the materials are of sufficient quality at the right price.
5.0 COST DETERMINATION
Due to the massive scale of this project, the cost determination should be accurate to the
maximum extent possible in order to avoid extra costs. This is mainly because even 10% extra
cost will result in massive budget overshoot that will hamper the cost benefit of the project.
Hence, accurate estimation of cost is required for the project (Lloyd-Walker & Walker, 2015).
The process to be followed for cost determination of the project should be based on overall costs
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PMGT 530 Procurement Management
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of materials and construction instead of calculation of the number of working hours. This will
ensure actual work is done during construction with the amount of resources available. However,
if the cost is determined by the number of working hours, the workers will take a huge amount of
time and the time schedule will not be met for the project.
6.0 STANDARDIZED PROCUREMENT DOCUMENTATION
Procurement documentation is required to ensure all the procurement processes are written in
papers as a proof for future reference. Each and every detail needs to be documented in the
procurement document and is to be signed by both the vendor and the project owner (Burke,
2013). This is because if there is no signature proof, a tampered document may be prepared by
one party as a part of fake claim to the procurement payment. Furthermore, the procurement
document is to be signed by a lawyer in order to legalize the document and should be provided in
court in cases of dispute over the payment issues of the procurement.
7.0 PROCUREMENT CONSTRAINTS
There are several procurement constraints associated with this project. These are as follows.
Buyer/Seller Relationship – There may be some procurement constraints due to poor buyer
seller relationship. If the relationship is poor, the seller may provide poor quality of materials or
even insufficient quantity of materials.
Scope Constraint – There may be scope constraints that can affect the procurement of the
project. In case of strict scope of project, the quality and quantity of the materials may be
compromised in order to abide by the scope and limitations.
Budget Limitation – Budget can also be a constraint for the project. In case of limited budget,
the procurement will also have to be done accordingly by compromising with the quality of the
materials.
8.0 CONTRACT APPROVAL PROCESS
The contract approval process will be done in a number of stages and will involve several
stakeholders as well as the vendors. After a suitable contract is prepared, the finance manager
will review the contract and analyze it based on the current financial status of the organization. If
he approves the contract, it will be forwarded to the procurement manager to review whether the
resource amounts in the contract are accurate (Lopez, Mascione & Liu, 2017). After his
approval, it will be forwarded to the project manager for final approval. The vendor should also
agree to the terms of the contract in order to sign the contract with the project owner.
9.0 DECISION CRITERIA
The decision criteria for signing the contract are as follows.
 Economically feasible for the organization
 Terms are favorable for both organization and the vendor
 A suitable quality standard is agreed
 Failure in abiding the contract terms will result in legal involvement
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PMGT 530 Procurement Management
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10.0 VENDOR MANAGEMENT
Action plans are necessary to ensure the vendors are supplying proper quality of materials
according to the terms of contract. In order to ensure that, before the project, a background check
will have to be done on the vendor and material quality will have to be mutually agreed at the
proposed cost as suggested by project owner (Crawford, 2014). In addition, weekly meetings
should be conducted with the vendors in order to ensure they are continuing to provide sufficient
quality of the materials. In case of breach of contract, the project owner should take immediate
action and penalize the vendor or even terminate the contract.
11.0 PERFORMANCE METRICS FOR PROCUREMENT ACTIVITIES
Vendor Description
of Criteria 1
Description
of Criteria 2
Description
of Criteria 3
Description
of Criteria
4
Description
of Criteria
5
Vendor
#1
Good
Quality
Materials
Reasonable
Price
On-Time
Delivery
Daily
Reporting
No
Additional
Demands
Vendor
#2
Rent of
Sufficient
Construction
Vehicles
Economically
Feasible
Right
Vehicles at
Right
Requirement
Abiding by
Contract
Weekly
Reporting
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PMGT 530 Procurement Management
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SPONSOR ACCEPTANCE
Approved by the Project Sponsor:
___________________________________________ Date:____________________
<Project Sponsor>
<Project Sponsor Title>
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References
Burke, R. (2013). Project management: planning and control techniques. New Jersey, USA.
Crawford, J. K. (2014). Project management maturity model. CRC Press.
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for the 2015 Exam. John Wiley & Sons.
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management is now a necessity. International Journal of Project Management, 33(2),
291-298.
Kerzner, H. (2013). Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Larson, E. W., & Gray, C. (2013). Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Lloyd-Walker, B., & Walker, D. (2015). Collaborative project procurement arrangements.
Project Management Institute.
Lopez, R., Mascione, D., & Liu, H. X. (2017). Management of Issues in the Delivery of Airport
Infrastructure within Western Australia. Proceedings of the Institution of Civil Engineers-
Management, Procurement and Law, 1-43.
Morozov, V., Kalnichenko, O., & Liubyma, I. (2016, February). The models of procurement
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Problems of Radio Engineering. Telecommunications and Computer Science (TCSET),
2016 13th International Conference on (pp. 609-612). IEEE.
Nicholas, J. M., & Steyn, H. (2017). Project management for engineering, business and
technology. Taylor & Francis.
Phillips, J. (2013). PMP, Project Management Professional (Certification Study Guides).
McGraw-Hill Osborne Media.
Schwalbe, K. (2015). Information technology project management. Cengage Learning.
Turner, R. (2016). Gower handbook of project management. Routledge.
Walker, A. (2015). Project management in construction. John Wiley & Sons.
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Zhang, R., Zhou, H., & Zong, Y. (2017, June). A Novel Model for Man-Hour Evaluation of
Nuclear Power Equipment Procurement: Practice From China Nuclear Power Projects.
In ASME 2017 Power Conference Joint With ICOPE-17 collocated with the ASME 2017
11th International Conference on Energy Sustainability, the ASME 2017 15th
International Conference on Fuel Cell Science, Engineering and Technology, and the
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Mechanical Engineers.
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