Project Procurement and Contract Management: Detailed Analysis

This assignment delves into the multifaceted domain of project procurement, encompassing a range of critical aspects. It initiates with a foundational understanding of procurement processes, including tendering and competitive bidding, and progresses to define project stakeholders and their influence. The analysis extends to real-world scenarios, such as the Toyota car recalls, highlighting the impact of procurement gaps. The assignment provides a step-by-step guide to chip procurement for a Tsunami benefit game, detailing supplier selection, evaluation criteria, and relevant documentation. It further explores the timing of procurement activities, the significance of project plans, and the consequences of early or late product arrivals. The document meticulously examines market approaches, bidder evaluation, and the development of contract KPIs, along with strategies for monitoring contractor performance. It also emphasizes the crucial role of documentation and its impact on decision-making. The assignment uses a case study of a juice extractor procurement, detailing the process of supplier selection, evaluation criteria, and performance indices. The document concludes with an in-depth analysis of contract management, including tender evaluation, contract characteristics, monitoring, and dispute resolution, along with recommendations for improvement and best practices.

Manage Project Procurement
Name
Date

Answer to Q 1
Procurement refers to the process of finding products, works, or services from external
sources, agreeing terms, and acquiring the goods/ services usually through a given
defined process such as tendering, single sourcing, or competitive bidding (Dalkin, 2014)
Answer to Q 2
Project stakeholders refer to a group, individual, or organization that may affect, perceive
to be affected by a given project undertaking, or be affected by any activity, decision, or
outcome of the project. For example, a company CEO that approves a major capital
investment their organization will be affected by the project outcomes; it can fail or
succeed, and so is a stakeholder (Usmani, 2018)
Answer to Q 3
The recent car recalls by Toyota for various problems, including faulty seats and steering
is due to a gap in the procurement process (‘The Economist’, 2010). The gap in this case
is reliance on single sourced suppliers that have been used before, and so are assumed to
be able to deliver the right product, without fresh vetting or testing of the delivered
products long term. This gap can be filled through competitive bidding and extensive
product testing of samples before making a substantial order and using them in cars
Answers to Q 4
In making the order for chips for the Tsunami benefits game, the first step would entail
determining the amount of chips to order and the required quality, then evaluating this
against a budget, and then determining the possible suppliers. The next step would be to
invite the identified suppliers to give more details and then vet them based on set criteria,
including price, quality, ability to deliver, compliance with standards and regulations,
guarantee on quality (Steinfeld, 2010).
The documents to rely upon in making the decision include the potential suppliers’
company profiles and certifications to demonstrate compliance and capability. The
expected attendees list from ticket sales will also be used to forecast the demand for
chips. The relevant regulations and rules by authorities (State and Local) will also be
used to get the exact requirements in procuring food for a public event

To help make the decision, samples would be requested from all suppliers, along with the
staff involved in the supply and a document on the supplier supply chain process,
including how and where they source the raw materials
Ordering too few would mean some people stay hungry, while ordering too much will
result in wasted food as well as resources and time taken to dispose of, or manage the
surplus
Answers to Q 5
The plan for when to procure services or products for project activities is done based on
the project plan itself, the schedule of activities (WBS), the approval time for the project
and funds, and the milestones and project deliverables (Norman, Brotherton, & Fried,
2011).
The project manager working with a supply manager decides on when to make project
procurement.
The documents to refer to when planning procurement include the Work Breakdown
Structure, the Project quality planning document, the risk management document, and the
project Gantt chart as well as the organizations’ procurement policies and regulations
document
When products or services arrive early, they add to costs of storage and management and
can force compression of project tasks to accommodate the early arrival; when they
arrive late, its worse since this inevitably leads to delays, affected project scopes, and
increased costs
Answers to Q 6
In going to the market, consideration is made on whether the particular product or service
can be single sourced, must be tendered for or competitive bidders invited: basically the
form of invitation to express interest
In evaluating responses, all interested bidders are evaluated against a benchmark on a
variety of factors, including capacity, legal issues, financial strength, experience, and the

personnel as well as compliance with various legal and statutory regulations, including
environmental compliance
In developing a contract KPI’s, the project objectives and deliverables are referred to, as
well as the project and quality management plans
Monitoring contractor performance is done through inspection of works and reviewing
the project progress report against the project plan (Gantt chart) and project scope and
budget (Mead & Gruneberg, 2013)
This is initiated officially by the project manager and then sent to the executive sponsor/
owner and/ or the project steering committee for approvals. Approvals must be informed
by circumstances, including the inputs such as project plan, the techniques and tools such
as market research and expert analysis, and the plan outputs
Conducting reviews on procurement activities entails evaluating all inputs to the plan,
including the activity cost estimates, whether the objectives were met, and if the quality
and budget parameters were met
Without such documents, procurement becomes ‘much easier’ but highly flawed since a
random decision can be made without going through the due process and reviewing other
documents and inputs, but with disastrous consequences
Answers to Q 7
Purchase of commercial juice extractor for multiple fruits (configurable) for an upcoming
establishment of a fresh fruit juice processing plant
The team searched online suppliers’ portals and supplier associations to seek out potential
suppliers using the internet and catalogs. In addition, the placed adverts in local and
international media (print and electronic), seeking for expressions of interest
They used the company procurement policy guidelines to determine the suitable
acquisition plan, the procurement initiation request document, and the form of invitation.
The listed suppliers are the following;

FENCO Food
Machinery s.r.l.-
Italy
Shanghai Triowin
Intelligent
Machinery Co.,Ltd-
China
Aguapuro
Equipments
Private Limited
Weight Score Weighted
score
Score Weighted
score
Score Weighte
d score
Financial health 0.075 4 0.3 4 0.3 4.1 0.3075
Capacity 0.125 3.8 0.475 3.9 0.4875 4 0.5
Experience,
including
supplying to
Australia
0.06 4.5 0.27 4.4 0.264 4.3 0.258
Reviews 0.07 4.2 0.294 4.1 0.287 4.2 0.294
Warranty and
Guarantee
0.15 4.5 0.675 4.4 0.66 4.3 0.645
Pricing 0.15 3.65 0.5475 4.15 0.6225 4.2 0.63
After sales
service
0.1 3.9 0.39 4.2 0.42 4.1 0.41
Speed of
delivery
0.05 3.8 0.19 3.9 0.195 4 0.2
Parts and
supplies
0.12 4.2 0.504 4.3 0.516 4.35 0.522
Installation and
configuration
0.1 4 0.4 4 0.4 4 0.4
Totals 1 4.0455 4.152 4.1665

Various performance indices were developed as shown in the table above and assigned
weights in order of importance. The indices were then graded for each firm and the weighted
averages summed after multiplying with the weight and aggregate score used for evaluating
suppliers. The Indian supplier is chosen because of overall better performance across all
areas, including the crucial areas of parts and suppliers, pricing, and after sales services
The task was completed professionally, following procurement guidelines and the
procurement management plan. However, advice is given to include more factors in
evaluating suppliers, such as green energy star certifications and innovation, as well as ease
of use of equipment
Answers to Q 8
Once tenders are received, the tender box is opened, preferably in the presence of all
bidders or their representatives and recorded. The tenders are then put through an
evaluation process by the procurement and tender selection committee. Each tender is
evaluated based on its performance against a set criteria, including price, experience,
financial health, capacity, past supply history, compliance with legal and environmental
regulations, tax compliance, among others. The suppliers are then scored based on the
evaluation criteria and awarded marks. Those that perform well are then shortlisted for a
further detailed evaluation, including the use of an extensive interview. The final chosen
supplier is then invited for a contract negotiation where they are given an opportunity to
raise any issues and clarifications made, including agreements on payment plans, work
place health and safety, among other finer details. A contract that is binding is then
signed. Prior to awarding the contract, all bidders are sent letters of their performance
with an explanation of the decisions made and why
The organization followed their procurement guidelines and regulations and issued an
expression of interest as a document (tender document). The bidders sent in documents,
including a duly filled tender document and attachments including financial reports, tax
compliance, registration and certification documents, testimonials, and a guarantee letter
from a recognized banker and insurer

The key things to remember are the points used to make evaluations and government
regulations/ legal requirements, as well as the desired delivery outcome
Bias and basing decisions on past performance rather than undertaking a completely
competitive tender review
Answer to Q 9
Characteristics of a good contract
 Explicit in detailing roles, responsibilities, and obligations
 Drafted using legal terms and with legal input
 Validly signed in the presence of a witness
 Willingly accented to
 Must be an offer given and accepted, with due considerations made
 Has certainty of terms
 The offer must be properly communicated and can be revoked at any time prior to being
signed
 Offers must be distinguishable from invitations to tender
 A poorly written contract may result in legal challenges or financial losses or even
increased liability on the part of either party which should not have happened (Naughter,
2018)
Answers to Q 10
The contract was for the provision of clearing and forwarding services to a major
telecommunications player in Sydney.
The contract KPI’s included vendor fraud, compliance, complaints resolved (Quality),
Terminated contract remaining value, order value variance from the original contract
value, and annualized contract value
The contract was monitored using the following tools:
 Contractor progress reports
 Quality Assurance (QA) Surveillance Plan
 Contractor Quality Assurance Plan
 Performance Assessment

 Earned Value Management
 Service/ Product Inspection and Acceptance
The procurement manager and the assistant project manager were involved, as were the
risk management team
The contract was professionally and properly managed
The evaluation of bids by subcontractors
The initial phase of the contract was characterized by late deliveries due to natural
circumstances; planning could have been done better
Answers to Q 11
Communications was done based on a project communications plan through e-mail,
memos, and face to face meetings
The communication was daily among the contract team where meetings were held each
morning
The terms of the contract, liabilities and responsibilities, terms and conditions,
description of services, and means for conflict resolution, as well as contract amounts
The contract details, the project delivery timelines, contract sum/ budget
The contract was managed well and in a professional manner
Answer to Q 12
The legal clauses under which the contract operates
Answers to Q 13
The dispute arose after a natural disaster (bad weather and heavy rains) led to delivery
delays and loss of some shipment portions
The dispute involved the contractors and a client we were working on behalf of
The dispute resolution mechanism was used in handling the issue by meeting with the
contractor and insurer as well as lawyers representing both parties

The procedures used was mediation and arbitration, rather than following a legal process
The outcome was a fairly resolved dispute with all parties being satisfied
Follow the mediation and arbitration procedures and not accept any liability upfront.
Answer to Q 14
Starting over with a new contract
Answer to Q 15
Done by reviewing the contract after extensive negotiations before signing off the
contracts once all parties are satisfied with it and the contract is then filed and the
necessary notifications made
Answer to Q 16
At the end of each project, a review is done and documented with a version number, and
a person in charge of managing it assigned to file and archive the review and evaluation
document. The document is managed under the general document management procedure

References
Dalkin, J. (2014, July 10). Definition - What is Procurement? Meaning & Process. Retrieved
from https://www.capital.uk.com/2014/07/definition-procurement/
Mead, J., & Gruneberg, S. L. (2013). Programme procurement in construction: Learning
from London, 2012.
Naughter, T. (n.d.). Characteristics of a Good Contract Compliance Manager. Retrieved from
https://www.contractworks.com/blog/characteristics-of-a-good-contract-compliance-
manager
Norman, E. S., Brotherton, S. A., & Fried, R. T. (2011). Work Breakdown Structures: The
Foundation for Project Management Excellence. Hoboken: John Wiley & Sons.
Steinfeld, J. (2010, November 17). 4 Things You Must Consider When Choosing a Supplier.
Retrieved from https://www.cbsnews.com/news/4-things-you-must-consider-when-
choosing-a-supplier/
'The Economist'. (2010). The machine that ran too hot. Retrieved from
https://www.economist.com/node/15581072
Usmani, F. (2018, April 17). Stakeholders in Project Management. Retrieved from
https://pmstudycircle.com/2012/03/stakeholders-in-project-management-definition-
and-types/