Project Procurement and Contract Management: Risks and Best Practices

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PROJ6004: Contracts and
Procurement

Introduction
This assessment is developed in the form of group report on the topic of contracts and
procurement and this assessment includes a brief description of risks associated with efficient
management of contract and procurement along with the discussion of the best practices for
project procurement and contract management. This assessment aims to explain the process of
monitoring and contract terms which further enables business organization to accomplish a
effective focus on project procurement outcomes and later on this assessment includes a brief
discussion of issues associated with practices and performance of project procurement and
contracts.. Apart from this, the assessment also includes a brief explanation of the roles and
responsibilities of managers within the management function of project contracts and
procurement.

Report
Key Performance Criteria
The management of contracts and procurement of a project generally required to follow a set of
key performance criteria which reflects the steps followed for efficient and effective
management of project contracts and procurement. The key performance criteria of project
procurement and contracts usually reflects the factors such as procurement process which states
procurement activities, procurement plan, contract approach, soliciting bids, qualifying bidders,
request for proposal, evaluation of bids and management of contract which are required to
contract and procurement management process to drive for a particular project. The key
performance criteria of contract and procurement management generally based on the project life
cycle and it includes the roles and responsibilities of project and procurement manager in
supplier development of project life cycle for completions effort (Alban, 2015).
The specific roles and responsibilities of project manager in project life cycle are stated below:
 Scope Management: Project manager plays an important role and responsibility in
planning, defining and monitoring the scope of the project for further maintaining effort
on project completion.
 Procurement Management: Project manager also consist a major role and responsibility
to manage required materials, suppliers and vendors for successful completion of project
life cycle.
 Risk Management: It’s the role of project of manger to identify risk associated with
project and to further develop an appropriate mitigation and contingency plan for
ensuring the development of supplier within project (Joshua, et. al., 2017).
While the specific roles and responsibilities of procurement manager in supplier development
and project life cycle are stated below:
 Procurement Document: Procurement manager plays an efficient role and responsibility
in procurement document as for requesting proposals, managing team and for ensuring
that documents accurate describe the project work to the suppliers.

 Scheduling: For requesting vendor’s schedule and further scheduling of project
components, procurement manager plays an important role and it’s the responsibility of
procurement manager to track vendor’s progress.
Performance Monitoring
Performance monitoring generally refers to the act of regularly tracking and verifying the
performance of project contracts and procurement. Performance monitoring concept is added in
management of project contract and procurement for efficiently identifying the complexity
within project and challenges associated with the terms of contracts and procurement
management in project life cycle. Moreover, the complexity of project generally reflects certain
factors which required to efficiently deal for effectively carrying out project development
process and the factors within project complexity are stated below:
Management Complexity: In project life cycle, management complexity is a major project
complexity as it is associated with business organization concepts such as time and cost issues,
project staffing, team composition, size, management, change related issues, political issues and
number of parties involved in project.
Technical Complexity: The technical complexity is associated with technical aspects of project
such as number of technical interfaces, number of technologies involved, well established
technology and familiarity of project team with technologies (Caifeng, et. al., 2018).
Apart from this the challenges faced in terms of contracts and procurement management in
project life cycle are stated below:
 Lack of efficient and accurate information of supplier’s performance.
 Limited transparency on service credits and claim within project contracts and
procurement.
 Lack of proper notification of obligations, terms and right.
 Lack of proper and effective mitigation and contingency plans.
 Poor and unclear responsibilities towards supplier disputes.
Moreover, the risk associated with contract and procurement management approach in a project
are stated below:

 Insufficient lead-time.
 Unethical practices.
 Failure to ensure smooth supply chain management.
 External factors such as unstable government, natural calamity and external interference.
 Application of inappropriate criteria.
 Selection of inappropriate procurement strategy.
 Operating risk leading to revenue fall.
 Construction risk related with funding gap.
Apart from these aspects, performance monitoring also focuses on significant issues or
controversial aspects related with project stakeholders are stated below:
Disbelief and Lack of Engagement: Project stakeholders disbelief and lack of engagement
towards the project usually regarded as controversial aspect as it delays the project outcome and
working process. Moreover, stakeholders also lead to the emergence of financial difficulty
because of his disbelief on project which act as an issue for project development. Moreover, this
issue further act as a risk for contracting prices as the prices of contract generally hike up by the
stakeholder (Bausman, et al., 2014).
Unacceptable Scope Changes: Another issue is the implementation of unacceptable changes in
the project as demanded by project stakeholder which generally leads to failure of project.
Stakeholders also adds up certain addition cost for the completion of project along with the
implementation of changes (William, et. al., 2012).
Over-budgeted: Lack of communication with stakeholder leads to over budget issue in the
project as they consist the power to invest and drive the project or reduce their investment for the
unbalancing the project development. Moreover, this issue of stakeholders usually act as risk to
the contracting price of project as it leads to disinvestment by stakeholder which directly impact
the budget of the project.

Contract Terms that Drives Performance Outcomes
Contract terms generally refers to a written agreement which includes the demonstration of
project along with the description of the duration when the project will be in force for driving
effective performance outcomes of both project manager and procurement manager. The contract
terms of project contract and procurement management focuses on the aspect of leadership
challenges faced by project and procurement managers with project execution are stated below:
Managing Increasing Costs: Project and procurement managers leadership within project faces
a major challenge from management issue of increasing cost as rise in project cost against the
project existing budget and income acts as huge issue for project which further falls back under
the leadership of project and procurement manager to control and manage the increasing costs of
project (Chris, et. al., 2016).
Risk Mitigation: Another challenge to the leadership of project and procurement manager is
development of risk mitigation plan by both project and procurement manager for further
avoiding supply risk through analysis of market risks, quality, cost, frauds and delivery risks
associated with the project which is a complex and stressful for managers for effective execution
of project.
Lack of Purchasing System and Technology: The leadership of project and procurement
manager also faces challenges in relation to develop an effective purchasing system of the
project along with advanced technology for efficiently handling project demands of processing
and execution.
Apart from this aspect the contract terms also determine the importance of completion effort by
project and procurement managers of project to meet the key needs of stakeholder as
stakeholder’s satisfaction is necessary for the contribution and engagement of stakeholders with
the project and stakeholders also consist various duties and authority while contributing on a
project. Moreover, stakeholders reduce and uncover risk associated with project, increase project
success, provide expertise and most importantly contributes to full project sponsorship thus in
order to maintain these aspects project and procurement manager are required to consider
completion effort for completing the project on the stated duration of time and for the success of
the project (Lina, et. al., 2018).

Sustainable Actions for Improving Outcomes for Community and Stakeholders
Sustainable actions are undertaken in progress by project and procurement manager for
efficiently improving the project outcome for community and stakeholders and this generally
includes the consideration and implementation of the following actions:
 Protection of forest, mineral resources, biodiversity, exploitation control and water
resources through implementing the use of renewable resources in project process and
completion (Geraldine, 2016).
 Maintaining well-balanced society through implementing the action of equitable income
distribution, balanced development, gender equality, employment and through good
governance in the project process.
 Implementing sustainability principle in project execution through understanding project
and its application for further adding sustainability principles in project application.
 Demonstration of market force for driving project for further benefiting society,
shareholders and environment.
 Promoting the project through the implication of continuous quality improvement process
in the project.
All these actions are regarded as sustainable actions within project as they improve project
potential outcome for community and stakeholders. Moreover, these actions also act as
performance drivers of the project and its managers as it enforces the project and procurement
manager to include the consideration and implementation of sustainable action which benefits
and meets the need of community and shareholders. Apart from this, sustainable actions of
project and procurement managers also develops an efficient and strong relationship of project
managers with both the community and shareholders (Hsin, et. al., 2013).
Contract Management
Contract management refers to the process of managing contract execution and analysis of
contract operation and this includes the demonstration of common themes or learning that could

be applied to future large projects to improve contract and procurement management along with
the assurance of project success. The learning of future large projects for improve management
of contracts and procurement is stated below:
 Centralization: For improvement in contract and procurement management of large
project the theme of centralization could be applied as it stores all essential documents as
it reduces time and effort to locate and review contracts throughout the project life cycle
which further also ensures the success of the project (Joshua, et. al., 2017).
 Proactive Resources: This theme generally focuses on resources associated with
contract review and leads to proactive and auto-renewal benefits to managers and
shareholders which enhance the project performance and supports project success.
 Ongoing Monitoring: This theme measures and monitors project which protect and
ensures the value of the project for determining efficiency of project and also improves
contract and procurement management.
Apart from this contract management also focuses on project management practices to ensure
better project outcomes for efficient management and negotiations to achieve successful contract
completion as stated below:
Effective Communication: It is an efficient project management practice as it avoids
misunderstanding and develops relationship between managers and other associated members
such as community, workers and shareholder which leads to effective project management and
negotiation with shareholders to accomplish successful contract completion.
Tracking and Reporting Project Progress: Another project management practice includes the
practice of monitoring and comparing the project progress with planned progress for efficiently
managing cost, schedule and scope of the project.
Moreover, contract management also demonstrate the importance of project completion is
important as it gathers project records, information of project process and an analysis of the
complete project plan which is efficient for developing a compete project review. While project
closure is also important as it ensures that all the objective of project are met, improving future
engagement and capturing efficient knowledge (Alban, 2015).

Group Reflection
During the development of the assessment I along with my group members have learned certain
major concept of contract and procurement management in project. We were able to learn about
the role and responsibilities of project and procurement managers in project execution and for
satisfying the needs and demand of stakeholders in project development. We were also able to
seek important knowledge of performance criteria, performance monitoring, contract terms and
contract management which are necessary to consider for effective contract and procurement
management of project by project and procurement managers.

Conclusion
This assessment is in the form of group report which aims to define and explain the role and
responsibilities of project manager and procurement manager for ensuring stakeholders
satisfaction and successful outcome of project. This assessment includes the description of the
complexity within project, challenges and issues related with stakeholders and management
function of contract and procurement management. Moreover, this assessment describes the
efficiency and significant of stakeholder to drive project execution and to accomplish successful
outcome of project.

Reference:
 Alban, M., (2015). Integrating contract management practices into the achievement of
value for money in tanzania public procurement: Evidence from selected procuring
entities in moshi municipality. Journal of Public Procurement. (15). pp.129-149.
 Bausman, D., Chowdhury, M. & Tupper, L., (2014). Best practices for procurement and
management of professional services contracts. Journal of Professional Issues in
Engineering Education and Practice. (140) pp. 3.
 Caifeng, Z., Wansheng, T. & Yanfei, L., (2018). Supply chain contract design of
procurement and risk-sharing under random yield and asymmetric productivity
information. Computers & Industrial Engineering. (126) Pp. 691-704.
 Chris, L., Joe, S., Glyn. W. & Fei P., (2016). Beyond intentional trust: supplier
opportunism and management control mechanisms in public sector procurement and
contracting. Policy & Politics. (44) n2 Pp. 289-311.
 Geraldine, A. R., (2016). Procurement contract management in the local government
authorities (LGAs) in Tanzania: a transaction cost approach.
International Journal of Public Sector Management. (29). pp. 6.
 Hsin, H. C., Yao‐Chuan, T. & Che‐Hao, H., (2013). E‐procurement and supply chain
performance. Supply Chain Management: An International Journal. (18). pp.34-51.
 Joshua, S., Clifford, M. & Eric, P., (2017). Professionalism as social responsibility in
procurement and administration. European Business Review. (29). pp. 320-343.
 Lina, V., Mark, H. & Yan, W., (2018). Bridging the Gap - Contractor and Bureaucrat
Conceptions of Contract Management in Outsourcing. Public Organization Review: A
Global Journal. (18) pp. 413-439.
 William, G. R., John, D. M., (2012). Loopholes to Load-Shed: Contract Management
Capacity, Representative Bureaucracy, and Goal Displacement in Federal Procurement
Decisions. International Public Management Journal. (15) pp. 525-547.