Contracts and Procurement

1
PROJ6004 Contracts and Procurement
T2 2022

Torrens University Australia
PROJ6004 Contracts and Procurement
T2 2022
Torrens University Australia
PROJ6004 Contracts and Procurement
We will focus on understanding the importance of Procurement Management
in a project and explore the following questions:
What is the role of procurement management in a project?
What are the conditions under which procurement occurs in an
organization?
What procurement strategies does organization use ?
How does procurement process differs from Buyers ( project owner) to
Sellers ( project contractor)?
Why Make or Buy decision plays an important role in procurement?
Torrens University Australia
PROJ6004 Contracts and Procurement

Module Topic Achieved Week
M1 The Role of a Procurement
Manager
12th of June 2022 W 1 & W 2
M2 Processes, Strategies and
Risks
26th June 2022
Assessment 1
W 3 & W 4
M3 Financial Aspects of
Procurement
10th July 2022 W 5 & W 6
M4 Global Procurement,
Documentations and
Contracts
24th July 2022
Due Assessment 2
W 7 & W 8
M5 Strategies, Risks and
Rewards of Performance
based Contracting and
Vendor Management
07th August 2022 W 9 & W 10
M6 Relationships in
Procurement
14 of August 2022
Assessment 3.
21th of August 2022
W11 & W12

Torrens University Australia
PROJ6004 Contracts and Procurement
Torrens University Australia
PROJ6004 Contracts and Procurement
Assessment 1 – Case study response due date 26th of June 2022
Assessment 2 – Case study analysis and individual report 24th of July 2022
Assessment 3 – Presentation and Report 14 of August 2022
Torrens University Australia
PROJ6004 Contracts and Procurement
Assessments

PROJ6004 Contracts and Procurements has 3 assessments:
Assessment 1 – Individual Case study response due date 26th of August 2022
Length: 600 – 800words
Weighting: 20%
Submission due: at the end of Module 2.2 (Week 4)
Assessment 2 – Individual – Case study analysis and individual report 24th of August 2022
Length: 2400 words
Weighting: 40%
Submission due: at the end of Module 4 (Week 8)
Assessment 3 – Group – 10-20 minutes presentation and 1500 words report due on 14 of August
2022
Length: 2000 words
Weighting: 40%
Submission due: at the end of Module 6.1 (Week 11)

Torrens University Australia
PROJ6004 Contracts and Procurement
Teaching team
Dr Ibrahim Abdallah – Unit coordinator
[email protected]
Mobile : +61 (0) 405942355
Torrens University Australia
PROJ6004 Contracts and Procurement
Module 1
The Role of a Procurement Manager
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Learning Objectives
Overview of Project Procurement
Project Procurement Environment
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Essential Resources:
Project Management JumpStart
Please read Chapter 6, ‘Planning and Acquiring Resources’
Heldman, K. (2018). Project management jumpstart (4th ed.). John Wiley & Sons, Incorporated.
https://public.ebookcentral.proquest.com/choice/publicfullrecord.aspx?p=5510587
https://lesa.on.worldcat.org/oclc/1053816112
A Guide to the PMBoK
Please read Chapter 12, ‘Project Procurement Management’.Project Management Institute. (2017). A guide to the Project
Management Body of Knowledge (PMBOK guide) (6th ed.).
https://lesa.on.worldcat.org/oclc/995162610
Project Procurement Management: A Structured Literature Review
de Araújo, M. C. B., Alencar, L. H., & de Miranda Mota, C. M. (2017). Project procurement management: a structured
literature review. International Journal of Project Management, 35(3), 353–377.
https://doi.org/10.1016/j.ijproman.2017.01.008
https://lesa.on.worldcat.org/oclc/6958946958
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A simple way of describing standards is “common solutions to repetitive problems.
”There are four types of standards:
De Facto – widely adopted and accepted as best practice
Consortia, or developed by companies
Regulatory, or required by law
Volunteer Consensus
PMI follows the Volunteer Consensus Standards Process
Hundreds of volunteers worldwide are involved in the four year cycle for the benefit
millions of people worldwide.
Standards
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PMI – The Project Management Institute’s (www.pmi.org) Project Management
Body of Knowledge (PMBOK) first published in 1987 provides a framework for best
practices from the USA for the management of projects.
The PMI was founded in 1969 and is a not for profit association with over
1,000,000 members in 170 countries with over 24 standards.
PMI Standards
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PMI Foundational Standards
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PMI Membership
Student membership of the Project Management
Institute is required for this subject
Apply online at www.pmi.org
Cost: US$37

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Prince – The Office of Commerce and Government (OCG) in the United Kingdom
also publishes a standard call Prince2 (PRojects In Controlled Environments)
This standard is predominately used in Government, Defence and large
enterprises.
Often methodologies use a combination of the two standards.
OGC Standards
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PRINCE 2
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PRINCE 2
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A Methodology is a set of processes & practices performed a specific way in order to
accomplish a project
An Organisation which has a mature, effective and repeatable methodology has an
advantage over competitors who do not have this level of process
Types of Methodologies
Traditional or Water Fall (PMI, PRINCE2, ITILV4)
Agile (SCRUM, LEAN, eXtreme Programming, KANBAN, DSDM, CRYSTAL, SAFe)
Methodologies & Why Do We Need ?
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History of Project Management
https://www.youtube.com/watch?v=C1uxCBx2-UQ
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Project Management is the application of knowledge, skills, tools,
and techniques to project activities to meet the project
requirements.
Meet business objectives
Satisfy stakeholder expectations
Project Management
Presentation title goes here
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Projects.. Drive Change …

Current
State
Future State
TIME

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Intangible Elements
Goodwill
Brand Recognition
Public Benefit
Trademarks
Strategic Alignment
Reputation
Projects.. Enables Business Value Creation
Tangible Elements
Money
Stockholder Equity
Fixtures
Tools
Market Share
Utility
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Projects…are initiated in response to outside forces & needs
Regulatory, Legal,
Social Requirements
Create, repair, or improve
products, processes or
services
Stakeholder/Busines
s needs
Implement
Technological or
Business Strategies
Presentation title goes here
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25
Project Description
Project Brief
Project
Description
Project
Lifecycle
Project Management
Click to add text Process
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The Role of a Procurement Manager
Overview of Project Procurement
Why Procurement management?
Every Project Manager should have sufficient knowledge
and skills in contracts and procurement Management,
Why?
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The Role of a Procurement Manager
Overview of Project Procurement
• If most of the projects spend 80-90% of its budget in outsourcing, then
having the right people means a lot!
• Good procurement decisions making can have as much effect on
delivering projects in time, cost and quality as technical decisions!

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The Role of a Procurement Manager
Overview of Project Procurement
• 10 Key Roles and Responsibilities of a Purchasing / Procurement
Manager:
https://aims.education/purchasing-or-procurement-managerresponsibilities/
• Procurement – roles & duties
https://www.youtube.com/watch?v=vYR
QpPKPAko

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The Role of a Procurement Manager
Example of how much procurement
occupies – Investment breakdown at
phone & construction projects
(Hoezen,2014 and Building and construction guide 2014)
TopForeignStocks.com
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The Role of a Procurement Manager
Torrens University Australia
Project procurement is the series of processes and activities undertaken to
identify, plan for, and acquire (via purchase, rent, contract, etc.) external
resources necessary to meet project goals.
Proactively managing the critical steps in an organisation’s contracting and
procurement strategy directly contributes to its bottom line success.

10 Procurement Challenges –
https://www.youtube.com/watch?v=DnT_hgXRdHw

The Role of a Procurement Manager
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The Role of a Procurement Manager
Procurement functions
1. Procurement strategy
2. Approved tender list
3. Pre-tender survey
4. Bidder selection
5. Request for quotation (RFQ)
6. Tender evaluation
7. Purchase order
8. Expediting, monitoring, and inspection
9. Shipping and storage
10. Erection and installation
11. Commissioning and handover

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(After Batra, K. 2008, Project Procurement Management: Best Practices, UNDP)
Procurement What and Why?
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Procurement Management-What and Why?
• Procurement means acquiring good and/or service from an outside
source.
• Procurement involves two
interact on a given market
parties with different objectives who
segment (H. Kerzner 2017).
• Company can increase its profit by adopting good procurement
practice. Through good procurement practice company can take
advantages of quantity discounts, minimizing cash flow problems
seeking out quality suppliers.
and
• In organization, procurement is often centralized as it directly
contributes to organization profitability.

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Procurement Management-What and Why?
• For the buyer, the seller’s work is usually a deliverable or subproject.
• •
For the seller, the contract is often a complete project.
Different names of Buyer are:
➢ ➢ ➢ ➢
Customer
Sponsor
Owner
Project team
• Different names of Seller are:
➢ ➢ ➢ ➢
Vendor
Supplier
Contractor
Provider

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Procurement Management-What and Why?
• Procurement involves considering whether to procure, how to
procure, what to procure, how much to procure, and when to procure.
• Procurement may also be called:
Buyer
• •
Acquisition/ Buying
Contracting
Purchasing
Procurement
• Procurement in simple
seller relationship.
term is a buyer –
Seller
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Purchasing vs. Procurement
The terms purchasing and procurement are often used interchangeably.
Purchasing is a component of procurement.
Purchasing is the act of acquiring goods and services on behalf of an organization.
Procurement Includes all the activities required to acquire goods or services.
Purchasing – the process of obtaining goods and services for the project.
Procurement – the combined functions of identifying needs, initiating a
procurement project, selecting a vendor, contracting with a vendor, purchasing
of the goods or services, managing the resulting contract.

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The Role of a Procurement Manager
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The Project Procurement Environment
The environment is made up of internal and external factors that influence a
project
leadership approaches,
Regulation,
Economics,
Political conditions
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Procurement Environment
1. Macro Environment: Macro environment includes those external variables
that can influence the procurement process (i.e., when and how
procurement is carried out). Some authors , including PMBOK
® Guide refer
these factors as Enterprise Environmental factors . Some of the examples
of these factors are recessions, inflation, cost of borrowing money,
unemployment and existence of buyer or seller market.
Microenvironment: Microenvironment includes the organization’s internal
procurement process including policies and procedures. It also includes any
2.
procedure imposed by a project or client. Project Management Institute has
identified four processes of procurement useful under microenvironment
The Project Procurement Environment
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The Project Procurement Environment
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Procurement Manager role sample
requirements

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Summary
Overview of Project Procurement: is a critical role that need to focus on maximising
the project delivery by engaging the third part /vendor
Project Procurement Environment: to enhance the project delivery, as procurement
manager you need to understand the Procurement Environment success elements or
factors