PROCUREMENT MANAGEMENT PLAN TEMPLATE

This Project Procurement Management Plan Template is free for you to copy
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PROCUREMENT MANAGEMENT PLAN
<PROJECT NAME>
COMPANY NAME
STREET ADDRESS
CITY, STATE ZIP CODE
DATE
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INTRODUCTION
The purpose of the Procurement Management Plan is to define the procurement re:uirements for
the project and how it will be managed from de;eloping procurement documentation through
contract closure. The Procurement Management Plan defines the following:
Items to be procured with justification statements and timelines
Type of contract to be used
!is<s associated with procurement management
)ow procurement ris<s will be mitigated through contract performance metrics=
insurance= or other means
Determining costs and if>how they?re used as e;aluation criteria
'ny standardized procurement templates or documents to be used
)ow multiple suppliers will be managed if applicable
$ontract appro;al process
Decision criteria
&stablishing contract deli;erables and deadlines
)ow procurement and contracts are coordinated with project scope= budget= and schedule
'ny constraints pertaining to procurement
Direction to sellers on baseline re:uirements such as contract schedules and wor<
brea<down structures @W-.sA
4endor Management
Identification of any pre:ualified sellers if applicable
Performance metrics for procurement acti;ities
This Procurement Management Plan sets the procurement framewor< for this project. It will
ser;e as a guide for managing procurement throughout the life of the project and will be updated
as ac:uisition needs change. This plan identifies and defines the items to be procured= the types
of contracts to be used in support of this project= the contract appro;al process= and decision
criteria. The importance of coordinating procurement acti;ities= establishing firm contract
deli;erables= and metrics in measuring procurement acti;ities is included. "ther items included
in the procurement management plan include: procurement ris<s and procurement ris<
management considerationsB how costs will be determinedB how standard procurement
documentation will be usedB and procurement constraints.
PROCUREMENT MANAGEMENT APPROAC)
The Procurement Management Plan should be defined enough to clearly identify the necessary
steps and responsibilities for procurement from the beginning to the end of a project. The project
manager must ensure that the plan facilitates the successful completion of the project and does
not become an o;erwhelming tas< in itself to manage. The project manager will wor< with the
project team= contracts>purchasing department= and other <ey players to manage the procurement
acti;ities.
The Project Manager will pro;ide o;ersight and management for all procurement acti;ities under
this project. The Project Manager will wor< with the project team to identify all items to be
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procured for the successful completion of the project. The Project Management "ffice @PM"A
will then re;iew the procurement list prior to submitting it to the contracts and purchasing
department. The contracts and purchasing department will re;iew the procurement items=
determine whether it is ad;antageous to ma<e or buy the items= and begin the ;endor selection=
purchasing and the contracting process.
PROCUREMENT DE(INITION
The purpose of procurement definition is to describe= in specific terms= what items will be
procured and under what conditions. .ometimes items which must be procured for a project can
be made internally by an organization. 'dditionally= procurement deadlines are usually affected
by the project schedule and are needed by certain times to ensure timely project completion.
This section is where these items must be listed= justified= and the conditions must be set. 'ny
important technical information should also be included. Indi;iduals may also be listed with
authority to appro;e purchases in addition to or in the absence of the project manager.
The following procurement items and>or ser;ices ha;e been determined to be essential for
project completion and success. The following list of items>ser;ices= justification= and timeline
are pending PM" re;iew for submission to the contracts and purchasing department:
Item>.er;ice Custification eeded -y
Item 'B %D E FD tool eeded for manufacturing widget type 8B we do not ma<e this
item
%8 Culy 9GEE
Item -B +D E HD tool eeded for building tool type 9B we ma<e this item but do not
<now the cost comparison ;s. purchasing it
80 'ugust 9GEE
Item $ eeded for transferring data to new operating systemB we do
not ma<e this item
8 .eptember 9GEE
In addition to the abo;e list of procurement items= the following indi;iduals are authorized to
appro;e purchases for the project team:
Nme Ro"e
Cohn .mith Project Manager
Cane Doe 5ead &ngineer
-ob Cones Design Technician
TYPE O( CONTRACT TO 'E USED
The purpose of this section is to describe the type of contract to be used so the contracts and
purchasing department can proceed accordingly. There are many different types of contracts li<e
firmIfiEed price= time and materials @TJMA= costIreimbursable= and others. Different
procurement items may also re:uire different contract types. ' well defined product may be a
firmIfiEed price while a product which will re:uire a research and de;elopment effort may be a
TJM contract.
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'll items and ser;ices to be procured for this project will be solicited under firmIfiEed price
contracts. The project team will wor< with the contracts and purchasing department to define the
item types= :uantities= ser;ices and re:uired deli;ery dates. The contracts and purchasing
department will then solicit bids from ;arious ;endors in order to procure the items within the
re:uired time frame and at a reasonable cost under the firm fiEed price contract once the ;endor
is selected. This contract will be awarded with one base year and three option years.
PROCUREMENT RIS*S
The purpose of this section is to identify any potential ris<s associated with procurement for the
project. Depending on the contract type= items or ser;ices being purchased= ;endor history= or
uncertainties in the project?s scope= schedule= or budget= potential ris<s may re:uire more
detailed planning and mitigation strategies. *or instance= if an organization has a close
relationship to a particular ;endor but there is a chance that ;endor will no longer to be able to
pro;ide goods or ser;ices needed= this represents a significant ris< to the project?s procurement
acti;ities that must be managed.
'll procurement acti;ities carry some potential for ris< which must be managed to ensure project
success. While all ris<s will be managed in accordance with the project?s ris< management plan=
there are specific ris<s which pertain specifically to procurement which must be considered:
I #nrealistic schedule and cost eEpectations for ;endors
I Manufacturing capacity capabilities of ;endors
I $onflicts with current contracts and ;endor relationships
I $onfiguration management for upgrades and impro;ements of purchased technology
I Potential delays in shipping and impacts on cost and schedule
I Kuestionable past performance for ;endors
I Potential that final product does not meet re:uired specifications
These ris<s are not allIinclusi;e and the standard ris< management process of identifying=
documenting= analyzing= mitigating= and managing ris<s will be used.
PROCUREMENT RIS* MANAGEMENT
The purpose of this section is to describe how ris<s related specifically to procurement acti;ities
will be managed. 'll projects should ha;e an independent and thorough ris< management plan.
)owe;er= much li<e there are ris<s which pertain only to procurement= there are ris<
management considerations which may also be uni:ue and apply only to procurement. This may
include in;ol;ement of specific personnel in managing procurement ris<s or obtaining appro;al
on mitigation steps from a particular management le;el within the organization.
's pre;iously stated= project ris<s will be managed in accordance with the project?s ris<
management plan. )owe;er= for ris<s related specifically to procurement= there must be
additional consideration and in;ol;ement. Project procurement efforts in;ol;e eEternal
organizations and potentially affect current and future business relationships as well as internal
supply chain and ;endor management operations. -ecause of the sensiti;ity of these
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relationships and operations the project team will include the project sponsor and a designated
representati;e from the contracting department in all project meetings and status re;iews.
'dditionally= any decisions regarding procurement actions must be appro;ed by the project
sponsor or= in his absence= the 4ice President of $ontracts before implementation. 'ny issues
concerning procurement actions or any newly identified ris<s will immediately be communicated
to the project?s contracting department point of contact as well as the project sponsor.
COST DETERMINATION
The purpose of this section is to describe how costs will be determined and if>how they will be
used as part of the selection criteria. *or procurements see<ing goods and>or ser;ices from an
outside ;endor= costs are usually pro;ided in response to a !e:uest for Kuote @!*KA= !e:uest for
Proposal @!*PA= or a !e:uest for -id @!*-A. 4endors submit :uotes= proposals= or bids which
describe the costs of the good or ser;ice in detail to aid the customer in their decision ma<ing.
$osts are almost always used as part of the procurement decision criteria but may be prioritized
differently depending on the organization.
*or this project we will issue a !e:uest for Proposal @!*PA in order to solicit proposals from
;arious ;endors which describe how they will meet our re:uirements and the cost of doing so.
'll proposals will include ;endor support for items '= -= and $ @from procurement definition
paragraphA as well as the base and outIyear costs. The ;endors will outline how the wor< will be
accomplished= who will perform the wor<= ;endors? eEperience in pro;iding these goods=
customer testimonials= bac<grounds and resumes of employees performing the wor<= and a lineI
item brea<down of all costs in;ol;ed. 'dditionally= the ;endors will be re:uired to submit wor<
brea<down structures @W-.sA and wor< schedules to show their understanding of the wor< to be
performed and their ability to meet the project schedule.
'll information must be included in each proposal as the proposals will be used as the foundation
of our selection criteria. Proposals which omit solicited information or contain incomplete
information will be discarded from consideration.
STANDARDIZED PROCUREMENT DOCUMENTATION
The purpose of this section is to describe what standard procurement documentation will be used
as part of the procurement. *or large compleE projects= standardization ma<es wor< across all
project process areas easier to manage. When organizations utilize standard forms= templates=
and formats= there is commonality across different projects as well as different groups within the
organization.
The procurement management process consists of many steps as well as ongoing management of
all procurement acti;ities and contracts. In this dynamic and sensiti;e en;ironment= our goal
must be to simplify procurement management by all necessary means in order to facilitate
successful completion of our contracts and project. To aid in simplifying these tas<s= we will use
standard documentation for all steps of the procurement management process. These standard
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documents ha;e been de;eloped and re;ised o;er a period of many years in an effort to
continually impro;e procurement efforts. They pro;ide ade:uate le;els of detail which allows
for easier comparison of proposals= more accurate pricing= more detailed responses= and more
effecti;e management of contracts and ;endors.
The PM" maintains a repository on the company?s shared dri;e which contains standard project
management and procurement documentation that will be used for this project. The following
standard documents will be used for project procurement acti;ities:
.tandard !e:uest for Proposal Template to include
I -ac<ground
I Proposal process and timelines
I Proposal guidelines
I Proposal formats and media
I .ource selection criteria
I Pricing forms
I .tatement of wor<
I Terms and $onditions
Internal source selection e;aluation forms
onIdisclosure agreement
5etter of intent
*irm fiEed price contract
Procurement audit form
Procurement performance e;aluation form
5essons learned form
PROCUREMENT CONSTRAINTS
The purpose of this section is to describe any constraints which must be considered as part of the
project?s procurement management process. These constraints may be related to schedule= cost=
scope= resources= technology= or buyer>seller relationships. 's constraints are identified= they
must be considered e;ery step of the way as procurement acti;ities are planned and conducted.
&;ery effort must be made to identify all constraints prior to any project or procurement planning
as constraints identified later in the project lifecycle can significantly impact the project?s
li<elihood of success.
There are se;eral constraints that must be considered as part of the project?s procurement
management plan. These constraints will be included in the !*P and communicated to all
;endors in order to determine their ability to operate within these constraints. These constraints
apply to se;eral areas which include schedule= cost= scope= resources= and technology:
.chedule:
Project schedule is not fleEible and the procurement acti;ities= contract administration= and
contract fulfillment must be completed within the established project schedule.
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$ost:
Project budget has contingency and management reser;es built inB howe;er= these reser;es
may not be applied to procurement acti;ities. !eser;es are only to be used in the e;ent of an
appro;ed change in project scope or at management?s discretion.
.cope:
'll procurement acti;ities and contract awards must support the appro;ed project scope
statement. 'ny procurement acti;ities or contract awards which specify wor< which is not in
direct support of the project?s scope statement will be considered out of scope and
disappro;ed.
!esources:
'll procurement acti;ities must be performed and managed with current personnel. o
additional personnel will be hired or reIallocated to support the procurement acti;ities on this
project.
Technology:
Parts specifications ha;e already been determined and will be included in the statement of
wor< as part of the !*P. While proposals may include suggested alternati;e material or
manufacturing processes= parts specifications must match those pro;ided in the statement of
wor< eEactly.
CONTRACT APPRO+AL PROCESS
The purpose of this section is to define the process through which contracts must be appro;ed.
This process may ;ary greatly from company to company but it is important to define the process
within your organization and who is in;ol;ed in the decisionIma<ing. Typically large purchases
follow an established bidding process and follow a formal selection and appro;al process.
.maller purchases can be less formal and can be appro;ed by the Project or Program Manager.
This section should clearly identify the rules for all procurements within your organization.
The first step in the contract appro;al process is to determine what items or ser;ices will re:uire
procurement from outside ;endors. This will be determined by conducting a cost analysis on
products or ser;ices which can be pro;ided internally and compared with purchase prices from
;endors. "nce cost analyses are complete and the list of items and ser;ices to be procured
eEternally is finalized= the purchasing and contracts department will send out solicitations to
outside ;endors. "nce solicitations are complete and proposals ha;e been recei;ed by all
;endors the appro;al process begins. The first step of this process is to conduct a re;iew of all
;endor proposals to determine which meet the criteria established by the project team and the
purchasing and contracts department. Purchases less than LE=EEE only re:uire the appro;al of
the Project ManagerB whereas= purchases greater than LE=EEE must be appro;ed by the $ontract
!e;iew -oard. *or these larger purchases the contract re;iew board will meet to determine
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which contract will be accepted. The $ontract !e;iew -oard consists of representati;es from
the project team= purchasing and contracts department= finance= and the PM".
DECISION CRITERIA
The purpose of this section is to define the criteria used by the contract re;iew board to decide on
what contract@sA to award. 'gain= these criteria may ;ary between organizations but must be
defined as part of the Procurement Management Plan.
The criteria for the selection and award of procurement contracts under this project will be based
on the following decision criteria:
I 'bility of the ;endor to pro;ide all items by the re:uired deli;ery date
I Kuality
I $ost
I &Epected deli;ery date
I $omparison of outsourced cost ;ersus inIsourcing
I Past performance
These criteria will be measured by the contracts re;iew board and>or the Project Manager. The
ultimate decision will be made based on these criteria as well as a;ailable resources.
+ENDOR MANAGEMENT
The purpose of this section is to describe the roles and actions the project team and purchasing
and contracts department will ta<e to ensure that the selected ;endors pro;ide all of the
products>ser;ices agreed upon and that the appropriate le;els of :uality are maintained.
The Project Manager is ultimately responsible for managing ;endors. In order to ensure the
timely deli;ery and high :uality of products from ;endors the Project Manager= or his>her
designee will meet wee<ly with the contract and purchasing department and each ;endor to
discuss the progress for each procured item. The meetings can be in person or by teleconference.
The purpose of these meetings will be to re;iew all documented specifications for each product
as well as to re;iew the :uality test findings. This forum will pro;ide an opportunity to re;iew
each item?s de;elopment or the ser;ice pro;ided in order to ensure it complies with the
re:uirements established in the project specifications. It also ser;es as an opportunity to as<
:uestions or modify contracts or re:uirements ahead of time in order to pre;ent delays in
deli;ery and schedule. The Project Manager will be responsible for scheduling this meeting on a
wee<ly basis until all items are deli;ered and are determined to be acceptable.
PER(ORMANCE METRICS (OR PROCUREMENT ACTI+ITIES
This section describes the metrics to be used for procurement acti;ities associated with the
project. These metrics may be used to ensure the project stays on schedule regarding
procurement acti;ities. They may also be used to compile data on the performance of ;arious
;endors in order to assist with future procurement acti;ities? ;endor selection criteria.
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While the purchasing and contracts department has their own internal metrics for procurement=
the following metrics are established for ;endor performance for this project?s procurement
acti;ities. &ach metric is rated on a 8I% scale as indicated below:
4endor Product
Kuality
"n
Time
Deli;ery
Documentation
Kuality
De;elopment
$osts
De;elopment
Time
$ost
per
#nit
Transactional
&fficiency
4endor
M8
4endor
M9
8 N #nsatisfactory
9 N 'cceptable
% I &Eceptional
In addition to rating each ;endor= actual ;alues will be noted in order to build a pastIperformance
data base for selecting ;endors for future procurement acti;ities.
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SPONSOR ACCEPTANCE
'ppro;ed by the Project .ponsor:
OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO Date:OOOOOOOOOOOOOOOOOOOO
PProject .ponsorQ
PProject .ponsor TitleQ
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