Key Considerations
As a program manager in capital projects, you are responsible for overseeing the procurement of goods and services required for your program’s success. Whether it’s hiring contractors, purchasing equipment, or acquiring raw materials, effective procurement and contracting can make or break a program. Here are some key considerations to keep in mind when managing procurement and contracting in capital programs.
This is the latest post is one of several in the series I have focused on Program Management Fundamentals
Establish procurement and contracting policies and procedures
Before you start any procurement process, make sure you have established policies and procedures for the procurement and contracting of goods and services. These should cover the entire procurement cycle, from identifying needs to contract administration. Ensure that all relevant stakeholders, including project sponsors, procurement officers, and contract managers, understand these policies and procedures.
Determine the appropriate procurement method
There are several procurement methods available, such as competitive bidding, sole source procurement, and request for proposal (RFP). Each method has its advantages and disadvantages, and the choice will depend on factors such as project complexity, budget, and the availability of qualified vendors. Carefully consider which method is most appropriate for each procurement need.
Develop a procurement plan
A procurement plan outlines the procurement requirements for a program and includes details such as the procurement method, schedule, and budget. It also identifies the procurement team and their roles and responsibilities. A well-designed procurement plan ensures that procurement activities are conducted in a structured and efficient manner.
Conduct market research
Before issuing a procurement, conduct market research to determine the availability of goods and services, the range of prices, and the most suitable vendors. This information can help inform the procurement method and ensure that you receive competitive bids from qualified vendors.
Ensure competitive bidding
Competitive bidding is a procurement method that ensures a fair and transparent process. By soliciting bids from multiple vendors, you can obtain the best value for money. Make sure that the solicitation process is open to all qualified vendors and that the evaluation process is transparent and impartial.
Monitor contract performance
Once a contract has been awarded, it’s crucial to monitor the contractor’s performance. This includes ensuring that the contractor meets all requirements and delivers the goods and services as per the contract. A comprehensive contract management plan can help ensure that contract performance is monitored and issues are identified and resolved in a timely manner.
Ensure compliance with regulations and policies
Procurement and contracting activities must comply with all relevant regulations and policies. These may include local, state, and federal laws, as well as internal policies and procedures. Failure to comply with these regulations can result in legal, financial, and reputational risks.
Key Takeaways
Effective contracting and Procurement in Capital Projects are essential for the success of any capital program. By following these key considerations, you can ensure that procurement activities are conducted efficiently, transparently, and in compliance with regulations and policies.
Best Practice Thinkers: Contracting and Procurement in Captial Programs
Some of the best thinkers in the field of Contracting and Procurement in Capital Programs include:
Karen R.J. White:
Karen is a procurement expert and consultant who has authored several books on procurement and contracting, including “The Procurement Game Plan: Winning Strategies and Techniques for Supply Management Professionals” and “Contract and Risk Management for Supply Chain Management Professionals”. She is known for her expertise in contract and risk management and has worked with various organizations to improve their procurement practices.
Fred Sollish:
Fred is a recognized expert in procurement and contracting, with over 25 years of experience in the field. He is an expert in Procurement in Capital Projects. He has authored several books on procurement, including “The Procurement and Supply Manager’s Desk Reference” and “The Purchasing and Supply Manager’s Guide to the C.P.M. Exam“. Fred is known for his expertise in strategic procurement, contracting, and supplier relationship management.
Great from merely Good
When it comes to separating great from good Contracting and Procurement practices in Capital Programs, some key differentiators include:
Strategic Alignment:
Great contracting and procurement practices are aligned with the overall strategy of the organization and are designed to support the achievement of business objectives. This requires a deep understanding of the business, the market, and the supply base, and the ability to develop and execute procurement strategies that are aligned with these factors.
Robust Risk Management:
Great contracting and procurement practices are designed to mitigate risks and manage uncertainty effectively. This requires a focus on identifying and managing risks throughout the procurement process, from supplier selection to contract management and performance monitoring.
Effective Communication and Collaboration:
Great contracting and procurement practices require effective communication and collaboration between procurement professionals, internal stakeholders, and suppliers. This involves building strong relationships with key stakeholders, providing clear and transparent communication throughout the procurement process, and fostering collaboration and innovation with suppliers.
Continuous Improvement:
Great contracting and procurement practices are focused on continuous improvement and the pursuit of excellence. Great procurement programs are characterized by a commitment to ongoing evaluation, feedback, and process improvement to ensure optimal performance and results.
