Month: December 2016

Procurement Planning

Procurement Planning: This involves the process of identifying which business needs can be best met by procuring products or services outside the organization.  This process involves determining whether to procure, how to procure, what to procure, how much to procure, and when to procure (Garrett & Rendon, 2005). 

This phase of the contracting process includes the following key activities:

1.  Determining and defining the procurement requirement (the supply or service to procure).

2.  Conducting market research and/or a pre-solicitation conference.

3.  Developing a preliminary Work Breakdown Structures (WBS) and Statements of Work (SOW), or description of the supply or service to be procured.

4.  Develop preliminary budgets and cost estimates.

5.  Preliminary consideration of contract type, risk assessment, and any special terms and conditions.

Sourcing: Being the initial stage of the procurement process, sourcing is the search of vendors or subcontractor who are available for supply or contract of the required goods / services. Pre-qualification: Once the lists of available vendors are compiled, it is necessary to find out the suitable vendors for the particular requiment at required quality and pre-qualification is the process of determining the suitability by reviewing the documents submitted by the vendors. The process includes thourouhg examination of the history, past dealings, expertise in the vendor organization, availability of right equipment, past supplies or projects … and other relevant details.

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Benefits of good contract management

Professional contract management attempts to ensure that both the buyer and the vendor fulfill all of the obligations agreed in the contract, reduce or mitigate disputes to bear minimum, avoid losses in cost and time and improves long term business relations among the parties involved in the contract.

On the other hand, a poor or non-existent contract management would have bad consequences to all involved with long term losses and sour relations among all involved parties. With no proper monitoring and management of the contracts, the business and financial performance of the organization is most likely to fail to meet its business strategies resulting with cost and time overruns of its projects or business goals.

In spite of the failures of achieving its goals, the long term effects of poor contract management is the deterioration of business relationships with its stakeholders resulting in losing future business aggravating the matters further.

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