Procurement Management

Mastering Relationships and Contracts in Project Procurement Management

In the realm of project procurement management, Control Procurements emerges as a cornerstone process. It's a multifaceted operation, encompassing the management of procurement relationships, vigilant monitoring of contract performance, and the execution of necessary changes and corrections. Furthermore, it oversees the closure of contracts. The ultimate goal of this process is to ensure that both seller and buyer performances align seamlessly with the project's requirements, as stipulated in the legal agreement.

Both the buyer and the seller are responsible for administering the procurement contract to ensure contractual obligations are met and legal rights are protected. The project management team needs to be aware of the implications of actions taken when controlling any procurement due to the legal nature of the relationship.

On larger projects with multiple providers, managing communication among the various providers is a key aspect of contract administration. Contract administration is often treated as an organizational function separate from the project due to its legal aspect. A procurement administrator may be part of the project team but usually reports to a supervisor from a different department.

Control Procurements involves applying the correct project management processes to contractual relationships. The outputs from these processes are integrated into the overall management of the project. This integration can occur at multiple levels when there are multiple sellers and multiple products, services, or results involved.

Administrative activities in project management involve the collection and management of project records, refinement of procurement plans and schedules, and monitoring the procurement environment. These activities also include the establishment of measurable procurement performance indicators, setting up for gathering, analyzing, and reporting procurement-related project data, and preparation of periodic reports to the organization.

The quality of controls, such as the independence and credibility of procurement audits, is crucial for the reliability of the procurement system. The organization's code of ethics, legal counsel, external legal advisory arrangements, and anti-corruption initiatives can contribute to effective procurement controls.

Control Procurements includes a financial management component that monitors payments to the seller. This component ensures that payment terms defined in the contract are adhered to and that compensation is linked to the seller's progress as outlined in the contract. A key concern in making payments is to closely align payments with the work accomplished.

It's worth noting that agreements aren't set in stone—they can be modified at any point before the contract closure, provided there's mutual consent. However, any changes must adhere strictly to the agreement's change control terms and are typically documented in writing for transparency and future reference.