Flashcards
Procurement / Supplier Selection
Flashcards do conjunto (15)
- 1Procurement / Supplier Selection: Two Differences Between Multiple & Single Suppliers O1.1a: Single - One Throat to Choke, Efficient for PM - Supplier Checks & Mgmt - Additional Services, MSAProvides single point of accountability across multiple supplier routes either directly or through sub contractors, external resources required to complete the project.
There is opportunity for a strong relationship to build with this route as it is efficient for the PM thus business.
Single supplier's responsibility to source subbies and carry out all checks required by the Org to ensure suitability.
Supplier’s job to manage that contractor, issues arising and manage the situation to improve or replace them if necessary.
Supplier, if within their capabilities, can also be asked to provide additional specialist services (either within contractual remit or an MSA addendum) as req'd to support the project. - 2Procurement / Supplier Selection: Two Differences Between Multiple & Single Suppliers O1.1b: Single Procurement / Risks - Economy of Scale - Disruptions = Procurement ProcessTime & costs are lower. Better streamlining of req's & processes, better leverage in cost negotiation due to the volume of work within contract.
If there are any disruptions to supply or the supplier goes bust it may take time to go through the procurement process to onboard an alternative supplier. - 3Procurement / Supplier Selection: Two Differences Between Multiple & Single Suppliers O1.2a: Multiple - SPOC Per, Time/Costs Impact - Lower Volume, Less Responsive/QualityMultiple supplier system results in a SPOCs per supplier that the PM has to manage directly, this results in a significant increase in time and costs related to managing multiple suppliers.
As each supplier is awarded a smaller amount of business, they may become less responsive to any requirement for after sales support.
The quality of work / attention to the project may also be lesser due to their prioritising high volume vs low volume customers. - 4Procurement / Supplier Selection: Two Differences Between Multiple & Single Suppliers O1.2a: Multiple Procurement/Risks - Cost Negotiation, Leverage - Higher Time/Cost/Mgmt - Disruption: Interim/FullWork volume will be less than a single route therefore the cost negotiation leverage is reduced.
There is opportunity to leverage cost competition between suppliers.
The additional time/cost this route requires from tender/procurement and negotiation to appoint and the subsequent volume of management and process execution one they are onboard
If disruptions to one supplier, other suppliers could be leveraged to close that gap, either for interim while a replacement is sourced, or in full resulting in minimum impact - 5Procurement / Supplier Selection: Two Differences Between Multiple & Single Suppliers O1.3: Integrated - Cohesion, Immediacy, Solutioning Speed - 'Behind the Curtain' Positive & NegativeA member of the supplier organisation is sitting in the Project team alongside internal SMEs.
Greater team cohesion, the immediacy of the individual and a corresponding speed of response can be expected when the need to discuss problems directly arises.
The supplier can also observe internal workings of their client and can learn how to optimise delivery of their remit - or offer additional services should it be appropriate to do so.
Integrated drawbacks are that the supplier ‘sees behind the curtain’ which could create reticence for project SMEs to discuss project aspects, ie: confidentiality, negative feedback of the integrated supplier.
This is not insurmountable though can slow down resolution solutioning and impede cohesive teamwork. - 6Procurement / Supplier Selection: Three Reasons for Robust Supplier Selection O2.1: Objectivity - Compliance, Structured, Scrutiny - Fair, Best Value, - Unbiased, Level Playing FieldTender processes need to be complaint with laws on ethics and fair trading.
The process needs to be open to scrutiny, fair and structured to show the best value from the number of suppliers invited to tender and an unbiased approach.
Requirements must be clear and each supplier given an equal chance of success throughout the process, including, for example, sharing supplier questions and business answers across all suppliers, setting and maintaining a dated framework for all tasks and activities to take place. - 7Procurement / Supplier Selection: Three Reasons for Robust Supplier Selection O2.2: Pre-Quals - Researched List, Vetting Interest & Capabilities - Questionnaire, Suitability for Tender - Preferred SuppliersResearch may result in a long list of possible suppliers.
Pre-Quals are a vetting or deeper research tool to identify quickly if a supplier is interested in and can provide the skills or capabilities required to work on the project.
Typically a questionnaire to establish if the supplier is willing to tender, their skills and expertise in relation to capability of completing the work, their financial stability and possibly references.
The output is a shortlist of suitable vendors who will be invited to tender against a defined set of requirements.
If the business has a list of preferred contractors who have completed robust selection and monitoring process Pre-Quals are typically not needed. - 8Procurement / Supplier Selection: Three Reasons for Robust Supplier Selection O2.3: Risk - Existing Suppliers, Tender Split - Current MSA & Checks - Unsuccessful, Vendors, Documentation, ProcessBest managed by using existing preferred suppliers who are familiar with the Org culture and processes, may be familiar with the team.
They have completed procurement processes previously so should have a smoother, shorter time onboarding and swifter solutioning issues/risks.
Risk for critical goods/services could be mitigated or contained by splitting the tender across more than one supplier.
Further risk mitigation can be achieved through ensuring preferred suppliers MSA and business security checks are validated & current (ie: financial stability)
Unsuccessful vendors risk of challenge needs to be planned for, ergo the process and documentation needs to be consistent, consistently applied and recorded for all suppliers to safeguard the business.
Following appointment, archive all documentation from all tenderers to contain any risks of challenge well after process close.
There needs to be an impartial, clear process for the suppliers and business to navigate any challenge. - 9Procurement / Supplier Selection: Explain Differences between Fixed Price & Target Costs Contracts O3.1: Fixed Price, Defined Scope - Supplier Cost Risk - Supplier Funds Shortfall - High Risk, TCQ MonitoringCost risk is assumed by the supplier
If scope is delivered for a greater cost to the supplier, they have to be able to fund that difference.
High risk remains for the PM as additional monitoring of schedule, quality and time will be required to ensure the supplier does not cut corners as a means to offset their cost risk. - 10Procurement / Supplier Selection: Explain Differences between Fixed Price & Target Costs Contracts O3.2: Cost Plus Fee, Unfixed Scope - Customer Cost Risk; Cost + % Fee - TQ over C; - General End Cost, Billing RiskScope is not fixed, allowing the org to define req's, or significant uncertainties are involved to give flexibility on the accuracy required for any type of fixed type contract.
Often used where performance quality or delivery time are of more concern than cost.
Where the customer agrees to pay the costs incurred to deliver the scope plus an agreed fee.
Occasionally this can be a cost plus percentage, which is usually preferred by the supplier.
This is a high-risk contract for the customer, as they agree to proceed with the work not really knowing what the final cost will be.
Requires additional PM monitoring to ensure the contractor is billing only for permissible costs and are deploying appropriate cost controls. - 1111Procurement / Supplier Selection: Explain Differences between Fixed Price & Target Costs Contracts O3.3: Time & Material/Per Unit Qty, Vague Scope - Highest Customer Cost Risk, - Unknown End cost, Billing RiskWhere a price is agreed for a unit quantity of material or time.
This is the highest risk contract to the customer as the final cost will not be apparent until the end of the contract.
This contract is necessary when the customer has very little idea of the actual scope of the work.
Requires additional PM monitoring to ensure the contractor is billing only for permissible costs and are deploying appropriate cost controls. - 12Procurement / Supplier Selection: Explain Differences between Fixed Price & Target Costs Contracts O3.4: Target - Pre-Agreed, Best Efforts - Savings/Shortfall Sharing - Incentive OpportunitiesTarget sum is agreed in advance by both parties, who expend best efforts to reach that target.
If the final cost is less than the target, the surplus is shared between both parties; similarly if the costs are greater, both parties agree to fund the excess.
This form of reimbursement is typical where there are opportunities in the work for incentives to apply. - 13Procurement / Supplier Selection: Three Purposes of an Org's Procurement Strategy O4.1: Ethics - Best Supplier, Appropriate Use of Funds - Best Fit, Agreed DeliverablesEnsures the project procures its products and services from the best supplier, enhancing the quality of delivered outputs and ensuring appropriate use of committed funds.
Defining a process for ethical supplier selection ensures those chosen are the best fit for delivering to agreed timescales and costs. - 14Procurement / Supplier Selection: Three Purposes of an Org's Procurement Strategy O4.2: Complexity (Make or Buy Decision) - Internal Redistribution, Cost Benefits - Short Supply Internally & Externally - External Likely, Tender Split, - Captured, ProcurementThe project will have explored both internal supply or the external potential to provide - defining whether the Org 'Makes or Buys'
Example 1: Ie: Team A has the skills that are under-utilised; these resources could be redistributed to the project, reducing costs and optimising existing labour spend.
Example 2: the skills exist in house but are currently over stretched or the external market challenging to obtain resources.
A high profile project could use some of the team’s resources, which can be investigated, though it is more likely that the skills gap will require closing with external suppliers.
The cost of closing this gap internally vs externally will have been taken into account as part of 'Make or Buy', as would breaking up the project into contractual packages that external suppliers may be able to provide.
The final decision must be captured in the procurement strategy; if the decision is to buy then the strategy can be used to alert Procurement of the requirement(s) and estimated timescale - 15Procurement / Supplier Selection: Three Purposes of an Org's Procurement Strategy O4.2: Risk - Best Contract Type, Supplier Qty - Documenting, Clarity - High Level, Informed by Strategy, PMPConsider best protection from unnecessary risk.
Understanding the best type of contract for the project, eg: Well defined scope then a Fixed Price model is better with the supplier taking most of the risk.
The strategy would also consider how many suppliers to use, eg single, multiple or integrated suppliers.
Documenting these decisions in the procurement strategy means clarity of resourcing is understood by all.
The Proc strategy sets out high-level approach for securing goods and services req'd from external suppliers.
It is informed by decisions made on strategic sourcing and leads to the development of the procurement element of an integrated PMP.
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- PMQ long flash cards FlashCards sobre Procurement / Supplier Selection, criado por Anna Farrow em 31-01-2024.
- Criado por
- Anna Farrow · jan 2024
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- 1 fev 2024
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