Contract and Procurement
Contract and Procurement
Contract and procurement are imperative operations that should be done appropriately for the success of an organization. More often than not, people who are in judge of procurement do take these activities less seriously (MOLENAAR, 2007). Due to such concern most institutions have put in place stringent measures that control all the procurement transactions. In addition to that, people should be employed to be responsible for this duty according to the policies of many institutions should be highly trained (MOSEY, 2009). This sudden change that has taken place in many companies and organizations has real improved the output of the department of procurement hence most activities run smoothly as scheduled. The directors of the department of procurement partly determine the success or the failure of a project that is undergoing.
Therefore, the managers of projects work very closely with the procurement officers to ensure that everything that is required is provided whenever its need arises. It is significant that, there exists a good relationship between the project managers and the procurement officers (MOSEY, 2009). If that is not the case, then there shall be contradicting ideas that will jeopardize the progress of the project. It is worth noting that, the duties and responsibilities of the procurement officers vary in accordance with the structure of an organization. This shows that, different procurement divisions have got structures which are designed to make management coordination and monitoring. This arrangement is imperative in improvement of the efficiency of the procurement activities. As aforementioned, the project manager should coordinate the transaction in collaboration with procurement manager to acquire all the requirements. The transactions which are carried out to achieve this are done under the interpretation of the set policies, rules and regulations (BOWER, 2003).
The rules and regulations set by the institution to ensure that the activities are carried out in harmony within all the departments that exist in a company. Unlike in the past, procurement process has dynamically changed and incorporated more activities. It only used to involve purchasing of goods and services required, but that is not the case nowadays (MOSEY, 2009). In procurement planning is done first. It determines whether to purchase a given commodity and if it should be bought the way it should be bought and quantity to be supplied. After this, reliable and potential supplies are determined, and contracts made with to supply the goods ordered (MOLENAAR, 2007). Before a contract is signed, thorough scrutiny is done by evaluating the proposals of the shortlisted vendors and interviews conducted to select the one that is unparalleled in offering those services and goods. After that, the one that emerges the best is awarded the contract.
Supervision of the supply is done by the procurement office. Procurement process gives support to the internal activities that are done within an organization. The operations served include management, production and marketing services. It supports all the processes, infrastructure and systems required by the projects. In other the dimension, a procurement body that is independent and separate provides all the things required by the project on a transaction basis (BOWER, 2003). In this case, the director of the project gives a list of things which are required and the procurement officer buys and coordinates the goods until they reach at the company to be used. In either organizational structure, the procurement manager is involved in generating and managing the operational transactions and the linkage that exists between all the stakeholders of the project.
This relationship that is created by the procurement manager exists in the whole procurement cycle period (MOSEY, 2009). The relationship between procurement professionals and the project management team is significant in that it creates a better environment for cross functional participation of all stakeholders. Moreover, it enables the procurement department to produce the best services to the project (DINSMORE & CABANIS-BREWIN, 2011). Therefore, for the procurement office to fit properly in the organization it must be well acquitted with the management strategies of the project. In a project based organization, there are about five general steps of procurement. Foremost, in collaboration with management, the procurement office should determine the requirements of the project.
After determining what the requirements, the supplier is selected, who in agreement with project managers and the procurement professionals is given a contract to supply goods and services. The procurement department supervises and conducts routine assessment on the performance of the supplier until the contract ends (DINSMORE & CABANIS-BREWIN, 2011). In centralized corporate management, there is an interaction between the principal stakeholders; the corporate purchasing coordination team, the chief executive officer, the chief purchasing officer, the managers of the business units and the purchasers of the business unit (SANKAR & RAU, 2006).
All of them have well defined roles and responsibilities in the procurement process. Most companies use formal organizational mechanisms like working groups and commodity teams, non-formal mechanisms of networking like employing competent people and initiating development programs, advanced systems of communication and use of complex management strategies (PENFIELD, 2010). In the centralized business unit procurement, the business units operate autonomously despite the fact that they are under one enterprise. The business unit creates a procurement order ships it to another business unit for supplier. Proper accounting records are kept to show the financial transactions between the two business units (SANKAR & RAU, 2006).
BOWER, D. (2003). Management of procurement. London, Thomas Telford. DINSMORE, P. C., & CABANIS-BREWIN, J. (2011). The AMA handbook of project management. New York, American Management Association MOLENAAR, K. R. (2007). Alternative project delivery, procurement, and contracting methods for highways. Reston, American Society of Civil Engineers. PENFIELD, P. C. (2010). A primer on negotiating corporate purchase contracts. [New York, N.Y.] (222 East 46th Street, New York, NY 10017), Business Expert Press SANKAR, C. S., & RAU, K.-H. (2006). Implementation strategies for SAP R/3 in a multinational organization: lessons from a real-world case study. Hershey, Pennsylvania, CyberTech. MOSEY, D. (2009). Early Contractor Involvement in Building Procurement Contracts, Partnering and Project Management. Chichester, John Wiley & Sons.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 30 December 2016
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