Integrating procurement tools & techniques within the project management lifecycle

Thesis (M.B.A.)--North-West University, Vanderbijlpark Campus [i.e. Potchefstroom Campus], 2008.The relationship between project management and procurement as an organisational function is often a clash of wills. The field of project management is ripe with stories of clashes between project managers and procurement officers who, for whatever reason do not work well together. There is no lack of literature on project failure and reasons why projects fail. Available literature concludes that successful projects are defined as those completed on time, within budget, and in ways that meet objectives. The biggest challenge to project managers is to mitigate risk in an environment filled with uncertainties. Marketplace forces such as unstable commodity markets and economic fluctuations are among the competitive forces experienced by project managers. Suppliers play an integral role within the project life cycle and therefore it is essential to ensure that the right suppliers are selected. The role of procurement has changed from functional to strategic and is no longer viewed as a backroom function, which converts requests into supplier orders. The main reason for the change is due to challenging factors such as globalisation, inflation, technological innovations, and fluctuations in exchange rates and commodity markets. Due to the large portion of expenditure spend by the procurement department within the organisation the savings on purchasing costs can have a substantial effect on the profitability of the organisation. Procurement savings initiatives are now far more visible on the agendas of senior management. Selection of the right suppliers is crucial for any organisation striving to achieve the business objectives of the organisation and meet the expectations of customers and shareholders. The procurement department apply certain tools and techniques to select, evaluate, and measure the performance of suppliers. Various tools and techniques are available, the focus of the study is on three of these tools and techniques namely: negotiations, material budgets, and the SESPA(Supplier Evaluation, Selection, and Performance Appraisal) process. According to the literature reviewed, a project life cycle can be broken down into four to five key phases namely: the conceptual, planning, execution, close out, and control phases and procurement process into five steps namely: define the requirements, select the supplier, produce an agreement, administer day-to-day activities, and assess the performance of suppliers. A comparison between the steps within the procurement process and the phases within the project management life cycle reveals commonality and the potential of benefits that the tools and techniques applied by procurement can contribute to the project life cycle. Thus the challenge to the procurement office is how to partner with the project management function in a manner that will positively impact on the project management life cycle and the project success. With these obstacles facing most organisations, it is time for procurement and project management to focus on cooperation instead of confrontation. Developing a culture that sees individual projects as elements of a business plan will require change. There is no lack of literature on resistance to change. Change is seldom easy and old ways die hard, even when there is wide agreement that change is needed. Therefore whatever the reason for change, it is essential for organisations to realise that successful implementation of change will require a systematic change implementation process.Master