All procurement execution activities are undertaken by the Project Procurement Manager and the Procurement team
You are responsible for ensuring that the procurement activities are executed in accordance with the Project Procurement Plan
You and your Project Procurement Manager need to hold regular meetings to:
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Review the status of procurement activities•
Identify issues early and determine the action required to minimize any adverse impactOverview of procurement execution
Procurement Execution
The purpose of the Purchasing Pre-award Process is to award the POs under which the project’s materials and equipment are obtained
The pre-award process ensures that all bidders are treated fairly and
equitable, that the confidentiality of the information is maintained and that the recommendation to award is in accordance with the agreed evaluation criteria
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Agreed evaluation criteria may be as simple as ‘Technically acceptable, lowest cost’ or more complex ‘Total Cost of Ownership’ (TCO). Consider that TCO often requires Customer input as well.•
Competitive bidding is indicated. However, if single source is considered for purchase orders, justification must be provided. This may include proprietary technology or customer’s standardisation preference. Project Purchasing pre-award activities occur predominantly during the Execution phase
Materials Management execution—purchasing pre-award process
Procurement Execution
Preparing enquiry packages, including special terms and requirements (for example, supplier data, support, spares)
Issuing the enquiry packages and managing bid preparation and receipt process
Managing all communications with bidders during bidding and evaluation
Evaluating the bids
Preparing recommendations for award, conducting post-bid negotiation and facilitating final issue
Entering all data related to the purchases into SmartPlant Materials Materials Management execution—purchasing pre-award process
Procurement Execution
Maintains the required level of confidentiality of information
Ensures that engineering deliverables are aligned to support timely procurement activities
Maintains the interfaces between Engineering, Quality and Construction
Involves the Project Procurement Manager in the regular team progress meetings
Undertakes and completes procurement activities in accordance with the Project Procurement Plan
Materials Management execution—purchasing pre-award process As Project Manager, you will need to ensure that the procurement team:
Procurement Execution
Purchase Order documents are to be prepared by Engineering and Procurement on receipt of the approved Award Recommendation
Kick-off meetings are arranged as required
Post-award activities are initiated by the project procurement team
Once internal and other approvals have been obtained to place a
contract or a PO the Procurement Manager is the only person with the authority to confirm the commitment for the contract or PO with the supplier on behalf of WorleyParsons and/or our customers
Materials Management execution—purchasing award process
Procurement Execution
Confirm that the cost of the awarded POs is within the project budget
Provide relevant information to the project’s Cost Controls Manager
Materials Management execution—purchasing award process You are responsible for ensuring that the award process is properly undertaken
You need to:
Procurement Execution
This process covers award of a PO through to receipt at site and financial close-out
The purpose of the Purchasing Post-award Process is to:
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Administer the POs to obtain the project’s materials andequipment on schedule and in accordance with specifications
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Provide cost and schedule information to Project Services•
Identify PO issues for Risk Management activities•
Liaise with Inspection to ensure compliance to specifications The Purchasing Post-award Process covers the technical and
commercial activities in the manufacture and delivery of materials and equipment
Ensure all meetings and vendor contact are coordinated by Procurement.
Materials Management execution—purchasing post-award process
Procurement Execution
The main activities in the Purchasing Post-award Process are:
Expediting (including Supplier documentation)
Inspection coordination
Traffic/Logistics
Receiving on site, warehousing and preservation
Change/Claim administration
Invoice payment
Materials Management execution—purchasing post-award process
Procurement Execution
Effective procurement performance requires:
Use of SmartPlant Materials
Monitoring the vendor’s engineering and manufacturing processes
Meeting documentation obligations
Measuring and assuring conformance to the technical specification
Administering delivery of the materials and equipment
Managing any changes to the PO technical and commercial provisions
Managing any claims by the vendor for additional payment or schedule time
Materials Management execution—purchasing post-award process
Procurement Execution
The Construction Manager involves the Project
Procurement Manager in construction progress review meeting
Materials Management execution—purchasing post-award process As Project Manager you are responsible for ensuring that:
For most items, weekly status meetings are sufficient
For critical items, daily review meetings between the Construction and Procurement Managers may be required
Procurement Execution
The Materials Field Administration Process governs the day-to-day procurement activities on site
The actual administration is the responsibility of your Project Procurement Manager
Materials Field Administration may include site administration, purchasing and contracting
Materials Management execution—purchasing materials field administration process
You are responsible for ensuring that the requirements for materials field administration are included in the Project Procurement Plan
Procurement Execution
The purpose of the Contracts Pre-award Process is the contracting of third-party services
Project Contracts pre-award activities predominantly occur during the Execution phase
For early contracts, some activities may occur in the Define phase
The deliverables of the Contracts Pre-award Process are:
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Bidders lists•
Enquiry packages•
Approved recommendations for award•
Contract documents Cost and schedule information provided to Project Services and contracts issues input into Risk Management activities
Contracts execution—contract pre-award process
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Procurement Execution
Contractor selection
A thorough prequalification process will normally be executed for major contracts, e.g. fabrication contracts. This will involve multiple disciplines to prepare the questionnaire for the relevant work scope, typically including construction, engineering, quality, HSE as well as project controls and procurement.
Competitive, sealed bids are indicated for major contracts
If single source is considered for service contracts, justification must be provided. This may include proprietary technology (e.g. software) or customer’s preference.
Once internal and other approvals have been obtained to place a contract or a PO the Procurement Manager is the only person with the authority to confirm the commitment for the contract or PO with the supplier on behalf of WorleyParsons and/or our customers
Contracts execution—contract award process
Procurement Execution
The Contracts Post-award Process covers the technical and commercial activities
The main activities are:
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Awarding contracts•
Administering and monitoring the contractors•
Managing any changes to the contract•
Managing any claims•
Processing any payments and back charges, reconciling quantities and finalizing all contract obligations•
Providing cost and schedule information to Project Services•
Identifying any contracts issues for Risk Management activities Contracts execution—contracts post-award processProcurement Execution
PO and contract variation must be processed in accordance with the Management of Project Change Process
You and the Procurement Manager must sign-off any variances before they can take effect
Purchase order and contracts variation
The scenario for the case study is on page 55 of your workbooks Discussion topics:
What would you say are the key procurement issues on the project?
What can be done to remedy the situation?
Case study—group discussion