What you need to plan for
Procurement Planning
When planning occurs
Identify 1 Evaluate 2 Define 3 Execute 4 Operate
Procurement Strategy
Procurement Plan
Materials Management Plan , if required
Purchasing and Contracts Initiation
Materials Management Plan, if required Contracts Plan, if required
Materials Field Administration
Contracts Plan , if required
Materials Management and Contracts Close-out
Procurement Planning
Project Procurement Strategy (PPS) is the:
•
Process for identifying and documenting the procurement opportunities applicable to the project•
First step in developing the Project Procurement Plan Typically, the PPS is first developed during the scoping stages of a project
Sometimes the customer provides the initial procurement strategy for further development in the Project Procurement Plan
Project Procurement Strategy
Procurement Planning
Purchasing activities can involve long lead times
Certain materials and equipment may be particularly critical to a project’s success
Purchasing activities usually involve multiple countries (infrastructure and logistics, local legislation etc.)
Market and technology developments can impact on the success of a project and therefore need to be monitored on an ongoing basis
During the development of the PPS, the following factors need to be considered:
Project Procurement Strategy
Procurement Planning
The PPS is a hierarchical matrix covering the entire work scope of a project, broken down into separate ‘work packages’
Only the major critical items are separately identified as work packages
These packages are created and identified according to:
•
Unique technical and commercial attributes of the work activities they comprise•
Methods by which they are to be executedProject Procurement Strategy
Procurement Planning
Example of a PPS matrix
Components Physical
Discipline
Special Equipment Item A
Special
Equipment Item B Balance of Plant Civil Works
Project Management
Project Management Services Contractor – Reimbursable Costs with Incentives Fee – $ 70m total
Design Design Contract – Lump Sum – $10m Facilities E & P Contract –
Reimbursable Costs with Fixed Fee –
$30m total Procurement Specialist
Supplier A – Lump
Purchase Order –
$100m total Fabrication
Construction Contract –
Reimbursable Cost and Equipment Rates with Incentives Fee - $100M total
Materials Control Construction / Erection Services
Installation Contract – Lump Sum –
$10m
Quality Inspection Specialist Quality Contract – All-in rates – $10m
Part of Project Management Services
Commissioning / Start-up
Assistance
Part of Supplier A Purchase Order
Part of Supplier B
Purchase Order Contract N/A
Procurement Planning
The structure of the PPS depends on the:
•
Scope of work•
Nature and complexity of the project•
Requirements of the customer The PPS assists in:
•
Administrative and commercial planning•
Cost/schedule control functions of a projectProject Procurement Strategy
Procurement Planning
Allows a concise, high-level overview of how procurement activities relate to the execution strategy of the project
Illustrates alternative ways of executing the project procurement activities
Identifies where:
•
Consolidation (or further break-down) of work scopes can work to the project’s advantage•
Gaps may occur in hand-offs during execution A Procurement Strategy is a deliverable that can be provided for projects in Identify and Evaluate phase
Benefits of a PPS
Procurement Planning
When planning occurs
Identify 1 Evaluate 2 Define 3 Execute 4 Operate
Procurement Strategy
Procurement Plan
Materials Management Plan , if required
Purchasing and Contracts Initiation
Materials Management Plan, if required Contracts Plan, if required
Materials Field Administration
Contracts Plan , if required
Materials Management and Contracts Close-out
Procurement Planning
Projects in Identify and Evaluate phases:
•
While you might not be able to fully identify these requirements, you should be able to identify them in broad scopeConcentrate on Procurement Strategy approach
Projects in Define phase:
•
The procurement needs of the project should be sufficiently identified to support the Customer’s overall project scheduleFull fledged procurement plan can be developed
Projects in Execute phase:
•
The procurement needs are clearly identified and a procurement plan shall be developed to achieve the timely delivery of the projectFull fledged procurement plan must be developed
Planning in the various WMPM project phases
Procurement Planning
Documents the basis for obtaining and managing materials,
equipment and third-party services required for project execution
Addresses relevant aspects of both materials management and contracts for the project
Maps out the various anticipated risks and constraints and identified mitigating actions
Identifies critical supplies (see also Procurement Strategy) and outlines general strategy
Ensures that the procurement activities align with the overall project schedule
Project Procurement Plan
Procurement Planning
The Project Procurement Plan:
•
Must clearly define the deliverables of the procurement process•
Needs to be ‘fit for its purpose’Project Procurement Plan
Procurement Planning
The Project Procurement Plan may also include details about the targeting of procurement efforts
The Project Procurement Manager will consider the assessment in the strategy development
Criticality-Value Assessment
Project Procurement Plan
Bottleneck, e.g. special alloy steel grade
Ensure continuity Develop alternatives Revise specifications
Critical, e.g. turbine compressor
Form closer relationships Direct negotiations
Routine, e.g. piping bulk blanket orders
Simplify procurement process
Automate
Rationalise supplier base
Leverage, e.g. customer’s standard agreement
Procurement Planning
Project Procurement Plan
Where the complexity and / or size of the project warrant it, the Project Procurement Plan may be further developed in separate plans:
•
A detailed Project Materials Management Plan•
Separate detailed Project Contracts Plan for major contract packages•
Separate detailed Procurement Plans for key procurement packagesProcurement Planning
The various elements of the Procurement Plan are further defined in the Materials Management Plan, including:
Specific strategies for buying materials and equipment
Associated activities for managing the expediting, traffic/logistics etc
The materials control and reporting systems
Prioritization of procurement activities and associated engineering deliverables in line with the ROS (Required on Site dates) as defined in the project schedule
Materials Management planning
Procurement Planning
Level of procurement effort based on cost, schedule, criticality, and other relevant factors
POs/activities already executed and/or underway prior to engagement of WorleyParsons
Transition of early purchase agreements from the customer
Material control systems
Quality management, verification and inspection, which includes an outline of inspection to be undertaken
Site materials management plans
Materials Management planning (cont’d)
Procurement Planning
Subsets of the Material Management Plan
Engineered equipment planning
Bulk materials planning
Prefabrication planning and modularization Materials Management planning
Procurement Planning
The primary objective is to ensure that items are acquired and released in time to meet the overall project schedule
The dates on which items are required on site to meet construction needs drive the engineering and procurement planning and activity for engineered equipment
A major equipment list for the project needs to be developed early Engineered equipment planning
Procurement Planning
Planning for bulk materials can be more complex than planning for engineered equipment
Bulk materials control starts with an examination of the project schedule to assess:
•
What bulk materials are required over time•
Critical required on site (ROS) dates Bulk material planningProcurement Planning
Procurement planning:
•
Is usually very complex for extensive prefabrication•
modularization often involving multiple sites An extensive prefabrication program demands an early procurement planning effort that addresses the interfaces between vendors,
fabricators and site construction