An Introduction to Procurement Management…continued

Below is a list of steps involved in procurement management.  Steps 1-8 can be found here.

9. Award contract
A contract is awarded for each procurement.  The contract is a legal document that clarifies the responsibilities and relationships between the buyer and seller.

10. Determine work start date
Work cannot begin until after the final contract has been signed by senior management of both the buying and selling organizations.  Delays in obtaining final signatures can result in delays to the start of work.

11. Manage contracts
‘Managing contracts’ is the supervision of actual procurement activities from both an administrative and a practical perspective.  Responsibility for ensuring that the right work gets done at the right time is typically left to the project team.  Administrative responsibility remains with the procurement department.

12. Review performance (extend or terminate)
Throughout the life of the ‘delivery’ of goods and services, the performance of the delivering organization (vendor) must be constantly reviewed and compared with contract terms.  A detailed SOW is a critical component of effective performance analysis.

If vendor performance falls below a specified standard, (such as schedule or quality) then the contract may be terminated according to terms established in the contract.  (Of course every effort should be made to correct the situation through negotiations and discussions before considering termination.)

13. Claims administration
Claims administration involves the management of conflicts between the buyer and seller.

How claims are administered is determined by the procedures set out in the contract.  When the remedies specified in the contract are insufficient to resolve conflicts, the issue may ultimately end up being settled in court.

14. End contracts
After all work is complete, or if the contract is terminated, the contract is formally ‘closed.’

Contract closure involves the formal notification of all parties regarding the status of the contract.  In addition, a contract archive is created that documents exactly what work was completed and what payments made. Records are kept of all correspondence generated during the life of the contract.

15. Lessons learned
An important part of helping an organization to avoid repeating mistakes is the gathering of ‘lessons learned.’  This includes an analysis of what went according to plan, what went wrong, and what should have been done differently.

16. Ongoing claim administration – litigation
Conflicts between the buying and selling organizations can continue long after a project is formally completed.  An organization’s legal and procurement departments take responsibility for ongoing claims administration, which can take years to be resolved.


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