PROJECT PROCUREMENT AND INTEGRATION.pdf

PROJECT PROCUREMENT AND INTEGRATION PRESENTED BY: MR BIRUNDU AND MARTIN OTUNDO RICHARD Martin Otundo Richard (PhD Fellow) is a PhD student in project planning and management besides being a part time lecturer in a number of universities in Kenya. He is a freelance researcher and runs a research firm in Kenya. He can be reached at any time for research work, data analysis, interpretation and data management, journals development and publishing etc. Contact: martinotundo@gmail.com, +254721246744 FOUNDATION INSTRUCTIONS: In this assignment you will integrate procurement tasks into a project. Consider the given case study (Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL); PDF file) and answer the following questions: 1. Explain each part of the “Flowchart for Optimal Utilization of Market Intelligence to Address Sourcing Challenges”. The definition of market intelligence has evolved over time since the early centuries but the 21st Business Dictionary defines it as the information an organization collects with regards to its markets. This information that has been collected is then grouped and analyzed to provide a detailed image of the organization's performance within the market. Moreover, it offers the management with enough information to guide their decision making. Management experts have indicated that market intelligence is made up of 3 core components that include: market research, competitive intelligence, and market intelligence. As per the flowchart provided, there are two 1 main requirements for successful optimal utilization of market intelligence to address sourcing (procurement) challenges. These requirements are the strategy and the process. Some of the challenges that face the process of market intelligence include: Risk management; Brand image and reputation; Compliance; Corporate social responsibility; Centers of excellence; Stakeholder engagement etc. the flow chart has outlined that these challenges can be addressed by: a. Integrating the strategy of scoping. Basically, scoping means that the project extension is clearly identified and understood well. Extension here includes the project coverage, geographical location, what it intends to deal with, the environmental climate etc. Equally, the capabilities of the project or organization as per the time of inception and state the areas that have not met the requirements or have problems that need to be addressed. This follows a clear plan that guides all the activities and the people charged with various responsibilities. b. Internal analysis is very important in addressing various challenges in market intelligence in projects. This second step in the strategy just involves an understanding the requirements of the whole process, available data scrutiny for informed decisions making, understanding the new entrants, what products they have and the future effect of these products to the whole process. c. External analysis as the third step is very crucial since it touches on analyzing and understanding the supply markets that define the market intelligence process. It goes to the extent of understanding the available markets and the trends in these markets together with their influence on the customer choices and consumptions. The whole process must be concluded by having a clear understanding of other competitors in the markets, what they offer and their influence on the markets trends. d. The 4th step of the strategy process is strategy development. In this category, one should understand the ethics that relate to sourcing, have a list of all the relevant sourcing levers, adopt better management of all the components so as to achieve the lowest TCO and ensure reduced costs in the whole process with maximum output. e. Sourcing execution is a process that has been identified in the fifth stage of the process of market intelligence, procurement for projects and challenges minimization. In the 2 process, a list of the potential suppliers with the relevant documents and who meet the set standards is made. Besides benchmarks are done to ensure that the suppliers‟ quotations are matching the market trends, and the value quoted is measured against the value of services or goods availed. f. Finally, the implementation process takes place. In this process, the key component that the projects handlers should internalize is the ability to understand the best contractual practices, best supplier management practices and continuous monitoring and evaluation of the process. 2. Analyze those factors that are important when MODNL needs to qualify and select suppliers for a project requirement. Guided by Carter‟s 10 Cs of supplier evaluation, there are 10 factors to consider as discussed below: Competency Make a thorough assessment of the supplier's capabilities measured against your needs, but then also look at what other customers think. Capacity Ability of the supplier to have all the requirements outlined for effective services delivery. Requirements also extend to include the resources and these resources include staff, equipment, storage, and available materials. Commitment The supplier needs to provide evidence that it's committed to high quality standards. Control Basically touches on how much control the supplier has over its policies, processes, procedures, and supply chain. Cash The supplier should be in good financial health. Cash-positive firms are in a much better position to weather the ups and downs of an uncertain economy. Cost Basically is compares that price of given commodities or services from aone supplier to another vs quality or value. 3 Consistency It focuses on the ability of the supplier to ensure that he/she consistently provides high quality goods or services Culture The best business relationships are based on closely matching workplace values . This is why looking at the supplier's business culture is important Clean This refers to this supplier's commitment to sustainability, and its adherence to environmental laws and best practices Communication Explains how the supplier plans to keep in touch with you. 3. Examine the key factors, including risk factors that affect buyer/supplier decisions concerning contract pricing and the selection of the proper contract type. An agreement between the organization and an outside provider of a service or materials is a contract. To limit misunderstandings and make them more legally binding, contracts are usually written documents that describe the obligations of both parties and are signed by those with authority to represent the interests of the parties. Factors influencing the contractual process and pricing include: The type of contract- a clear outline on the type of contract determines the pricing and the contract uptake together with the risks. The contract types here include: fixed contracts, costreimbursable projects etc Contractual rules and regulations-this involves the rules that guide the contracts from the initiation point to the termination level. Organizational culture that includes the beliefs, values, norms and the morals of an organization or agency Credit potential of the supplier that touches on the sufficiency of the cash flow of the supplier and other involved parties 4 Reliability- the ability of parties not to let down each other based on trust and other considerations like financial resources muscles etc. Quality of services and goods demanded is crucial since quality is always associated with an extra mile sacrifice or spending. Others include: The uncertainty of the scope of work needed; the party assuming the risk of unexpected cost increases; the importance of meeting the scheduled milestone dates; and the need for predictable project costs 4. Given a procurement situation for a major contract, analyze the application of eProcurement and other types of supplier bidding models available for MODNL. e-Procurement is the counterpart to e-Sourcing, starting where e-Sourcing ends and ending where e-Sourcing begins. The scope of e-procurement simply maps on to the procurement process itself; each stage of the process can now be undertaken online. E-procurement set-ups include spend data software, market analysis software, e-tendering, e-auctions (and the more recent „advanced sourcing‟ technology), online contracts and purchase-to-pay systems. The process shall involve the following nine basic steps:  Requisition in this situation, the buyer or consumer recognizes a need and places a request for goods or services.  Authorization Each requisition made by a buyer gets routed to an appropriate approval agent. The approver verifies that the goods or services are needed, that they are either off of an appropriate contract or acceptable as a stand-alone non-contract order, and that the purchase amount is acceptable.  Purchase Order Once a requisition is approved, a purchase order is created and automatically delivered to the supplier(s). 5  Receipt of Goods Once goods are received, the buyer issues or confirms a receipt of such goods to the supplier.  Invoice After a supplier prepares goods for shipment, an invoice is created that denotes the individual goods ordered by consumers and the amounts being charged.  Reconciliation After the goods are received, the invoice needs to be reconciled to the purchase order and goods receipt before payment is made.  Payment Once the goods have been received and the invoice reconciled with the order and contract, payment is scheduled and made using an appropriate payment method, which could be pcard, electronic funds transfer, or good old fashioned cheque.  Reclamation of Taxes Occasionally, the supplier of a good or service will be obligated to charge a tax, but the buyer may be eligible to retain some or all of that tax because of its corporate status .In Kenya, the tax is pegged at 16%.  Analysis After a number of procurement cycles have been completed, it is important to take measurements of the efficiency and accuracy of the procurement process. . 5. Given a situation to solicit a bid proposal, evaluate technical, management, commercial and ethical requirements, and then prepare a RFP for MODNL. A request for proposal (RFP) is a document that an organization, often a government agency or large enterprise, posts to elicit a response -- a formal bid -- from potential vendors for a 6 desired work solution. The RFP specifies what the customer is looking for and describes each evaluation criterion on which a vendor's proposal will be assessed. Technical requirements of a bid proposal include:  Neutral Language- The words “or equivalent” must be included after each mention of a particular service provider‟s name, brand, product, or service.  Bid Evaluation Criteria- Bid evaluation criteria (e.g., a scoring matrix) must be included with weighted percentages describing how the most cost-effective bid will be selected.  Infrastructure language- Requests for both costs must be explicitly stated in the RFP.  HCP Site Listings- List of all participating member HCP site listings must be included. Site listing should include site names, addresses, and HCP numbers, at a minimum.  Competitive Bidding Period- Must specify the period in which bids will be accepted.  Requested Contract Period- Must specify the desired contract length. Bid management requirements include the capacity of the bid manager to understand the outsourcing laws, rules and regulations, understand the ethics in bidding, understand the component of financial management and human resources management. The bid manager should be brought on board on the procurement process in at least 18 months before the conclusion of the process. Commercial requirements states that the parties involved in handling the bidding process should adhere to the market trends and understand the role of other stakeholders like the strategic leader, the employees and other sub-contractors in the whole procurement process. Finally is the Ethical Standards- Many owners include ethical standards that the owner and the supplier or contractors are required to follow in their relationships with one another prior to and after the award of a contract in the Instructions. These standards often come from corporate procurement policies. They include such item restrictions on gifts and entertainment from suppliers and contractors to owner personnel Purpose of the Request for Proposal (RFP): 7 The purpose of this RFP is to advance bidding for the Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL); Practice Information: Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL) is basically an integrated new technology that uses eco-designs in manufacturing to meet the needs of the people presently and takes care of the future needs both environmentally and economically. The target in this bidding is qualified suppliers who critically understand the concept of eco-design production. The following is the schedule for proposals: Activity Date Release of RFP _______________________, 20__ Scheduling of product demonstrations _______________________, 20__ Submission of proposals _______________________, 20__ Notification of finalists _______________________, 20__ Finalist interviews _______________________, 20 __ Selection notice _______________________, 20__ Questions Concerning the RFP. Any questions or inquiries on the RFP must be in writing and must be received prior to __________, 20__. They may be directed to [Bid Manager Mr. Johnson], [also acting liaison office], at the physical address listed in the next paragraph, or via facsimile [009-467] or email [Johnson@yahoo.com]. Any material questions that are received will be responded to in writing with copies provided to all of the potential RFP respondents. Proposal Submission. Proposals must be received by no later than the end of the business day on __________, 20__. They should be submitted to [Mr. Johnson] at the following address: __________________________________ _____________________________ _ Name __________________________________ Phone No. _____________________________ _ Address __________________________________ Fax No. _____________________________ _ City, State, Zip E-mail Confidentiality. All information presented in this RFP, including any information that is subsequently disclosed by the [Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL);] during the proposal process, should be considered strictly confidential. Proposal contents will be held strictly confidential by [Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL);]. 8 Miscellaneous. This RFP does not convey a commitment to award a contract or to purchase a PMS. [Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL);] reserves the right to accept or reject any or all proposals or to cancel this RFP for any reason. [Name of your practice] will not be liable under any circumstances for any expenses incurred by any bidder in connection with the selection process. Proposal Specifications:   a) Goal. This is a request for a proposal to cheap textile from the recycled fibre that could be an environmental pollutant. . b) Specifications. Our recommended PMS will meet the following specifications::  Revenue cycle automation  environmental documentation and interface  Billing and collections functionalities  Environment communication functionalities  Reporting Compliance with federal, state and Health Insurance Portability and Accountability Act (HIPAA) transaction and code set, security and privacy rules How the vendor's products and services enable the practice to achieve “meaningful use” as defined in federal regulations (applies to integrated Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL)]. c) Timetable. Between December 2015 to March 2018. d) Price. $35 billion Background Information: a) Company name and address. Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL); 099-67 Netherlands b) Organization chart :Attached c) Description of company’s experience: distinguished personnel that combine all the categories of energetic military that is out to serve the country by managing the current resources for future benefits. d) Leadership: all military personnel plus other experts drawn from Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL);. Evaluation: continuous evaluation for confidentiality is adopted. 6. Given the receipt of a proposal or competitive proposals for a major contract, determine the key factors used when negotiating an agreement or evaluating competitive proposals and establish a negotiating strategy for MODNL. In a summary, the evaluation process consists of the preliminary examination and evaluation of the offers received, and considered to be valid, to assess their responsiveness to specifications and requirements as defined in the solicitation document, analyse their cost and benefit, and determine their price and value. Evaluation, together with the requirement definition and the 9 evaluation criteria and method specified in the solicitation document, is the basis for the subsequent selection of the offer that provides the best value for money for the organization. The pre-requisite tasks for evaluation include:  Establishing an evaluation team- Evaluation is usually overseen and coordinated by the procurement officer who usually conducts the evaluation together with an evaluation team.  Developing a plan- It is good practice and a useful internal tool to establish an evaluation plan along with the preparation of the solicitation documents. It should detail the timeframe and responsibilities of the evaluation team members during the evaluation process, the evaluation criteria and the evaluation method that will be applied.  Using the pre-established criteria and methods-Upon the receipt and opening of offers, evaluation must be conducted according to the set of evaluation criteria and method, which have been established during the preparation of the solicitation documents  Ensuring transparency- To ensure the integrity of the process and to provide a proper audit trail, all stages in the evaluation process should be documented in writing to verify that the process has been conducted in accordance with the regulatory procurement framework and principles of the organization. All evaluations must be done without favouritism for or bias against any supplier to ensure a fair and transparent process for all participants. The flowchart below shows each of the stages in the evaluation process. 10 7. Analyse and select effective contract management techniques to control contract cost, schedule and performance factors; as well as manage contract changes, contract claims and contract close out for MODNL. The main aim of contract management is to ensure that goods or services are delivered on time, at the agreed cost and to the specified requirements. Effective contract management relies on 3 separate, but interrelated factors:  Managing service delivery ensures that a contract is being delivered as agreed, to the required levels of performance and quality  Managing relationships keeps the relationship between the two parties open and constructive, aiming to resolve problems early and focus on continual improvement  Managing contract management provides governance, performance management and accountability through tracking and recording delivery. All three factors must be managed effectively and consistently if the contract is to succeed and favor the costs of the whole process During the process of cost effectiveness in contract management, measures of process evaluation to get clear information must be put in place. Performance measures suggested by the committee of contract managers universally or other measures that have the following characteristics: 11  Measurable, objectively or subjectively;  Reliable and consistent;  Simple, unambiguous, and understandable;  Verifiable;  Timely;  Minimally affected by external influence;  Cost-effective;  Meaningful to users;  Relate to mission outcome; and  Drive effective decisions and process improvement. 8. Given a claim on a major contract, analyse the role of commercial terms and conditions, the uniform commercial code (UCC) and applicable government regulations on the outcome for MODNL. In procurement, the Uniform Commercial Code (UCC) governs contracts between a merchant and the sale of goods. Essentially, the UCC contains two sets of rules for contracts. One set involves rules for everyone, and the other set involves rules for merchants. Some of the roles of the UCC have been discussed from one federal state to another and include:  The UCC seeks to provide uniformity to contracts law among the different states.  The UCC provides more flexibility in contract formation than exists in common-law contracts, thereby accommodating the reality of business practices.  The UCC also embodies some elements of the Statute of Frauds. The Statute of Frauds requires certain types of contracts to be in writing to be enforceable.  The UCC deals primarily with transactions involving personal property (movable property), not real property (immovable property). 12  Other goals of the UCC were to modernize contract law and to allow for exceptions from the common law in contracts between merchants. References Amado, M., Ashton, K., Ashton, S., Bostwick, J., Clements, G., Drysdale, J., Francis, J., Harrison, B., Nan, V., Nisse, A., Randall, D., Rino, J., Robinson, J., Snyder, A., Wiley, D., & Anonymous. (2017). Project Management for Instructional Designers. Retrieved from http://pm4id.org/ under Creative Commons Attribution 3.0 Unported.="http://www.w3.org/2000/svg" viewBox="0 0 512 512"> Jorge Lynch. (2018). Receiving and Opening Offers (Bids/Proposals). https://procurementclassroom.com/receiving-and-opening-offers-bidsproposals/ Kasee N. (2017). Market Intelligence. https://www.coursehero.com/file/33811292/Market- intelligenceediteddocx/ Michael L. (2017). 9 Steps to e-Procurement Success. http://www.esourcingforum.com/archives/2007/11/15/9-steps-to-e-procurement-success/ Newman, Larry (2015). Proposal guide for business development professionals. Shipley Associates. ISBN 0-9714244-0-3. Paulie A. (2017). 12-Step Program for Implementing an Effective E-Procurement Strategy. http://spendmatters.com/2017/04/25/12-step-program-implementing-effective-e-procurementstrategy/ World Bank. (2016). Project: Strengthening Public Procurement in Serbia: E-Procurement System Analysis. Republic of Serbia Institute, The American Law. "Institute Projects - The American Law Institute | American Law Institute". American Law Institute. Retrieved 2017-08-23. The American Law Institute – UCC 2007 Edition (Official Text with Comments) Archived December 8, 2017, at the Wayback Machine. 13 FRA. (2018). Uniform Commercial Code adoption for more information on adoption of each article in the UCC by U.S. jurisdictions. Stewart Macaulay; Jean Braucher; John A. Kidwell; William Whitford (2015). Contracts: Law in Action. I (3rd ed.). LexisNexis. ISBN 978-1-42248176-9. Mark E. Roszkowski (2014). "Symposium on Revised Article 2 of the Uniform Commercial Code: Section-by-Section Analysis". SMU Law Review. Dedman School of Law, Southern Methodist University. 54: 927. Boer, L. de, Harink, J.H.A., Heijboer, G.J., 2014, A conceptual model for assessing the impact of electronic procurement, proceedings of Ipsera congress, Jönnkoping, Sweden, 2014 Croom, S.R., 2015. The impact of web-based procurement on the management of operating resources supply. The Journal of Supply Chain Management, Winter 2015. Emiliani, M.L., 2014. Business-to-business online auctions: key issues for purchasing process improvement, Supply Chain Management: An International Journal 5(4), 176-186. 14