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Purchase or acquisition of goods or servicesfrom outside an organization

Procurement

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S teps in Procurement Management

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1. Determine what to procure and when

2. Document product requirements andidentify potential suppliers

3. Request supplier responsesThis is obtained through:-

RFI: Request for Information

RFQ: Request for QuotationsRFP: Request for Proposals

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R equesting S eller R esponses

RFQ R equest for Q uotation

RFQ s are usually used as a supporting documentationfor sealed bids

Best suited to products and services that are asstandardized and as commoditized. This makessuppliers quotes comparable.

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R equesting S eller R esponses

RF T R equest for Tender An RF T is an open invitation for suppliers to respond toa defined need. This gives an opportunity for potentialsuppliers to submit an offer to supply goods or services against a detailed tender.

C ompared to RFQ, the business requirements are notwell defined

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RFP R equest for P roposal

An RFP leaves all or part of the precise structure andformat of the response to the discretion of the suppliers

The c reativity & innovation that suppliers choose to

build into their proposals may be used to differentiatethem.

As a part of the evaluation procedure , discussion andnegotiation with the proposers is anticipated

U sed when the product or service is very sophisticatedor of large value

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S ome names

S upplier

Vendor

P rovider S eller

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S ample RF P template

A description of the projects objectivesContact information and schedule of eventsassociated with the selection processGuidelines for vendor communication with theorganizationEvaluation CriteriaSufficient technical details to show the scope of work

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S ample Proposal Format

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A Proposal may consist of the following sections in order

1. Ex ecutive Summary2. Scope, Approach and Methodology3. Pr oject Deliver ables4. Pr oject Management Appr oach5. Detailed and ItemizedPr icing 6. B idder Qualifications7. Assumptions, Terms & Conditions8. O ptional Ser vices and Featu r es

Attachments

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S ample Proposal Attachments

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1. Co mpanyO ver view2. Collater als (Success sto r ies & Refer ences)3. ScheduleMile stones4. Resou rceLoading 5. Payment S chedule

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S ources of bench marking standards

R ef Domain Website

1 Accounting & F inance www.ssbenchmarking.org

2 Human R esources www.ssbenchmarking.org

3 Information S ystems www.ssbenchmarking.org

4International Business(airlines to water utilities) www.gobenchmarking.com

5 Outsourcing www.obenchmarking.com

6 P rocurement www.ssbenchmarking.org7 P roduction & Operations www.6sigmaops.com

8 Telecommunications www.tbig.org

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C ontract Types

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Contract Type Buyer sRisk

Seller sRisk

Fixed Price Contract 1 5

Fixed Price PlusIncentive Fee

2 4

Time & Material 3 3

Cost Plus Incentive Fee 4 2Cost Plus Fixed Fee 5 1

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S tatement of Work (for software projects)

T he statement of work (SOW) is a formal descriptionof the minimum requirements of a project. It is theheart of the Software Contract.

SOW outlines the general features of the project:-

The scope of workThe exact software requirements (functional & technical)S chedules for intermediate & final deliveryQ uality R equirementsS

ervice Level AgreementsP roject tracking & reporting mechanism

Acceptance criteriaEstimated Effort