The information technology (IT) department at my company follows a structured approach to managing infrastructure projects. Infrastructure projects include the installation of a network, telephone system, office equipment, file servers and audio/visual equipment. Most of the products and services needed to complete the projects are purchased from sources outside the company. To ensure consistency across projects, the IT department follows a standard procurement process for each project.
The procurement process includes “all of the activities that are required to obtain the goods and services required for a project” (Huston, 1996, p. 3). The primary objective of the procurement process is to “obtain the goods and services in accordance with the technical, quality, schedule, and cost objectives of the project” (Huston, 1996, p. 3). The procurement process can be broken into six basic steps:
Step 1—Define Goods and Services
At my company, the project manager is typically responsible for managing the procurement process. In the first step, the project manager must identify the products and services needed for the project and determine which to purchase from an outside source. Typically, my company will purchase any technology hardware and software used in infrastructure projects from external sources. However, installation and configuration services are sometimes provided by my company and other times provided by outside vendors. The decision for services depends on the type of work, the location of the installation, and the availability of internal resources. For example, we will usually perform our own network equipment installation and configuration. An internal resource will travel to any office around the world to perform the work. In contract, we rarely installs our own network cabling throughout the buildings—this work is typically outsourced to a local service provider.
In order to define the technology goods and services needed for a new office, the IT project manager will work with designers from the internal facilities department and external architects to review designs and floor plans for the new facility. Through the review process the project manager documents the technology requirements and creates a scope statement. The project manager reviews the scope and requirements with a project core team to specify the technology needed to meet the requirements and develops a preliminary installation schedule and a rough order of magnitude budget. The scope, schedule and budget are reviewed with the project sponsor and key stakeholders. If the schedule or budget does not align with the sponsor’s expectations, the process is repeated until the sponsor approves the preliminary plans. Once the preliminary plan is approved, the project core team will create documents that define in detail the products and services that they plan to procure. The documents will include a “complete description of the technical, quality, schedule, cost, and other performance requirements” (Huston, 1996, p. 5).
Step 2—Select Bidders and Complete Request for Proposal
Once the project manager has a clear and detailed description of the products and services, the next step is to identify the vendors that are qualified to provide what is needed. If the new office is in a location where we have worked previously, they will leverage existing relationships for procurement activities. However, for new offices in new locations, we must search for and identify qualified vendors. The project manager will often rely on the local construction contractor to recommend vendors. In addition, we will solicit recommendations from other project managers through tools like LinkedIn.
The project manager will also oversee the creation of the Request for Proposal (RFP). My company uses standard templates for its RFPs, adjusted for the specific project type. In addition, project teams leverage previously created RFPs as check points to ensure they cover the needed information. The RFP will include the scope, requirements, and detailed product specifications. In addition, the RFP will request a copy of any vendor contracts, an outline of the vendors change management process, licensing requirements, and any vendor testing and acceptance criteria. My company also includes its standard policy on gifts and a list of required meetings and standard reports. Finally, the project manager will prepare an evaluation matrix that the team will use to compare the vendor responses.
Step 3—Prepare Bid Proposals
Once the project manager completes the RFP, a copy is sent to each qualifying vendor. The vendors are given a window of time, usually a few days, to review the proposal. The project manager than coordinates a bidder’s conference to review the RFP in detail and answer any questions. For infrastructure projects, the bidder’s conference is held at the construction site in order to give the vendors firsthand exposure to the site. Although the bidders conference can be uncomfortable for the vendors, they are encourages to ask questions openly as any additional information generated through the process benefits all parties by providing additional clarity.
After the bidders conference, the vendors are left to create proposals in response to the RFP. If one of the vendors has additional questions, the question and answer is sent in writing to all the vendors. Again, the intent is to share information with all parties with the intent of providing clarity. The RFP includes instructions about the format, submittal process, and due dates for the RFP proposals. Any vendor that does not follow the instructions is excluded from further consideration.
Step 4—Evaluate Bids / Award Contract
Once the due date for proposal submission has passed, the project manager will close the submittal process and work with the project team to begin evaluating the bids. Prior to a detailed evaluation, the project manager and team must determine if anyone involved with evaluating the bids has received any gifts or special treatment in violation of corporate policy. If a violation is identified, both the company employee and the vendor are excluded from the evaluation process.
The project team uses the evaluation matrix developed during Step 2 to compare the proposals for each vendor. The team reviews each proposal and scores it against each area outlined in the evaluation matrix. The purpose of the evaluation matrix is to help facilitate a thoughtful comparison between the proposals; the evaluation matrix is not used to determine a winner, although the highest scoring vendors is typically awarded the contract.
Once the team completes the initial evaluation, they eliminate the vendors that are the least likely fit for the project. The project manager will continue negotiations with the remaining vendors, typically two but not more than three vendors. The project manager might ask the vendors to modify proposals based on new information learned; the process continues until both the vendor and my company have developed a win-win contract. Finally, the project manager will select the vendor and award the contract. Huston (1996) approach is to award the contract to the vendor with the highest evaluation. However, as mentioned previously, my company uses the evaluation matrix as a tool to foster discussion and to help with the decision process, not a tool to make the decision for them.
Step 5—Contract Management
Once the contract is signed, the project manager must manage the contract and the vendor relationship to a successful completion. Some organizations have separate contract managers. However, for infrastructure projects, my company typically depends on its project managers to manage the contract. This differs from ongoing operations-related contracts which are usually handled by the affected department’s manager.
To help facilitate collaboration and communication, the project manager will typically add a person from the vendors organization to the project core team. The vendor representative is included in all discussions and decisions that impact the contract, scope, schedule, and costs for the project. Including the vendor and continuing to develop open relationships and communication is a key to successful project execution.
However, even with the inclusion of vendor representation within the project core team, keeping information updated and coordinated across multiple vendors is problematic. If a change is needed in one area of the project, the change often affects the work of more than one vendor. My company provides its vendors with a centralized document storage system for vendors to use to coordinate information across the project. The use of this tool, in addition to regular discussions with the core team helps to reduce disconnects between the key areas of the project team.
Step 6—Close Out Contract
The final step in the process, whether because the work is complete, or because the team determines the work is no longer needed, the project manager must close out the contracts. In a normal situation where the vendor has completed the work, the project manager will facilitate an acceptance process. During the acceptance process the project manager will use the acceptance criteria developed during Step 2 to review the work and obtain acceptance from the internal customer, typically the project sponsor or a designated alternate. If the customer identifies any deficiencies, the vendor will resolve as needed before the contract is closed.
After contracts are closed, the project manager will ensure all final payments are made for services and products. The project manager will also update the budget to ensure all costs have been recorded accurately. Finally, all project related documentation, including procurement and contract information, is archived in a document storage system and made available to other project managers for future reference on similar projects.
Conclusion
My company follows a similar procurement process as outlined by Huston (1996). The six steps, defining, selecting, preparing, evaluating, managing and closing are all important to obtaining the “goods and services in accordance with the technical, quality, schedule, and cost objectives of the project” (Huston, 1996, p. 3).
References
Huston, C. L. (1996). Management of Project Procurement. The McGraw-Hill Companies, Inc.
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