Enlightening Quotes and Insights on Project Procurement Management

2. Project Procurement Management Prof. Dr. Attaullah Shah

3. O mankind, indeed We have created you from male and female and made you peoples and tribes that you may know one another. Indeed, the most noble of you in the sight of Allah is the most righteous of you. Indeed, Allah is Knowing and Acquainted. O you who have believed, avoid much [negative] assumption. Indeed, some assumption is sin. And do not spy or backbite each other. Would one of you like to eat the flesh of his brother when dead? You would detest it. And fear Allah ; indeed, Allah is Accepting of repentance and Merciful.

4. Some quotes about procurement • Labor was the first price, the original purchase - money that was paid for all things. It was not by gold or by silver, but by labor, that all wealth of the world was originally purchased. Adam Smith • “Property may be destroyed and money may lose its purchasing power; but character, health, knowledge and good judgment will always be in demand under all conditions.”  Roger Babson • “Men use care in purchasing a horse, and are neglectful in choosing friends”  John Muir. • Purchasing power is a license to purchase power.”  Raoul Vaneigem • “Excellence in any department can be attained only by the labor of a lifetime; it is not to be purchased at a lesser price.”  Samuel Johnson

5. Some quotes….. • Passion can never purchase what true love desires: true intimacy, self-giving, and commitment” • “Experts agree that the best type of computer for your individual needs is one that comes on the market about two days after you actually purchase some other computer.”  Dave Barry • It takes me a long time to make a big purchase. Jessica Chastain • If a man will make a purchase of a chance he must abide by the consequences. Richard Richards

6. “Self-pity is our worst enemy & if we yield to it, we can never do anything wise in this world” - Helen Keller

7. CITY UNIVERSITY OF SCIENCE AND INFORMATION TECHNOLOGY, PESHAWAR

8. Bio details of the Speaker • Dr. Attaullah Shah • Vice Chancellor City University of Science and IT Peshawar • Previously Director ( Planning and Projects AIOU) • pdaiou@yahoo.com. pd@aiou.edu.pk, www.drshahpak.weebly.com • +92-333-5729809, +92-51-9057212 • Qualification • PhD Civil Engineering ,M.Phil Eco ,MSc Structure Engg • MBA, MA Eco, MSc EnvirDesign,BSc Civil Engg (Gold Medal), Post Grad Dip Comp (Gold Medal) • Professional and Field experience: • 25+ Years • Research Publications in refereed journals and conferences: • 25 Journals publications+55 Conference publications • Areas of interests • Structural Engineering • Sustainable built Environment • Construction project Management

9. Engineering Programs: Fall 2015 (Aug-Feb)BS Electrical Engineering – Telecom – Power- Electronics BS Civil Engineering MS Electrical Engineering MS Engineering Management MS Civil Engineering PhD Electrical Engineering

10. Faculty of Engineering (PhD faculty • Prof. Dr. Nauman Khan Dean F/O Engineering • Electrical Engineering • Prof. Dr. Sahibzada Fayyaz Noor • Associate Professor Dr. Nasimullah Khan • Assistant Anisullah Khan • Asstt. Prof. Engr. Abraiz Khattak ( PhD Comp/Defense awaited) • Asstt. Prof. Fazal Mohd ( PhD Scholar GIK/CityU sponsored) • Civil Engineering: • Prof. Dr. Attaullah Shah • Assistant Prof. Shahab Samad • Shared faculty • Prof. Dr. Anwar Fazil Chishti (Economics/Management) • Prof. Dr. Jehanzeb (Economics/Management) • Asstt. Prof. Muhammad Tahir ( Computer Science) • Asstt. Prof. Ghufranullah Khan ( Computer Science)

11. What is a Project? • An temporary endeavor to create a Unique Product or Service. • A unique one time effort bound by cost, time and resources/technical performance ( CST) and has defined objectives to satisfy the customer needs. • Project is an undertaking having definite objectives, and specific beginning and ending points, limited budgets, defined scope. • Sum of certain activities and tasks required to be performed in a specified period of time with human and non-human resources for specified objectives. ( Is your training a project? )

12. What is a Project? • Project is a one time non-routine opportunity to develop a new product. To satisfy the customer to achieve the organizational objectives. To be completed with in • Allocated budget. • Scheduled Time. • Approved Technical Performance. • Approved and agreed Scope of Work. • Without any change in the existing culture.

13. What is management?The process of Planning, Organizing, Staffing, controlling and leading. Project management: The art of Directing and coordinating the human and non human Resources throughout the life of project by using modern Management techniques to achieve pre-determined objectives of scope, cost, time, quality and participants satisfaction. ( Project Management Institute America) • Project management includes: • Project Appraisal ( Before Commencement of Project PC-I, PC-II). • Project monitoring. ( During Execution of the Projects PC-III) • Project Evaluation ( After Completion of the projects. PC-IV,PC-V)

14. Complete Establish Execute Project Life Cycle: Three Stages of a Project • Define project objectives, scope and approach, mobilise project team • Execute the work plan to achieve desired outcome • Wrap up and transition

15. Complete Establish Execute Project Stages & Project Management Model • Define project objectives, scope & approach, mobilise project team • Execute the work plan to achieve desired outcome • Wrap up and transition Project Selection Confirm Definition Complete Project Planthe Execution Report Status Control the Work Organise Resources

16. Project Selection • Define Project Scope • Define Project Objectives • Define Approach • Define Business Case • Select Best Projects Project Stages & Project Management Model Establish Project Selection Confirm Definition

17. Project Stages & Project Management Model Establish Confirm Definition • Understand Project Sponsor expectations • Understand Project Scope • Understand Project Objectives • Confirm any assumptions • Identify Project Risks Project Selection Confirm Definition

18. Project Stages & Project Management Model Execute Plan the Execution • Define Project Deliverables • Develop Work Plans • Develop Scope, Change Control, Issue Management and Sign-off Processes • Develop Risk Mitigation Plan • Develop Quality Plan Plan the Execution Report Status Control the Work Organise Resources

19. Project Stages & Project Management Model Execute Organise Resources • Identify Project Team Roles / Responsibilities • Assign Team Members to Work Plan tasks • Communicate responsibilities, target dates, deliverables • Train Team Members • Organise physical resources Plan the Execution Report Status Control theWork Organise Resources

20. Project Stages & Project Management Model Execute Control the Work • Monitor work progress • Resolve issues • Measure performance Plan the Execution Report Status Control the Work Organise Resources

21. Project Stages & Project Management Model Execute Report Status • Assess project progress • Prepare status reports • Communicate progress to relevant audience group • Follow up any issues resulting from status meeting Plan the Execution Report Status Control the Work Organise Resources

22. Project Stages & Project Management Model Complete Complete Project • Complete any development / administrative activities • Obtain sign-off of final project deliverables • Transition to maintenance team where appropriate Complete Project

23. Information Technology Project Management, Fourth Edition

24. Suggested Skills for Project Managers • Project managers need a wide variety of skills. • They should: • Be comfortable with change. • Understand the organizations they work in and with. (who to go to, SOP, etc) • Lead teams to accomplish project goals.

25. Suggested Skills for Project Managers • Project managers need both “hard” and “soft” skills. • Hard skills include product knowledge and knowing how to use various project management tools and techniques. • Soft skills include being able to work with various types of people.

26. Successful ^ Suggested Skills for Project Managers • Communication skills: Listens, persuades. • Organizational skills: Plans, sets goals, analyzes. • Team-building skills: Shows empathy, motivates, promotes esprit de corps. • Leadership skills: Sets examples, provides vision (big picture), delegates, positive, energetic. • Coping skills: Flexible, creative, patient, persistent. • Technology skills: Experience, project knowledge.

27. Leadership and professionalism are crucial. Know what your sponsor expects from the project, and learn from your mistakes. Trust your team and delegate decisions. Know the business. Stand up for yourself. Be a team player. Stay organized and don’t be overly emotional. Work on projects and for people you believe in. Think outside the box. There is some luck involved in project management, and you should always aim high. Media Snapshot – Good Project Management Skills from The Apprentice

28. The Project Management Profession • Professional societies such as the Project Management Institute (PMI) have grown significantly. PMI • There are specific interest groups in many areas, such as engineering, financial services, health care, and IT. • Project management research and certification programs continue to grow.

29. Project Management Certification • PMI provides certification as a Project Management Professional (PMP). • A PMP has documented sufficient project experience, agreed to follow a code of ethics, and passed the PMP exam. • The number of people earning PMP certification is increasing quickly. • PMI and other organizations are offering new certification programs

30. Growth in PMP Certification, 1993-2003

31. Project management ProcessesPMI approach • Five Processes. • Initiating: Authorizing the project or phase • Planning: Defining Objectives and selecting approach • Execution: Managing human and non human resources to execute the project. • Controlling: Monitoring, evaluation and correcting • Closing: Formal acceptance and close out.

32. Nine Project Management Knowledge Areas • Knowledge areas describe the key competencies that project managers must develop. • Four core knowledge areas lead to specific project objectives (scope, time, cost, and quality). • Four facilitating knowledge areas are the means through which the project objectives are achieved (human resources, communication, risk, and procurement management). • One knowledge area (project integration management) affects and is affected by all of the other knowledge areas. • All knowledge areas are important!

33. A Framework for Project Management

34. Construction Project Lifecycle

35. Procurement Management • Procurement is acquisition of goods and services. • Project Procurement Management includes the contract management and change control processes required to administer contracts or purchase orders issued by authorized project team members.

36. Procurement of Items • Procurement means the activities related to purchase, subcontracted items • Procurement items are usually classified as goods, work or services (GWS) • Goods represent raw material or produced items • Work means contracted labor • Service means consultation • Planning, budgeting, scheduling and follow-up control of all fall under procurement management • Logistics plan includes everything related to the transport and storage of materials for the projects. GWS items cannot be scheduled to arrive just-in-time (JIT). Provision must be made to store and protect them until they are needed.

37. Procurement Management • Procurement management refers to planning and control of the following • Equipment , material or components designed and provided by vendors specifically for the project • It may be a portion of a work package or entire work package • It may be off-the-shelf (OTS) equipment and components • bulk material, like cement, metal piping etc. • Consumables items; nails, bolts, lubricants • Support equipment for construction, cranes, lifts etc • Administrative equipment, computers, project office facilities

38. Industrial Project Cost Distribution

39. Project Procurement Management Processes and Key Outputs

40. Procurement Cycle • Plan Purchases and Acquisitions. Determining what to purchase or acquire and determining when and how. • Purchase of equipment • Procurement of works • Procurement of supplies etc • Plan Contracting – documenting products, services, and results requirements and identifying potential sellers. • Developing the requisite documents • Specification • No and make etc.

41. Request Seller Responses. • obtaining information, quotations, bids, offers ,or proposals, as appropriate. • Inviting bids • Inviting quotations • Request for Proposals ( RPFs) • Expression of Interest ( EOI) etc. • Select Sellers. • Reviewing offers, choosing among potential sellers, and negotiating a written contract with each seller. • Tender/bids opening • Evaluation and Assessment of bids • Negotiation if required and allowed • Selection of the seller/contractor

42. Contract Administration – • Managing the contract and relationship between the buyer and seller. • Reviewing and documenting how a seller is performing or has performed to establish required corrective actions • Provide a basis for future relationships with the seller, • Managing contract-related changes and, when appropriate, • Managing the contractual relationship with the outside buyer. • Contract Agreement • Contract Closure – • completing and settling each contract, including the resolution of any open items, • Closing each contract applicable to the project or a project phase.

43. Procurement Planning • Procurement planning involves identifying which project needs can be best met by using products or services outside the organization. It includes deciding • whether to procure • how to procure • what to procure • how much to procure • when to procure

44. Procurement Planning • Contract Types • Different types of contracts are more or less appropriate for Different types of purchases. • Fixed-price or lump-sum contracts. • Cost-reimbursable contracts.( cost Plus) • Time and Material (T&M) contracts. • Fixed Price contracts • Fixed price or lump sum - Cost price with re-determination • Fixed price plus incentive fee. • Fixed price plus economic price adjustment • Fixed price with successive targets incentives • Fixed price for service material and labor at cost. • Time and material labor hours only. • Others methods: • Turnkey • Bonus - Penalty • Joint venture • Combination of the above • BOOT ( Build Operate Own and Transfer • BOT ( Build Operate and Transfer) • Build Lease and Transfer ( BLT)

45. Selection of project delivery system • All project delivery systems include three participants • Owner, designer and construction organization • Their relationships vary according to the different systems and ownerships. • Project delivery systems • Traditional design–tender–build ( Design Bid Build) • choice for owners of most construction projects during many centuries

46. Design–build Single contract with an organization that becomes responsible for both the design and the construction of the project One of the primary reasons for low productivity in the construction industry is the lack of integration of activities across the project life cycle. The Design–Build Institute of America (1994) lists potential benefits from the design–build method as follows. Singular responsibility. - Quality. - Cost savings. Time savings. - Potential for reduced administrative burden Early knowledge of firm costs. - Balanced award criteria. Risk Management

48. Disadvantages of Design and Build: • Importance of the project brief: Difficult when scope not defined • Difficulty of establishing a price for the work. • Costly tendering • Short tender periods • Potential low quality. • Less control over subcontractor and consultant selection. • Generally less control by the owner over both project definition and execution than design–tender–build projects.

49. Project manager Adding a project manager between the owner and the architect/engineer and general contractor This arrangement implies that the project manager contracts with the designer and the general contractor.

50. Separate prime contracts • The owner contracts directly with individual specialty contractors, each of whom can be considered as a ‘prime’ contractor. • There is no single general contractor to coordinate their work. • An ‘agency’ construction manager may be engaged , who will assist the owner in this coordination, but the chart makes it clear that the construction Manager is not related contractually to the several prime contractors.