The role of vendor selection practices in raising the level of project procurement management

Posted on Jun 06, 2023 at 09:06 PM

The vendor selection process plays an essential role in project procurement management; As they affect the project's likelihood of success or failure, many practices have emerged to take into account when managing procurement in a project.

In this article, we will learn about the top 7 practices to install, to improve project procurement management by reading.

What are the best practices of project procurement management?

There are a large number of effective project procurement management practices, and the following list of techniques is the most important:

• Conduct a comprehensive market search:

One of the essential practices of managing a project's purchases is to conduct a comprehensive range of market research you want to access; This phase involves conducting a detailed market analysis and studies to identify potential vendors and gathers information about them and the products and services they provide.

This study and research offer project managers the ability to understand how vendors compete, quality, cost or otherwise, as well as know the direction of the industry and how to price, and determine what the potential risks associated with procurement or sales management are, remember that without this research managers cannot manage projects, make the right decisions, or choose the right vendors for projects.

• Identification of project requirements:

At the outset of project management, comprehensive planning determines the project's requirements. So that the vendor can understand what to have of it; this practice involves more detailed identification and management of the project's standard specifications and needs. This phase includes:

1. Quality standards.
2. Technical requirements
3. Project timetable.

Also, to any project-related standard that vendors (or project procurement management section) may find necessary.

Detailed and accurate project requirements help to drop the confusion and anxiety that a vendor or member of the Procurement Management Section may have. Thus, clear conditions allow vendors to submit proposals for improved project procurement management and timely delivery of what they need.

• Improving effective communication:

Effective vendor communication is the key to effective and successful procurement management; The project team must establish clear communication channels with vendors or suppliers and maintain comprehensive and regular contact with them throughout the project's procurement process.

Vendor outreach should include the following:

1. Provide vendors with all information about the project and its requirements and expectations.
   
2. Respond immediately to all their questions and concerns.
   
3. Solve problems that a vendor may raise.

Remember that any project manager can establish collaborative professional relationships with vendors by developing the communication process with vendors. In contrast, ensuring continuity and success for both parties.

You may have to conduct training courses such as human resources management courses and project management courses London to improve your staff's management and communication skills.

• Effective negotiations to reach satisfactory contracts:

When negotiating with vendors to establish arrangements, it is necessary to develop the previous stage (effective communication) so that project managers must engage in negotiation processes to reach an agreement that ensures the benefit of the company's projects on the one hand and the vendors on the other.

The vendor negotiation process involves identifying several essential things, most:

• Appropriate pricing for the project budget management.
• Payment system and conditions (checks, cash, instalments, etc.).
• Setting Timetables to receive project requirements from vendors.
• To document the contract and provide all guarantees to both parties.
• Identify and manage property rights with an appropriate mechanism for resolving disputes and disputes.

The skill of negotiating with vendors is essential, which helps project managers provide premium bidding models for the project, as well as manage and minimise risks that may arise as much as possible.

• Formation of a particular contract department:

After concluding the project contracts, we should develop effective contract management to ensure vendors' compliance with project requirements. This practice or phase includes several actions, including:

1. Documentation of contractual obligations between both parties.
2. Track vendor performance and compare it with agreed standards.
3. Manage changes and differences in the purchased quantity or the contract's content.

This practice aims to minimise the risks that may arise in the future, ensure that vendors do not change their obligations to the project program, and achieve productive and friendly relationships with them.

• Vendor performance monitoring and evaluation:

Monitoring and evaluating vendor performance is most important in the project procurement management process, ensuring vendors' commitment and fulfilment of all contract terms without prejudice to any of them, as well as providing services, goods, and products at reasonable prices and of high quality.

Vendors' performance can only be evaluated by formulating a critical concept, Key performance indicators (KPI). These indicators help measure the vendor's performance and know its direction in dealing with the project.

They allow for identifying areas where the vendor can improve with the possibility of providing the vendor with practical advice and observation to enhance its regulatory work.

Periodic audit and evaluation of the Organization's procurement processes:

Regular audits and assessments increase the level of project procurement management. They allow the identification of corporate weaknesses and strengths and the identification of areas of improvement. The following can consider the most critical actions within this practice:

• Analysis and study of key performance measurement indicators developed in the previous step.
• Carry out periodic audits and follow-ups of purchases or orders of materials occurring in the company (such as contract management, vendor selection, general procurement performance, etc.).
• Assess the usefulness of different procurement tasks performed by any company division.
• Remember that by using this practice, you can identify weaknesses, strengths, the procurement management cycle, and the company's stakeholders more efficiently.

In conclusion, 

past vendor selection practices are among the essential items to consider in project procurement management. However, remember that the vendor selection process cannot be only these practices but a large number to implement, based on the nature of companies' programs, projects and objectives.