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Contracting Process Paper
For projects to meet the necessary demands of their customers, it becomes imperative that
an organization creates a deep relationship with its suppliers/vendors. Having their needs in a
contract, in writing, provides the conduit that is needed to manage that relationship. Along those
lines, we have an outline and will explain the high-level process steps for conducting project
procurements, introduce contract administrations policies and procedures, and describe the tools
and techniques used for that process. Along with, techniques for conflict resolution used to
manage the contract relationship, then what steps will be taken to close out project procurements
and their importance. Finally, examining external influences on the procurement management
process and risk management process, and examining the relationship between the risk response
plan and those external influences.
High-level Steps for Conducting Project Procurement
There are a number of high-level steps that help make up the framework on how to obtain
goods and services necessary to complete any project. Here are a few steps:
1. Project Procurement Plan – a summary of how the project team plans, executes, monitors
and controls, and closes any and all procurements connected to this project.
2. Make or Buy Analysis – helps to decide whether the product will be made in-house that
is higher cost or outsourced at a lower rate and made elsewhere.
3. Procurement Documents – gives the project team a way to communicate with vendors
bidding, what the needs of project procurement are.
4. Source Selection Criteria – used to measure and grade the responses from vendors and/or
suppliers to the request for proposals. This helps to ensure that the proposal selected will
offer the best quality for the services required (Project Management Institute, 2017).
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Contract Administration Policies and Procedures
Contract Administration is the management of all actions taken to assure compliance with
the terms of the contract after award (University of Mary Washington, 2022). This process
begins during the Request for Proposal (RFP) as part of the contract terms and scope of work
(SOW) specifications (Montclair State University, 2018). It is managed by the contract
administrator who is responsible for understanding terms of the contract, managing, and
monitoring any changes, making certain the goods and services meet contract needs, preserving
documentation, and closing the contract out. No matter what type of contract, every organization
will create policies and procedures to walk them through the process. Here are a few of the most
common policies and procedures in contract administration:
1. Project Scope Definition – the scope defines the details of all the work that will be
completed on the project.
2. Source Selection Criteria – this criterion is used as a necessary process to identify and
select the most qualified suppliers/vendors. Procedures will show what the minimum
criteria is that must be met.
3. Terms of Payment Statement – States the terms of the payment, detailing how the
contract work believes they will be invoiced and paid, taking into account any
adjustments made.
Tools and Techniques for Contract Administration
In order to manage contract administration, a number of tools and techniques are needed
to procure contracts. Below are the tools and techniques used for contract administration in the
procurement process:
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1. Contract change control process – this provides the steps needed to be taken for the
modification and/or alteration of the contract, and who is responsible for approving any
changes.
2. Procurement performance reviews – the process used to evaluate suppliers/vendors and
how their feedback is provided. These types of reviews monitor metrics like on time
delivery, cost, and quality.
3. Inspections and audits – these specifically give a checklist on reviewing and auditing
contracts, ensuring all contract terms are in compliance with scope.
4. Performance reporting – provides what tools are used to gather updates on performance.
5. Payment process – this process provides the method of payment made or billed under the
contract terms. If you see n/30, or n/60, this refers to the net days before the invoice is
due, meaning n/30 must be paid within thirty days and so on.
6. Records management system (RMS) – this system will operate as a document warehouse
for the contract and all other project documentation.
Conflict Resolution Techniques in Contractual Relationships
Conflict is unavoidable and for certain must be managed effectively. If the contractual
relationship is not monitored for conflict, it can have a negative impact on the project, project
team, and project management as a whole. This can cause low productivity, low team morale,
and absolutely affect the quality of work. Even before you get into a contractual relationship, a
plan needs to be in place that deals with the resolution of conflict in case it occurs, this can be in
a conflict response plan. Techniques a Project Manager (PM) can use to find a resolution are
negotiation (the back and forth between two parties), mediation (an impartial person hears both
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sides to reach a mutually beneficial agreement), and lastly, arbitration (remarkably similar to
mediation, however, the impartial person makes the final decision for resolution).
Steps to Close Project Procurement and Accounts and Importance
Every project comes to a close at one time or another, but in project management we use
closure procurements to make sure all loose ends are tied up. “As each work activity is
completed, the process of ensuring every procurement has been finalized, all conditions have
been met, and payments have been completed is called closing procurements” (Wilson, 2015).
There are seven steps to discuss when closing out project procurements. First, review the
performance of the supplier/vendor to characterize the conduct and professionalism of each.
Second, verify the details of any change requirements to ensure compliance of the final
deliverable. Third, confirm the deliverable met expectations, delivered, inspected, quality
checked, and no damage was done. Fourth, send a formal statement of release to
suppliers/vendors and team members that the project has been closed. Fifth, conduct a project
review to evaluate successes and/or failures to identify any areas of improvement. Sixth, archive
any documents used in the project so they may be referred to in the future. And, lastly, celebrate
securing the last payment, and the conclusion of the project, including, all the hours the team put
in, and get that final payment.
External Influences on Procurement and Risk Management Process
Procurement Management Process
Who a project chooses to do business with and how can all be affected by external factors
in the procurement management process. Financial forces, political forces, technological forces,
and socio-cultural/environmental forces are external entities that at any moment can have a
major affect on how business is done, causing the project to become vulnerable.
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Risk Management Process
External risks are outside the control of the project team and its members and the host
organization. These types of risks are difficult to predict and manage, like bankruptcies, war,
crime, and economic global expansion, however, they directly threaten the project and whether it
will succeed. This can catch project managers off guard because they have inadequately analyzed
these external dangers.
Relationship Between Risk Response Plan and External Influences
External influences happen from a variety of occurrences, factors like the environment,
politics, religion, education, and needs within the community. Any of these factors have the
power to influence and change in the relationship to risk response planning, and that creates a
risk that could be damming to the project. Even though the relationship is risky, certain risks
mature, some evolve and change, others can be addressed with ease. These external influences
can be dealt with using risk avoidance, transfer, mitigation, and acceptance. A complete
understanding of what could happen will provide the project team with a record of external
influences that can be dealt with using best practices to reduce, avoid, transfer, or mitigate
through the risk response plan.
Conclusion
We have outlined and explained what the high-level process steps are for conducting
project procurements, introduced the policies and procedures for contract administration, and
described the tools and techniques that contract administration utilizes. We discussed conflict
resolutions that are used in managing contractual relationships. Then, outlining the steps used to
close out project procurements and explaining the importance of the close out process. As a final
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point, we examined the relationship between the risk response plan and the external influences
that are known to affect the projects outcome.
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References
Montclair State University. (2018). Policies and Procedures.
https://www.montclair.edu/university-policies/wp-
content/uploads/sites/205/2018/09/ContractManagementPolicy.pdf?
Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge
(6th ed.). PMBOK guide.
University of Mary Washington. (2022). Procurement Services.
https://adminfinance.umw.edu/procurement/umw-policies-and-procedures-2/contracts-
2/contract-administration/
Wilson, R. (2015). Mastering Risk and Procurement in Project Management: A Guide to
Planning, Controlling, and Resolving Unexpected Problems. Pearson.
