Project procurement management

Introduction

Procurement, the project management process or organisational activities which involves ''finding a contractor and aligning their skills with a project vision and needs'' Sliger (2008). Pauling suggested "The best way to have a good idea is to have lots of idea" and thus the processes is known to involve interviewing potential suppliers to enable sellection and contracting of the best eligible organisation in coordinations with the needs of projects schudule in coordination with project requirements.
Procurement management involves Plan purchasing and Acquisitions, Plan Contracting, Requesting of seller responds, selections of sellers, Contract administration, and contract closure in that sequential order. The essay will be aimed at analysing the traditional and Agile project management practices in the context of project procurement management.

Procurement management is the process that involves purchasing or acquisition of products, service or results needed from outside the project team to perform a project at stake. Procurement management includes the contract management and change control processes; administering any contract issues by the “buyer” organisation that is acquiring the project, being it services or product from the “seller” organisation and contractual obligation placed on the team.

Although Agile manifesto, value customer collaboration over contract negotiation; the practitioners go through procurement processes and the writing of contracts.

Analysis
The act of planning, writing, and administering contracts really doesn't change that much in agile projects (XP procurement), with the exception of:
· The need to educate parties as to what it means to work in an agile fashion.

· The project teams taking a more active role with the project manager in evaluating and selecting sellers and noting sellers' performance.
· Contract documents which are written and negotiated in face-to-face meetings.
· The contract may specify the expectations of the seller
working with an agile buyer or the expectations of an agile seller working with a buyer.
· Contract administration that is done such that contractors’ deliverables match iteration deliverables.
· Inclusion of Project retrospectives, in addition to iteration retrospectives which becomes useful for improvement in the overall contract delivery process


XP practices that is relevant to Procurement management
The planning process is divided into two parts:
Release Planning: This is focused on determining what requirements are included in which near-term releases, and when they should be delivered. The customers and developers are both part of this.
Iteration Planning: This plans the activities and tasks of the developers. In this process the customer is not involved (Extreme Programming Wiki)
User stories are a quick way of handling customer requirements without having to elaborate vast formalized requirement documents and without performing overloaded administrative tasks related to maintaining them. The intention with the user story is to be able to respond faster and with less overhead to rapidly changing real-world requirements and aids the procurement team and the project manager in their determination of what a project may require and hence selecting a qualified supplier for a given project
Benefit and limitation of user story for procurement management
XP and other agile methodologies favor face-to-face communication over comprehensive documentation and quick adaptation to change instead of fixation on the problem.
Benefits

·
Allowing developer and client to discuss requirements throughout the project lifetime
· Needing very little maintenance
· Only being considered at the time of use
· Maintaining a close customer contact
· Allow projects to be broken into small increments
· Suited to projects where the requirements are volatile or poorly understood. Iterations of discovery drive the refinement process.
· May be easier to estimate development effort
Limitations

· Without accompanying acceptance tests, they are open to interpretation which makes them difficult to use as the basis for agreement
· They require close customer contact throughout the project which in some cases may be difficult or may be unnecessary overhead
· Can have difficulty scaling to large projects.
· Rely more on competent developers
· User stories are regarded as conversation starters. Unfortunately they may not capture where the conversation ended and fail to serve as a form of reliable documentation of the system.



Comparing theoretical background of traditional PM and Agile approach to PM in the context of procurement management

Differences between traditional procurement management and agile

Traditional procurement
Agile
Plan contract and acquisition
Management plan is developed based on information from :
· Work breakdown structure
· Scope statement and the project management plan




Ask team for assistances:
· For providing products inputs and it plan for iteration release


Plan contracting

Whilst in you create the procurement document and evaluation criteria



In agile you meet with the team to
· Determine the best language for requeting for proposal
· Establish and review criteria for candidate evaluation


Requesting seller Responses

· Create qualified sellers list




Revisiting the list and reviewing with team, base on needs.




Selecting sellers
· Establishing of contract management plan



· Identification of end of an iteration for every activity


Contract Administration
· Determination of best ways to administer contracts



Engagement of team in definition and of expectations through daily stand up reviews


Contract closure
· Contract is closed and recording on the supplier is updated



Contract is only close with the supplier, by a confirmation of the customers acceptance of project deliverables





Similarities in agile and traditional procurement

Contracts

Some traditional approaches in contracting are adopted and used in agile; fixed Price contract type which usually involves fixed total price for well defined products which usually includes some incentives.(PMBok 2004); A refinement of Time and material contract type of contract by which the full value of the agreement and the exact quantity of the items to be delivered are not defined at the time of the contract.(PMBok 2004)
Other similarities throughout the procurement cycle:

· Conduction of bidder conferences when requesting bidder conference
· Creation of procurement document when planning to contract
· Receiving of proposals in requesting for sellers
· Using of tools to determine suppliers during the sellection of suppliers

The role of the project manager in the context of agile procurement management


On agile project, team is jointly responsible to manage the project and not the project manager alone. In Scrum agile methodology, in most of the cases project manger role is mapped to Scrum Master.
Agile Project Manager Responsibility as suggested by (toolbox, 2009) “… is not “boss” of the team who commands and control the team instead he is a facilitator who would serve and protect his team so that his team would give 100% to develop quality working software on time”
It goes on to explain that, “…the agile Project manager plays key role to facilitate the team, serve and protect team and resolve project impediments or blocking factors at right time”
In agile project the research into the criteria for buying criteria is a grass root involvement, which includes the team and the project manager (Facilitator).

The project manager and the project team have a key role to play in project procurement management, the following are some of their key active role through the procurement cycle

In the Plan contracting Phase:

· The project manager and/or team identify a buyer decision, and then the project manager prepares documentation to get the buyers response.

During the Selecting sellers phase:

· The project manager determines how status will be reported in accordance with the contract. As suggested by Sliger and Broderick (2008: 206) “…the project manager’s responsible to coordinate and facilitate the status reporting activities such that they satisfy the signers of the contract and yet still protect the team …”

At the contract Administration phase:

· The project manager and the project team helps the contract administrator, handling the contract to comprehend ways by which contract would be executed.

And finally at the contract closure phase:

· The project manager has a role to evaluate sellers and keeps records of the suppliers/sellers performance retrospectively.



Planning, estimating, and scheduling technique in Procurement management and how they help to reduce project uncertainty

Estimating Technique

The three most common estimating techniques suggested by Cohn (2006) which are:

· Expert opinion: An expert is consulted about the estimate of an activity, however in procurement management the team and the project manager doing the work does the estimate. This has been argued by Cohn (2006:54) that this “ approach is less useful on agile projects than on traditional projects”
· Analogy: Estimation technique by which all stories are not a single baseline or a universal reference. However, each new story against an assortment of those already estimated referred as triangulation.
· Disaggregation: The estimation solution of breaking large stories into smaller easily estimating piece.

Planning poker as an estimation technique bringing together experts opinion to estimate, as lively dialogue requiring justification, hence improving accuracy and removing uncertainty. Best approach for agile team to estimate by playing planning poker, recommend by Grenning(2002). Planning poker used to estimate the effort to complete a project and hence to determine the resources required. This technique to some extent eliminate uncertainty when making a buy or make decision in procurement management. As stated earlier, in agile procurement the team that do the work are involved in the process collaboratively from plan contracting to contract closure phases; it been argued by Cohn(2006) that "the best estimate are given by those that will do the work" and further suggested that "estimation should be a collaborative activity for the team"

Planning
Prioritizing as a planning tecnique suggest by Cohn; Is in itself a capability in determining the timeframe, the which and the quantity of the resources required. Since is a technique that supports a better decision making process cohn makes the following argument about the ability of planning which can aid in reducing procurement uncertainties. Cohn(2006) argued that planning could mitigate risk, as it reduces uncertainty about what the suppliers has to provide.
Planning provides an optimised plan to synchronise with the production plan and enables the real needs of the producers and suppliers to be balanced.


Scheduling
Tools and techniques relevant to scheduling are Iteration planning and user stories



· Iteration planning is a practice in scheduling where stories are turned to tasks for implementation(Beck,2000).Tasks are smaller than stories and a story cannot be delivered with a single task. The purpose of iteration planning is to enable the agile team commit to a functionality that they can complete in iteration. The agile team is also able to figure how many products that can be delivered in subsequent iterations. This practice can be linked to the lean principles of eliminating waste, amplifying learning process of suppliers who may have not work in agile delivering of services and products, team been able to decide just in time as to what the project may be required and delivered on schedule. The uncertainty about the contractor being able to work in agile environment could be reduced, procurement team scheduling requirement to match production.

· User stories are a quick way of handling customer requirements without having to elaborate vast formalized requirement documents and without performing overloaded administrative tasks related to maintaining them. The intention with the user story is to be able to respond faster and with less overhead to rapidly changing real-world requirements and aids the procurement team and the project manager in their determination of what a project may require and hence selecting a qualified supplier for a given project and schedule thus reducing uncertainty and having time supply.



Identified common issues using agile practice in large organisation, globally distributed teams and outsourced projects
Many of the problems facing large organisations arise because the teams are unwilling to adapt the project to reflect the continually changing customer requirement. According to Forrester research, 30 per cent of the software development projects currently fail due to unattainable requirement (Forrester 2004).
Some common issues facing large organisations using agile are cost of running project overrun , issues of relationships with the development team and businesses, Issues with team adaptation of the needs for change, issue of communication and collaborative working approach between team and businesses especially in situations where operating teams are in a distributed locations; the issue of mixing old and new working approaches to development, the issue of having in place the right support systems to manage the interface between agile and traditional approach. The Issues of having short development cycle time to attain a rapid, targeted delivery of projects.