BUSI 415 Week 8 Project: Procurement Management Plan Example

Procurement Management Plan: Fairmont Hills Community Recreation Center

Purpose and Constraints

This plan describes how the City of Fairmont Hills will acquire the goods and services needed for the community recreation center. It applies Plan Procurement Management as the PMBOK Guide describes it (Project Management Institute, 2013) within the limits of the city's purchasing ordinance, which requires sealed competitive bids for construction contracts above $100,000, allows competitive proposals for professional services and technology, and requires council approval of any contract above $250,000. Dinsmore and Cabanis-Brewin (2014) note that public projects must plan procurement around such rules from the start, since they fix much of the schedule. The plan uses the roles from the resource plan and responds to the risks recorded in the project's risk register.

Several assumptions underlie it. The design documents are complete and approved, so construction can be bid on a fixed price. The city's general fund and a bond issue cover the budget, so no purchase depends on outside financing, except the energy rebate, which is treated as an opportunity. And the purchasing division can give the procurement officer the time listed in the resource calendar during bidding. Should one of these prove false, the affected package and its contract type will be reconsidered through change control, with the steering committee informed.

Make-or-Buy Decisions

Procurement Packages and Contract Types

The choice of contract type follows how well each package can be defined. In Bajari and Tadelis's (2001) model, a fixed price motivates the seller to hold down cost, yet each change then has to be bargained over, which makes fixed prices efficient for straightforward, fully specified work and cost reimbursement better for complex work that will evolve. Turner and Simister (2001) reach a parallel conclusion: the less certain the deliverable and the method of producing it, the more the contract should share risk rather than fix it.

The one package with real uncertainty, software configuration, is the one that does not get a firm fixed price. Using a cap keeps the city's exposure known while avoiding the change disputes a fixed price would invite.

Procurement Documents and Source Selection

Package P1 will use an invitation for bid with complete drawings and specifications, and award goes to the lowest responsive and responsible bidder, as the ordinance requires; bid alternates for the kitchen and outdoor court respond to risk R5. Packages P4 and P5 will use requests for proposals evaluated on the criteria below.

An evaluation panel of three, the procurement officer, the program coordinator and the IT specialist for P5 or the construction manager for P4, will score proposals independently before meeting. Scores are averaged, and the panel discusses any criterion on which members differ by more than two points before finalizing them. The two highest-scoring software vendors will be asked to demonstrate their systems using scripted scenarios, such as registering a family for a summer camp and issuing a refund, so that the functional score reflects what staff will actually do. Price proposals are opened only after the technical scores are recorded, which keeps the panel from being anchored by cost.

Procurement Schedule

Local and Small Business Participation

The city's purchasing ordinance encourages participation by local and small businesses without setting quotas. The procurement officer will advertise the construction bid through the regional builders' exchange and hold a pre-bid meeting at which the general contractors can meet local subcontractors. For the furniture package, the lot structure allows smaller dealers to bid on individual lots, such as fitness equipment or kitchen equipment, rather than the whole package. These steps widen competition, which also supports the response to risk R5, too few bidders.

Roles and Authority

The procurement officer issues solicitations, receives bids and proposals, and drafts contracts. The project manager approves technical requirements and recommends award. The city manager signs contracts up to $250,000; the council approves larger ones. Only the procurement officer may communicate with bidders during a solicitation, to keep the process fair.

Contract Administration and Change Control

The construction manager administers P1, reviewing monthly pay applications against work in place and retaining 5 percent until final completion. Contract changes are handled through the integrated change control process: the contractor submits a change request with cost and time, the construction manager reviews it, and approval follows the thresholds in the communication plan. Claims are logged and answered in writing within fourteen days. Seller performance is reviewed at each monthly progress meeting. For the construction contract, the construction manager tracks schedule progress against the contractor's baseline, the number of open requests for information and their age, inspection failures and safety incidents. For the furniture and software vendors, the procurement officer tracks delivery dates and defects. A seller that falls behind receives a written notice describing the problem and asking for a recovery plan within seven days, and repeated problems are documented for the city's vendor performance file, which is consulted in future awards. Most disputes are expected to be settled at the project level; those that are not go to the city attorney.

Closing Procurements

Each contract is closed after the work is accepted, warranties and manuals are received, final payment is made and lessons learned are recorded. Retainage on P1 is released after the punch list is complete and the certificate of occupancy is issued. Procurement files are kept for the period required by the city's records schedule.

Biblical Integration

Deuteronomy forbids taking advantage of a poor laborer and tells employers to hand over the day's pay before nightfall, since the worker is counting on it (English Standard Version Bible, 2001/2016, Deuteronomy 24:14-15). Small subcontractors on a public project often wait months for money that has already been paid to the general contractor. This plan therefore requires P1 to include a prompt payment clause that gives the contractor ten days after each city payment to pass the money on to its subcontractors, and the construction manager will check payment certifications with each pay application.

Conclusion

This plan sets out what the city will make and buy, how each package will be contracted and why, how sellers will be selected and managed, and how contracts will be closed. Its contract choices respond directly to the risks identified in the risk register, completing a set of plans in which staffing, communication, risk and procurement fit one another.

References

Bajari, P., & Tadelis, S. (2001). Incentives versus transaction costs: A theory of procurement contracts. RAND Journal of Economics, 32(3), 387-407. https://doi.org/10.2307/2696361

Dinsmore, P. C., & Cabanis-Brewin, J. (Eds.). (2014). The AMA handbook of project management (4th ed.). AMACOM.

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Project Management Institute. (2013). A guide to the project management body of knowledge (PMBOK guide) (5th ed.). Project Management Institute.

Turner, J. R., & Simister, S. J. (2001). Project contract management and a theory of organization. International Journal of Project Management, 19(8), 457-464. https://doi.org/10.1016/S0263-7863(01)00051-5