Contracting and Procurement in Project Management Essay - 1

Contracting and Procurement in Project Management - Essay Example Project procurement management is "the process of purchasing goods or services from the vendors" (Phillips, 2003). This very definition of the process suggest that the procurement is the process which involves external organizations as well as persons in the whole project management process. It therefore not only makes it more complicated but also a delicate job too as maintaining relationships with the vendors and suppliers sometimes become a very important element for the overall success of the project. Thus, it is of great importance that the procurement management should effectively be integrated into the overall process of project management so that project can get completed within budgeted times, costs and schedules. It is also important to understand that the process of procurement management is a phased process therefore it is not only time consuming but also need to have a more strategic outlook as it also provides an opportunity to develop long term relationships with the vendors. This presentation will present an overview of how the process of procurement management can fit into the whole project management besides discussing the various other aspects to get a braoder view of the whole process. Procurement is a process which requires the involvement of different resources including people, goods, services as well as other resources. It also involves the evaluation of tenders as well as estimation of different costs involved in the procurement process. This therefore requires that the project managers must take extreme care to manage different risks involved in the process. Since the process of procurement management involves different persons outside the project therefore project managers need to follow a systematic procedure. A procurement management process generally involves following processes: 1) Purchase and acquisition decisions 2) Contract Planning 3) Solicitation of seller responses 4) Selection of sellers 5) Administrating the contract 6) Contract closure The first phase of purchase and acquisition is about the determination of the different goods and services required to complete the project. This therefore requires that the project managers must clearly identify which project needs can be fulfilled through the procurement process. The emphasis, during this phase of the procurement, is mostly on what, how and when to acquire the resources required for the project. (Ghosh, 2007). Contract planning is the next important steps which require not only close monitoring of the existing policies and procedures of the firm but also require that the organization's strategic objectives and aims are achieved. It is important to understand that the very crux of the procurement management process is to make a conscious decision of whether to buy or build the resources required for the project to complete. It has also often been argued that the while planning for contracting, project managers must also take into account the various legal aspects of the contracting and that the drafting of the same should be done after taking into different legal as well as operational aspects of the contracting. While at the phase of the purchase and acquisition decisions, it is also important that the project managers must evaluate the seller responses after making acquisition decisions. It is quite possible that the project

Finance and Strategy Essay Example | Topics and Well Written Essays - 3000 words - 1

Finance and Strategy - Essay Example Working capital management is a keystone that determines the short term solvency position of the company. It shows the ability of the firm to meet its short term obligations with its short term resources. Usually it is required to pay off the suppliers, purchase raw materials, wages and other direct expenses related to the core business operations. It ensures the business perpetuity and sustainability (Matz, 2011). It is the difference between short term assets/ current assets and short term liabilities/ current liabilities. Working capital means net current assets i.e. when the current assets exceed current liabilities. A company is expected to have sufficient working capital to meet its current obligations; else it signifies a weak short term solvency position. Working capital includes the following items (Spurga, 2004): It is the time taken to convert the short term assets into cash to meet its short term liabilities. A longer cycle time means that a company takes long time to convert its current assets. For example, company X has a supplier payment period of 30 days and collection period of 60 days. Its working capital cycle is 30 days, resulting in a deficit of 30 days that needs to be financed through short term loans. Companies should aim to reduce its working capital cycle in order to reduce its cost of short term borrowing that impacts the income statement and balance sheet (Periasamy, 2009). The cash conversion cycle measures the cash to cash cycle. Business’ use cash to buy inventory, and produces goods which are sold in the market to earn cash. The measure of the time taken for employment of cash to earn cash is the cash conversion cycle. A longer cycle is significant of longer collection periods, which implies a slow cash conversion cycle. It is calculated by adding the days inventory outstanding to the days sales outstanding and subtracting the days payable outstanding. Each of the mentioned metrics has got