2. Solicitations
• Deals with the planning necessary to solicit proposals from
qualified sellers.
• The old adage "be careful what you ask for . . . you may get
it".
3. Issues for Selecting Prospective
Suppliers
• There are several matters which must be considered when planning for
the solicitation of bids from prospective sellers.
• do we have past experience dealing with similar purchases?
• will we want to "pre-qualify" the potential suppliers prior to sending
out a solicitation?
• the dependability and stability of project funding. Is the project funded
with private or government funding, it does make a difference?
• will there be political pressures on the award of major procurements?
• are there special considerations incorporated in the prime contract
which must be addressed in selected procurements which will impact
solicitation planning?
4. Process of selecting prospective suppliers
1. Identify Needs: ("buy" listing)
1. Start with the identification of business needs and
requirements.
2. Market Research:
1. Conduct market research to identify potential suppliers.
1. This includes gathering information about suppliers’ capabilities,
product quality, pricing, and market reputation.
3. Preliminary Screening:
1. Perform a preliminary screening of suppliers based on initial
criteria such as product range, delivery capabilities, and
basic compliance.
1. Eliminate suppliers that do not meet these basic requirements.
4. Request for Information (RFI):
1. Send an RFI to the shortlisted suppliers to gather detailed
information about their offerings, financial stability, and
operational capabilities.
5. Evaluation of RFIs:
1. Evaluate the RFIs received from suppliers against
predetermined criteria.
1. Criteria may include product quality, cost, financial health, delivery
performance, and sustainability practices.
6. Request for Proposal (RFP):
1. Issue an RFP to the suppliers that passed the RFI evaluation.
1. The RFP should request detailed proposals including pricing,
delivery schedules, service agreements, and terms and conditions.
7. Evaluation of Proposals:
1. Conduct a thorough evaluation of the proposals
based on factors such as cost, quality, delivery
schedules, technical capability, and supplier reliability.
1. This may involve scoring the proposals against a predefined
scoring system.
8. Site Visits and Audits:
2. Arrange site visits and conduct audits of suppliers to
verify their capabilities and compliance with industry
standards and regulations.
9. Final Negotiations:
3. Engage in final negotiations with the top suppliers to
finalize terms and conditions.
1. This includes negotiating on price, delivery schedules,
service levels, and contractual terms.
10. Selection of Supplier(s):
4. Select the supplier(s) that best meet the business
needs and criteria.
1. Formalize the selection with contracts and agreements.
11. Ongoing Performance Monitoring:
5. Implement a system for ongoing monitoring of
supplier performance.
1. This involves regular reviews and assessments to ensure
that suppliers continue to meet expectations and
requirements.
5. Request for
Information (RFI)
• Request for Information (RFI)
• An RFI is a request for
information—a document that
formalizes the collection of
information on products, goods
and services from existing or
potential suppliers. The RFI
comes from a customer and is
sent to the supplier.
6. Request for Proposal (RFP)
• A request for proposal (RFP) is used to seek out vendors and contractors that can supply a company’s project
with necessary products and services that fall outside of what the soliciting organization can provide
internally. The RFP, then, is a document to source that work and allow vendors and contractors to bid for the
work.
7. Request for
Quotation (RFQ)
• A Request for Quote (RFQ),
sometimes called a request for a
quotation or an invitation for bid
(IFB), is part of the process of
securing procurements for a
project. The RFQ is a way to
narrow down the suppliers to
only those who can meet your
price range at a consistent rate.
The RFQ is often sent before the
request for proposal (RFP).
8. Similarities and use
• The RFQ and the RFP are similar documents in that each together or
separately is how the communications with suppliers begin. The RFP
provides details about the project and the service or materials needed.
• The RFQ more specifically is asking for how much that service or goods
will cost to set a price for the project.
• Using an RFQ is not exclusive to project management and can be found
across many industries.
• In project management, the RFQ is used as a mechanism in procurement
and helps the project managers meet the goals of their budget.
• They can then contract with suppliers or vendors who meet their
financial restrictions.
9. Statement of Work (SOW)
• Procurements are first identified during the planning phase of the project. For
every external contractor, there needs to be a statement of work (SOW) to serve
as a document outlining the work being contracted.
• A statement of work or SOW, is a legally binding agreement between a client and
a vendor, service provider or any party executing a project. It basically defines
the scope of work, and the agreed-upon conditions before the project start.
• Think of the statement of work as a bucket in which to collect all pertinent items
in a project. It not only highlights every aspect of the project scope such as the
activities, deliverables and milestones but also defines the timetable and
acceptance criteria over which the project will run and be completed.
• The statement of work is the granddaddy of project documents, as it is the first
you’ll create. It will show your plan and how you will execute it. Yes, it has that
much detail.
11. Significance of SOW
• Statement of Work (SOW)-A description of a product or service to be procured
under a contract; a statement of requirements. 2
• The SOW in the request for proposals (RFP) is the only official description of the
work requirement. Accordingly, it must provide the contractor with enough
information to develop and price the proposal—without the need for further
explanation.
• Question: if the Statement of Work (SOW) is so important, and it appears to be,
why is it that most procurements do not contain what is called a SOW document?
Answer: all procurements do in fact contain a SOW, they are just not called the
SOW. But all procurements whether they go under the title of a purchase order, a
contract, a subcontract, etc., will always contain the generic equivalent of a
statement of requirements, i.e., a SOW.
12. Question: Might the Seller's SOW someday be
superseded by the "Project WBS Dictionary"?
• seller's Statement of Work (SOW) has become a obsolete document on
most projects. if a project truly employs a Work Breakdown Structure
(WBS) to define their work, then takes the next step to describe the
defined project work in the form of a WBS Dictionary, there is no
further need to prepare a separate document for sellers. This idea has
some merit.
• Not only would this approach eliminate the need to prepare a
separate document, but the project would have both the project team
and the seller working with the same understanding of the work to be
done, the deliverables to be produced, etc.
13. The Buying Approach: Advertise, Solicit, Negotiate, Compete
• various companies use different methods and forms, often to achieve
the same purpose. Some companies will issue an Invitation to Bid
(ITB) or sometimes an Invitation for Bid (IFB) to obtain written
requests for quotes, bids, best prices from suppliers.
• When only information on a product or on a given company is
desired, the buyer will often issue a Request for Information (RFI)
form to the prospective companies. Some firms will use a Request for
Quote (RFQ) to obtain data, information, and sometimes firm quotes
leading to a subsequent buy.
• Point: different companies will have different standard forms to
achieve the same purpose
• However, if the item needed by the project is a complex buy,
something new which must be developed according to the project's
unique specification, most companies do employ a similar process:
15. Purchase Order Terms and Conditions(T&Cs)
• Definitions
• Agreement
• Delivery of Goods and Services
• Inspection; Acceptance and Rejection
• Price/Payment Terms.
• Taxes
• Hazardous Materials
• Legal Compliance; Workplace Safety
• Warranty Remedies
• Intellectual Property Rights.
• Confidentiality
• Insurance
• Indemnities etc (see word document)
16. the Requirements for Management
Oversight
• A number of factors will need to be considered by the project
team including: an assessment of the known risks, a
determination of how technically challenging the work may be,
any past experiences with the proposed seller, etc.
• Five elements of data should be required
1. a listing of all key tasks required to support the procurement;
2. a time phasing for each task;
3. a percentage or absolute dollar value for each task, which must sum to the total
contract value;
4. a monthly percentage complete estimate for each specified task; and finally
5. the earned value for each task, which is simply item (3) times item (4) which equals
item (5).
17. technical specification:
• The purpose of the technical specification is to define the features and
functions that the purchased product will perform, the physical
attributes, the limitations, design requirements, constraints, and the
environment in which the product will be used.
• It is critical that the buyer defines well what tite seller
• is expected to do to satisfy the contract, and then not change the
requirements once stated.
• Specifications will exist within companies under various titles:
Procurement Specifications; Product Specifications; Performance
Specifications; Design Specifications; Detailed Specifications; Functional
Specifications; Brand-name or Equal Specifications; Form fit or function
Specifications; etc.
18. Types of technical specifications
• Detail Design Specification
• The first type of specification provides virtually all of the technical
information that a supplier needs to fabricate materials or
equipment.
• Performance Specification
• The second type of specification provides performance criteria for
the materials or equipment.
19. Procurement Competition
• There are essentially three forms of competition we will
encounter:
• Full and open competition, anyone can bid on the job.
• Limited competition among pre-qualified sellers, sometimes
called two step procurements.
• Competition among selected sources (Small Business-
Disadvantaged Business Enterprise-Women Owned
Business)
