Project Procurement Management

For complex projects with huge capital, procurement management plays a vital role on the project success by optimizing the selection of the source of materials, services, equipment complying with the requirements of project with the best price, and meeting the project schedule.

Procurement management implements processes, policies, regulations and procedures to meet the following objectives: result in a good return on investment, satisfying the requirements of project, safety and meeting industry and legislatives, and for health and safety and for environmental performance.

Procurement management also requires the good coordination among divisions within the project, the coordination between procurement team and technical teams, the coordination between procurement team with suppliers and sellers. Only a good coordination among participants in project including internal and external can give contribution to make project procurement management to be effective.

On the other hand, unlike other ordinary projects, petroleum projects require huge capital investment and the characteristics of petroleum project is high profit – high risk so that the weakness from preparation and acquisition of materials, equipments, services can create the risks on project which have impacts on cost, quality, safety, and schedule. This report presents the overview about procurement management in petroleum industry. Mr. Truong Thoi Nhiem made a case study aimed to identify the strengths and weakness in procurement of upstream projects and combination theories in order to have solutions for improvement of project procurement management.

Conclusion

Based on this case study, procurement management plays vital role in project implementation. All materials, services we purchase to assist project is important. All purchased category should be used and be ready in time to assist the needs of the project. The shortcoming of materials, services arising from the poor procurement process can lead delay in project schedule.

The nature of exploration – production projects is high risk – high profit in which costs for procurement of materials and services are huge. The requirements for materials and services are very strict and high, so the procurement management in oil and gas project plays an important role in successful project. Procurement process and policies should be prepared carefully and approved prior commencement of the project.

The factors such as:

(i) The establishment of standards, requirements for products services being supplied, and schedule of goods delivery in the stage of procurement planning;

(ii) Good preparation of procurement documents and evaluation criteria in selection of best suppliers for project at the stage of solicitation;

(iii) Application of tools and technique to supervise and monitor the performance of contract awarded to the sellers in the stage of contract administration and finish at the stage of contract close – out with liquidation of procurement contracts;

(iv) Right selection of procurement team and clear definition of their responsibilities are the keys to run project procurement successfully.

His thesis abstract is copied ang posted below:

Abstract

Project Procurement Management plays a vital role in implementing petroleum project. It normally departs when the project is officially approved by authority investors. The phases of Project Procurement Management comprise of procurement planning, solicitation planning, solicitation, source selection, contract administration and contract close- out.

The purpose of Project Procurement Management is to ensure that the acquisition of materials, services or works from suppliers in comply with the requirements and schedule of project with competitive price.

The effort of this report is going to make clear the project procurement process in order to achieve to the goals of project.