agip karachaganak
Industrial Project Management
Contract & Procurement Module
Kazakhstan, 2021
Introduction
Objectives
Develop knowledge and awareness of the contract and procurement process within the industrial project
management, including the awareness of the project procurement management methods and techniques,
contract management, commercial and legal aspects of construction contracts.
Develop the awareness of the role played by procurement in the overall success of the project.
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Index
Day 1 – General information about contracts, contract & procurement process. Specific terms, definitions and main
roles in Contract & Procurement. Procurement planning.
Day 2 - Project Management and Project Procurement Management. The role of Procurement in different stages of
project development.
Day 3 - Project Procurement Contract Strategy (PPCS). Main principles of preparation of PPCS.
Day 4 - Project Procurement Contract Strategy – Case study. Home task: to draft alternative Project Contract
Strategy.
Day 5 - Review of home task on alternative Contract Strategy. Identification of needs and initiation of the
procurement process. Purchase Requisition. Tender Evaluation Plan. Contract Strategy.
Day 6 – Tender Evaluation Plan - Practical session.
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Index
Day 7 – Invitation to tender/Request for Bid. Negotiation. Evaluation of Bids.
Day 8 - Practical session. Review of TEP for any of Work Packages under “Black Pearl” project. Negotiation game.
Vendor management. Due Dilligence (Supplier Risk Assessment).
Day 9 – Structure of the Contract. Walking through the contract terms and conditions. Liabilities & Indemnities.
Day 10 - Contract Execution - Post award phase.
Day 11 - Variation Orders vs Amendment in Construction Contracts. Guest lecture.
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Index
Day 12- Resume. Final exam.
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Industrial Project Management
Day 1 - General information about contracts, contract &
procurement process. Specific terms, definitions and main roles
in Contract & Procurement
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Contract
Most people do not know or they don’t realize that they stipulate contracts almost every day, starting in the
morning when they ask and pay for a coffee and continuing they refuel their car, open a bank account or buy
something.
For many people, the term “Contract” represents a sheet of paper with some information, and often they don’t
have a clear picture of what a contract really is and what are its legal effects or how it affects the relations
between physical persons, companies, governmental and other entities.
Contracts represent a very important instrument used not only in business but in everyday life. They are of
paramount importance to help people and business to establish, maintain, enforce and protect reciprocal rights
and obligations, safeguarding their interests.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Contract
Any kind of agreement stipulated between two or more entities, called partners, in which all of them are
interested in forming, regulating, suspending, modifying or terminating a relationship regarding legal property
between them, shall be considered as a Contract.
A contract is binding in law, which means that the agreement generates rights and obligations that may be
enforced in the courts.
What is important to remember is that:
 A contract is not necessarily a long and formal document;
 Whenever a contract has been made, there are rights and obligations arising from that contract and the law
provides for consequences and remedies in the event that such obligations are not fulfilled.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main types of Contract
Contracts used in business can normally be split in following main categories:
 Contracts in which the object is related to performing some activities – service contracts;
 Contracts in which the object is related to providing some kind of tangible good – purchasing contracts;
 Contracts in which the object is the transfer of the property of a thing or the transfer of another right against the
consideration of a price, fixed or determinable – sale contracts;
 Contracts in which the object is the temporary transfer of the possession of a good (a product, a machine, equipment,
a real estate property) for use by the lessee against payment of a fee – lease contracts;
 Contracts in which the object is the temporary or permanent grant of the right to use or exploit products,
applications, works, etc., which are protected by intellectual property rights – licensing contracts.
All contracts have the same key elements in common, although each type of contract has some specific rules concerning
the rights and obligations and the performance of the parties.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main types of Contract
Subcontracting
A type of contract whereby the subcontractor agrees to provide to its counterparty a portion of work, services or
deliveries. Subcontracting may be chosen for savings, use of specific competencies or equipment or local contractors or
securing additional resources, etc.
The use of subcontracting is quite common, but is subject to strict rules and limitations that is important to know:
 The applicable laws and regulations may impose restrictions on the contractual provisions, especially with the aim of
protecting subcontractors as weaker parties in the transaction;
 Company policies provide restrictions on subcontracting limiting the number of subcontractors to be used, not
allowing its usage without certain verifications and approvals, etc
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main elements of a Contract
For a simple contract to exist and be valid, there has to be the following:
Offer: One of the parties made a promise to do or refrain from doing some specified action in the future.
Consideration: This is the bargain or exchange aspect of the contract. It is a promise by one party for an action by
the other party. For example, consideration for the sale of a car would be the amount of money offered.
Acceptance: Acceptance of an offer.
Intention: All parties must have the intention that their agreement can be enforced by civil law. This means that if
something goes wrong, one party can take legal action against the other.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main elements of a Contract
Parties: In any kind of contract there will be at least two parties; there can be more than two but never less.
In all kind of contracts, only physical persons can materially negotiate and sign the contract.
Such persons must have the power of attorney to represent the legal entities that will be parties to the contract.
When dealing with persons that act of behalf of a legal entity, it is of paramount importance to check their powers.
Object: The object of a contract can be a real item, a right, a service, another contract, etc.
Anything that is not either illegal or imposable can be the object of a contract.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main elements of a Contract
Term (duration): Some contracts need to have terms in order to define the duration of the contract itself and/or of the
activities to be performed by parties.
Form: A contract needs to be made using a specific formal way in order to be valid or for its existence and conditions to
be proven between the parties and to third parties. The most typical and common form is the written form; however,
there are also more solemn forms such as deeds, acts made by or in front of a notary public, etc...
A contract needs to be made in a specific form only when the applicable law or the will of the parties so requests.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main elements of a Contract
Test:
Construction company “RoadStroy” LLP required to buy 10 smartphones from SmartMob Inc. at the proposed rate of
100,000 KZT each. One-time purchase contract is required for a period of 3 months. The contract must be placed
considering all technical and commercial aspects for subject supply (warranty, penalty, etc).
Task: to identify the main elements of a contract to be placed.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Procurement process
In general, everything that needs sourcing and buying involves procurement. Procurement Unit in organizations
manage following functions:
1. Manage the organization’s spending;
2. Support operations by ensuring the timely purchase of goods, services and works;
3. Protect the organization from risks preventing corruption, etc.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Procurement process
The costs of Company can be linked to the procurement process.
It is a process in which the need to procure a service, a good, a right for that party has been analyzed internally as
well as with several potential suppliers, in accordance with set of procedures, in order to select the optimal solution
in terms of costs, reliability, efficiency and effectiveness.
General business sense is to achieve value for money, while doing procurement this can be achieved in a different
ways. There are so called “5 rights of procurement” that helps to achieve the most effective and efficient outcome.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
5 rights of Procurement
Title
Right Quantity
Indicative description
Refers to the quantity of the goods and services to
be purchased
Aim
To ensure that the most cost effective
amount of goods or services are procured
What are the situations where the quantity procured is wrong?
Right Quality
Refers to the quality of the goods or services
ordered and the standards required
To ensure that goods or services meeting
the needs and expectations of Company
What if required quality is not captured?
Right Time
Refers to time of delivery
To ensure that goods or services are
delivered at the right time
What if goods or services are not obtained on time?
Every procurement process should contain above elements in each of its stage.
What are the situations that could occur if below 5 rights are not met?
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
5 rights of Procurement
Title
Right Place
Indicative description
Aim
Refers to the exact place goods and services should To ensure that goods or services are
be delivered at
delivered to the right place
What if goods or services are failed to be delivered to the right place?
Right Price
Refers to the amount to be paid for the goods and
services
To ensure that goods or services are of fair
and reasonable price
What if goods or services are purchased at the wrong price?
Every procurement process should contain above elements in each of its stage
What are the situations that could occur if below 5 rights are not met?
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Procurement process
Procurement process can be divided into 3 main phases as follows:
Identifying needs
for Contract
Establishing the
Contract
Pre-award phase
Executing the
Contract
Post-award phase
The first two phases are considered Pre-award phases, the last is considered the Post-award phase. These
phases will be further described in details.
agip karachaganak b.v. kz branch
General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Procurement process
Procurement process can be divided into 3 main phases as follows:
Identifying needs
for Contract
Establishing the
Contract
Pre-award phase
Executing the
Contract
Post-award phase
The first two phases are considered Pre-award phases, the last is considered the Post-award phase. These
phases will be further described in details.
This is the early stage aiming to identify the needs and select
best Contracting Strategy
agip karachaganak b.v. kz branch
General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Procurement process
Procurement process can be divided into 3 main phases as follows:
Identifying needs
for Contract
Establishing the
Contract
Pre-award phase
Executing the
Contract
Post-award phase
The first two phases are considered Pre-award phases, the last is considered the Post-award phase. These
phases will be further described in details.
This is the second phase of procurement cycle and it is divided in four major
steps, from requisition up to contract award through the preparation of
invitation to tender and tender evaluation.
agip karachaganak b.v. kz branch
General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Procurement process
Procurement process can be divided into 3 main phases as follows:
Identifying needs
for Contract
Establishing the
Contract
Pre-award phase
Executing the
Contract
Post-award phase
The first two phases are considered Pre-award phases, the last is considered the Post-award phase. These
phases will be further described in details.
This is the third and final phase of procurement cycle.
According to some authors, the real activity or Contract Management starts here
because it is only now that the effects of the Contract come into operation
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Specific terms and definitions
Purchase Requisition: internal document prepared by the requesting unit issued to activate the procurement process. It
contains all the necessary information to satisfy the request made by the requesting unit.
Work Assumption or Bill of quantities: document that provides a detailed list of all the items the vendor must quote with
an indication of their estimated percentage quantity and/or weight on the expenditure forecast; this information will be
used to identify the winner of the tender.
Contract strategy: document, drawn up by the unit performing the procurement process whenever starting a
procurement procedure, which defines the main criteria on the basis of which the procedure itself will be carried out.
Tenderer: vendor invited to prepare a bid.
Tender Vendor list: list of vendors invited to a tender, normally belonging to a specific vendor list and selected on the
basis of objective and non-discriminatory criteria.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Specific terms and definitions
Bid request: document prepared by the procurement function and sent to all tenderers included in the tender vendor list.
The document provides the necessary information to draw up an appropriate technical, commercial and economical
quotation, and includes the instructions and requirements for bidding. The BR may also be called differently, for example
Request for Quotation (RFQ) or Invitation to Tender (ITT).
Sole Source vendor: vendor chosen for direct negotiation when it is objectively impossible to use other vendors in the
relevant market (e.g. because there are no other vendors or because of exclusive rights).
Single Source vendor: vendor chosen for direct negotiation, when other sources are available, for exceptional reasons (e.g.
technical reasons, only viable solution, urgency, value, etc.).
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Specific terms and definitions
Purchase Order (Closed Contract): agreement that defines the terms and conditions, including quantities timing and
prices, for the performance of works and services and/or the provision of goods.
Blanket Order (or Open Contract): contract between the Company and a Contractor entered to establish terms, price lists
and/or prices, general conditions and execution methods of services without indication of quantity/measure of works,
goods and services. Said contract can be used during a certain period of time and is activated through the issuing of
specific orders (Delivery Orders for goods and Work Orders for works and services), until the Administrative Contract
Value is reached.
Call-off contract: typical Oil Industry contract in which the Company and the Contractor negotiate unit prices for defined
goods, materials, works and/or services, either with or without a commitment to the Contractor.
Under this contractual solution the Company (at its own discretion) can ask Contractor to supply goods, materials, works
and/or services needed from time to time to meet its requirements, by issuing individual requests called Call-off orders.
If the contract does not state a committed value, the value of commitment shall be the sum of the Call-offs.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Specific terms and definitions
Beauty contest: competitive procedure used to select a vendor from among the holders of blanket orders with
the same scope, for which a Delivery Order/Work Order must be issued.
Delivery Order (DO): document that activates a blanket order for goods, under the terms and conditions
previously agreed, stating the quantities of the goods requested.
Word Order (WO): document that activates a blanket order for works or services, under the terms and conditions
previously agreed,stating the quantities of works and/or services requested.
Administrative Contract Value: ceiling of economic value of a blanket order up to which Contractors are
requested to provide works/services (by issuing Work Orders) or to deliver goods (by issuing Delivery Orders), in
accordance with the terms and conditions of the blanket order. The Administrative Contract Value (ACV) is
mentioned only in internal contractual Company documents but not revealed to the Contractor.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Specific terms and definitions
Contingency: in relation to any contract, maximum financial allowance, authorized as part of the total administrative
contract value, which may be used to meet any costs or expenditures incurred due to unforeseen events in the course
of the work.
Contract Amendment: revision of an existing contract by issuing additional documents or modifying the contract data and
clauses.
Contract Variation: modification to a contract in progress which does not introduce significant changes and which is
managed through the issue of Contract Variation Order (VO); the variations are modifications which do not entail
exceeding the established Administrative Contract Value.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Specific terms and definitions
Framework Agreement: agreement between Company and one or more vendors in which the parties set the general
terms and conditions, price lists and/or reference prices for the provision of works, goods and/or services in force over a
specific timeframe. The FWA normally is activated by issuing call-offs. Any organization may join to use FWA by means of
adhesion letter.
Buyer (Contract Engineer): a person within Company Procurement organizational structure responsible to conduct
procurement process.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main roles in C&P
Company guidelines and procedures set forth clear responsibilities for performance of contract
administration/management activities.
Therefore, it is of paramount importance to identify and understand the different roles involved in procurement process:
Contract Holder is responsible for the correct execution of the contract and for the technical, operational and finance
control of goods, works and services. The Contract Holder is the reference person for the contracts for which he has been
appointed, both within the Company and towards third parties and is accountable for all aspects of the contract during
contract management.
Contract Administrator has a pivotal role in post award contract management and administration. It is an appointed
resource who supports Contract Holder in fulfilling the Contract Holder’s role.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main roles in C&P
Requesting Unit (or User Department) – internal Company function that activates procurement functions with the request
of the supply of goods, works and services.
End User – internal Company function that benefits from using the contracts activated by other departments.
C&P Department has the ownership of the procurement processes and is responsible for setting and maintaining systems
and policies through the procurement and contract management process. C&P ensures consistency throughout the
Company, for all pre-award activities from receipt of the Requisition through the tendering process to contract award, and
also is responsible for the issue of Contract Amendments in accordance with proper procedures.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Main roles in C&P
In relation to the roles and responsibilities there are two important definitions to remember:
Delegation of authority - The process of delegation enables a person to assign work task to his subordinate and give them necessary
authority to accomplish it successfully. It helps in completing the work in time, reduces the workload of managers and motivates and
develops subordinates.
Compliance wise person not authorized to perform some activities in relation to procurement process cannot accomplish such tasks.
Mainly, it is referred to the approval of Purchase Requisition, contracts, the official communication on behalf of Company.
Segregation of Duties – an internal control whereby tasks are apportioned between different departments in order to reduce the
likelihood for fraud and error.
All employees completing procurement-related functions are responsible for ensuring segregation of duties or creating and ensuring
effective compensating controls where segregation of duties is not possible or is cost prohibitive.
Examples: procurement requisition submission should be segregated from tender process function, delivery/work order issuance should be
segregated from accounts payable, etc.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Procurement Planning
Procurement planning determines a timeline of what items will be procured and when based on the User's budget.
Advantages:
- Time;
- Quality;
- Cost reduction.
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Summary
 Q&A
 Recap
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General information about contracts, contract & procurement process.
Specific terms, definitions and main roles in Contract & Procurement
Summary
True or False?
1. Contract is binding in law.
2. Subcontracting does not require authorization.
3. Contract must be always signed.
4. Sole source negotiation is a negotiation due to exclusivity.
5. Procurement planning is waste of time.
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Industrial Project Management
Day 2 - Project Management and Project Procurement
Management. The role of Procurement in different
stages of project development.
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
What is a Project
It is a “temporary” initiative to create a Product or a Service “stand alone” aimed at the achievement of business
objectives
TEMPORARY
It is limited in time
Has a beginning and a definite end
The temporary nature doesn’t mean a Project has a short duration. Normally, the end of a Project is reached when
 The Project’s objectives have been achieved;
 The objectives will not or cannot be met;
 Funds are no longer available;
 The need for the Project no longer exists;
 The Project is terminated for legal cause or convenience, etc
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
What is a Project
 TIME
 GOAL (OBJECTIVES)
 COST
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
What is a Project
Project Management is the application of
Knowledge
Skills
Techniques
Tools
aimed to achieve specific Project objectives and to meet or exceed everyone's needs and expectations from the
Project.
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
What is a Project
Project Management enables Company to execute projects effectively and efficiently.
Effective Project Management
Poor Project Management
Meet business objectives
Failing in achieving the objectives
Satisfy expectations
Missed deadlines
Increase chances of success
Poor quality
Respond to risks on timely manner
Failing in achieving the objectives
Manage change in a better manner
Cost overrun
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
What is a Project
Components
Description
Life cycle
All phases that a Project passes from its start to its completion. It is up to
Project management team to determine the best life cycle for each project.
Phase
All activities in relation to completion of some deliverables. It could be
distinct phases or sub phases.
General phases: evaluation of the project, concept selection, definition,
production/maintenance, close out.
Phase gate
A review at the end of each phase helping to make a decision of the way
forward. It is about assessing the project’s performance and progress in
comparison with project business objectives.
Decisions: continue to the next phase, continue to the next phase with
modifications, end the project, remain in this phase or its repetition.
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
What is a Project
Components
Description
Management processes
Activities in relation to completion of some deliverables, but not
part of Project Phases.
As the process it is presented by Input, Tools & Techniques and
Output
Management processes group
It is a grouping of project management processes – Initiating
process group, Planning process group, Executing process group,
etc
Management knowledge area
It is an identified area of project management defined by its
knowledge requirements – Project Integration Management,
Project Scope Management, Project Cost Management, etc
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Project Charter
Develop Project Charter is the process of developing a document that
formally authorizes the existence of a project and provides the Project
Manager with the authority to apply organizational resources to project
activities.
The key benefits of this process are that it provides a direct link between
the project and the strategic objectives of the organization and creates a
formal record and shows the commitment.
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Project Integrated Multifunctional Team
Projects are undertaken at all organizational levels. Any individuals or group of individuals that have an interest in a
Project, who can affect or be affected by a Project form a Project Integrated Multifunctional Team.
The key benefit of this process is that it enables the project team to identify the appropriate focus for engagement
of each stakeholder or group of stakeholders.
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Project Integrated Multifunctional Team
How to identify the Team members?




Who have an interest?
Who is affected directly, indirectly?
Who has power to influence?
Who would be concerned if a Project succeeded or failed?
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Project Integrated Multifunctional Team
All parties involved come with different levels of authority and interest
H
Power on the
decision maker/
Project
L
KEEP SATISFIED
KEY PLAYER
MIN EFFORT
KEEP INFORMED
Interest for the issue
H
Summary:
 Identify the Team;
 Categorize in terms of power and interest;
 Open communication with them;
 Maintain relationship throughout the Project duration
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Project Integrated Multifunctional Team
Clear roles and responsibilities are fundamental to delivering successful projects
R.A.C.I is a simple tool to put structure around who does what
R
Responsible – Person working on activity
A
Accountable – Person with decision authority
C
Consult – Key stakeholder who should be
included in decision or work activity
I
*
Inform – Needs to know of decision or action
Project phases
Project
Manager
Project
Engineer
Project
Procurement
Manager
Evaluation*
R
A
C
Concept selection
I
R
I
Concept definition
I
A
R
Production & close
out
R
A
A
*phases to be described in details in further slides
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Staff
Project Functions
Asset Team/
Development Project team
•
Development Management
•
Exploration
•
Geophysics & Geology
•
Reservoir
•
Drilling & Completion
•
Facilities
•
HSE-QR
•
Production & Maintenance
•
Procurement
•
Commercial
•
Business Planning
•
Finance & Administration
•
Human Resources
•
IT
•
Legal
Evaluation
Concept
Selection
Concept
Definition
Execution
Production
and close out
Alternatively level of involvement
can be defined
Level of
involvement
Very high
High
Medium
Low
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Project Management and Project Procurement Management.
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The Team
Geology
DPM
Staff
Geophysic
Business Plan. & Contr.
Petrophysic
HSE-QR
Drilling &
Completion
Reservoir
Procurement
Facilities
Legal
Finance & Administr.
Commercial
HR
IT
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
The Project Procurement Manager
The PPM is the person in charge at least but non limited to all related Project Activities in
connection with “procurement” and that could have an impact on the “Procurement Contract
Strategy” or the whole Project life
The Profile
The PPM profile should include the following skills:



Knowledge
Flexibility to changes
Teamworking



Stakeholder Management
Procurement Management
Contract Management
The PPM is a Key Factor for the success of a project
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
The Project Procurement Management
Project Procurement Management includes the processes necessary to purchase goods, works or services.
Project Procurement Management processes include the following:
 Plan Procurement Management;
 Conduct Procurement;
 Control Procurement;
 Close Procurement.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
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Inputs
Responsibility
Project management plan
Requirements documentation
Risk Register
Activity Resource Requirements
Project Schedule
Activity Cost Estimates
Stakeholder register
Enterprise Environmental Factors
Organizational Process Assets
Project Manager
Shared- Project Manager/ Buyer
Project Manager
Project Manager
Project Manager
Shared- Project Manager/ Buyer
Project Manager
Buyer
Buyer
Tools&Techniques
Responsibility
Make or buy Analysis
Expert Judgment
Market research
Meetings
Outputs
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2
3
4
5
6
7
Procurement Management Plan
Procurement Statement of Work
Procurement Documents
Source Selection Criteria
Make or Buy Decisions
Change Requests
Project documents updates
Fonte: PMBOK ® Guide 5th edition
Project Manager
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Project Procurement Management includes
the processes necessary to purchase goods,
works or services. Project Procurement
Management processes include the following:
 Plan Procurement Management;
 Conduct Procurement;
 Control Procurement;
Responsibility
Buyer
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Project Manager
Project Manager
Shared - Project Manager/Buyer
 Close Procurement.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
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5
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9
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2
3
4
Inputs
Responsibility
Project management plan
Requirements documentation
Risk Register
Activity Resource Requirements
Project Schedule
Activity Cost Estimates
Stakeholder register
Enterprise Environmental Factors
Organizational Process Assets
Project Manager
Shared- Project Manager/ Buyer
Project Manager
Project Manager
Project Manager
Shared- Project Manager/ Buyer
Project Manager
Buyer
Buyer
Tools&Techniques
Responsibility
Make or buy Analysis
Expert Judgment
Market research
Meetings
Outputs
1
2
3
4
5
6
7
Procurement Management Plan
Procurement Statement of Work
Procurement Documents
Source Selection Criteria
Make or Buy Decisions
Change Requests
Project documents updates
Fonte: PMBOK ® Guide 5th edition
Project Manager
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Responsibility
Buyer
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Project Manager
Project Manager
Shared - Project Manager/Buyer
Plan Procurement Management Highlights:
The key benefits of this process is that it
determines whether to acquire goods and
services from outside of the project, if so, what
to acquire as well as how and when to acquire.
Output:
• PM Plan containing the activities to be
undertaken during the procurement
process;
• PM Plan can be formal or informal, can be
highly detailed or broadly framed based on
business needs of the project.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
1
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3
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5
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7
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9
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2
3
4
Inputs
Responsibility
Project management plan
Requirements documentation
Risk Register
Activity Resource Requirements
Project Schedule
Activity Cost Estimates
Stakeholder register
Enterprise Environmental Factors
Organizational Process Assets
Project Manager
Shared- Project Manager/ Buyer
Project Manager
Project Manager
Project Manager
Shared- Project Manager/ Buyer
Project Manager
Buyer
Buyer
Tools&Techniques
Responsibility
Make or buy Analysis
Expert Judgment
Market research
Meetings
Outputs
1
2
3
4
5
6
7
Procurement Management Plan
Procurement Statement of Work
Procurement Documents
Source Selection Criteria
Make or Buy Decisions
Change Requests
Project documents updates
Fonte: PMBOK ® Guide 5th edition
Project Manager
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Plan Procurement Management Highlights:
Once the Make or Buy decision is made, a
procurement strategy to be identified. The aim
of such strategy is to determine the project
delivery method, the types of contracts, how
the procurement will be conducted, scope of
work, bids selection criteria, etc.
Responsibility
Buyer
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Project Manager
Project Manager
Shared - Project Manager/Buyer
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Inputs
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2
3
4
5
6
7
8
Project Management Plan
Procurement Documents
Source Selection Criteria
Seller Proposals
Project Documents
Make or Buy Decisions
Procurement Statement of Work
Organizational Process Assets
Tools&Techniques
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2
3
4
5
6
7
Bidder Conferences
Proposal Evaluation Techniques
Independent Estimates
Expert Judgement
Advertising
Analytical Techniques
Procurement Negotiations
Outputs
1
2
3
4
5
6
Selected Sellers
Agreements
Resource Calendars
Change Requests
Project Management Plan Updates
Project Document Updates
Fonte: PMBOK ® Guide 5th edition
Responsibility
Buyer
Buyer
Buyer
Buyer
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Shared- Project Manager/Buyer
Responsibility
Buyer
Seller Selection Committee
Buyer
Buyer
Buyer
Buyer
Buyer
Project Procurement Management includes
the processes necessary to purchase goods,
works or services. Project Procurement
Management processes include the following:
 Plan Procurement Management;
 Conduct Procurement;
 Control Procurement;
 Close Procurement.
Responsibility
Seller Selection Committee
Seller Selection Committee
Project Manager
Buyer
Shared - Project Manager/Buyer
Shared - Project Manager/Buyer
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Inputs
1
2
3
4
5
6
7
8
Project Management Plan
Procurement Documents
Source Selection Criteria
Seller Proposals
Project Documents
Make or Buy Decisions
Procurement Statement of Work
Organizational Process Assets
Tools&Techniques
1
2
3
4
5
6
7
Bidder Conferences
Proposal Evaluation Techniques
Independent Estimates
Expert Judgement
Advertising
Analytical Techniques
Procurement Negotiations
Outputs
1
2
3
4
5
6
Selected Sellers
Agreements
Resource Calendars
Change Requests
Project Management Plan Updates
Project Document Updates
Fonte: PMBOK ® Guide 5th edition
Responsibility
Buyer
Buyer
Buyer
Buyer
Shared- Project Manager/Buyer
Buyer
Shared- Project Manager/Buyer
Shared- Project Manager/Buyer
Responsibility
Buyer
Seller Selection Committee
Buyer
Buyer
Buyer
Buyer
Buyer
Conduct Procurement Management Highlights:
It is the process of obtaining bids receipt, bids
evaluation and selection, award. The key benefit
is the process selects qualified bidder to be
legally binded.
Output:
• The qualified suppliers selected on the basis
of predefined criteria;
• PM Plan can be updated via change requests
(alternative standards or solutions, project
new requirements, etc).
Responsibility
Seller Selection Committee
Seller Selection Committee
Project Manager
Buyer
Shared - Project Manager/Buyer
Shared - Project Manager/Buyer
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Inputs
1 Project Management Plan
2 Procurement Documents
Tools&Techniques
1 Procurement Audits
2 Procurement Negotiations
3 Records Management System
Outputs
1 Closed Procurements
2 Organizational Process Asset Updates
Responsibility
Project Manager
Buyer
Responsibility
Buyer or Independent party
Buyer
Shared-Project Manager/Buyer
Responsibility
Buyer
Shared-Project Manager/Buyer
Project Procurement Management includes
the processes necessary to purchase goods,
works or services. Project Procurement
Management processes include the following:
 Plan Procurement Management;
 Conduct Procurement;
 Control Procurement;
 Close Procurement.
Fonte: PMBOK ® Guide 5th edition
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Control Procurement Management Highlights:
Inputs
1 Project Management Plan
2 Procurement Documents
Tools&Techniques
1 Procurement Audits
2 Procurement Negotiations
3 Records Management System
Outputs
1 Closed Procurements
2 Organizational Process Asset Updates
Responsibility
Project Manager
Buyer
Responsibility
Buyer or Independent party
Buyer
Shared-Project Manager/Buyer
It is a process of managing relationships,
evaluating contractor performances.
The key benefit of this process is that it ensures
that both parties' performance meet the
project’s requirements. So the correct input is
important.
Responsibility
Buyer
Shared-Project Manager/Buyer
Fonte: PMBOK ® Guide 5th edition
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Inputs
1
2
3
4
5
6
Project Management Plan
Procurement Documents
Agreements
Approved Change Requests
Work Performance Reports
Work Performance Data
Tools&Techniques
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2
3
4
5
6
7
Contract Change Control System
Procurement Performance Reviews
Inspections and Audits
Performance Reporting
Payment Systems
Claims Administration
Records Management System
Outputs
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3
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6
Work performance information
Change Requests
Procurement Documentation
Project Management Plan Updates
Project Documents Update
Organizational Process Asset Updates
Responsibility
Project Manager
Buyer
Seller Selection Committee
Buyer
Seller
Buyer
Project Procurement Management includes
the processes necessary to purchase goods,
works or services. Project Procurement
Management processes include the following:
Responsibility
Buyer
Buyer
Buyer or Independent Party
Buyer
Accounts Payable of Buying Entity
Buyer/ Seller or Independent Party
Shared-Project Manager/Buyer
Responsibility
Buyer
Buyer
Buyer
Shared- Project Manager /Buyer
Project Manager
Shared- Project Manager /Buyer
 Plan Procurement Management;
 Conduct Procurement;
 Control Procurement;
 Close Procurement.
Fonte: PMBOK ® Guide 5th edition
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
The activities
Main activities can be summarized as follows:




PSA/JOA knowledge (Project
specific)
WBS and CWBS definition
Procurement Contract Strategy set up
Procurement Contract Strategy
preparation and support for approval





Local Authorities, Risk and Stakeholder
management
Local Content set up and support for
approval
Tender activities
Support for FID (Final Investment Decision)
Support to Contract Management
The PPM follows all the “procurement” activities aiming to grant the achievement of the Project goals related to
the specific project throughout the Opportunity & Project Development Process (OPD)
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Value Assurance Process
The Value Assurance Process is the Activity by which the Company challenge and define the
most suitable solution granting the maximization of the value from a "Business
Opportunity"
A "Business Opportunity" became a Project after preliminary screening to check the
"feasibility"
From Business Opportunity to Project
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
The OPD
The OPD Process provides a general guidance for the Upstream Development Projects
Approval Process, a systematic application of best practices and a mechanism of continuous
improvement
NEW EXPL.
INITIATIVE
PRODUCTION
START-UP
DISCOVERY
WELL
DEVELOPMENT PROJECT CYCLE TIME
EXPLORATION &
APPRAISAL
DEVELOPMENT
PRODUCTION
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
The OPD phases
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
The OPD Gates
OPD gates shall ensure an appropriate level of Company governance in
order that projects can access the next phase only if they are:
- aligned with company strategies;
- proven to be robust and economically solid;
- passed through required assurance process.
The internal decision-making process at gates is a value-adding process
through an assessment that covers both quantitative and qualitative criteria.
The gate decision is formalized in the Gate Outcome Report.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
The OPD phases
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Project Management and Project Procurement Management.
The role of Procurement in different stages of project development
GATE 1
Objective: to establish that the opportunity can support an
economically attractive development.
Decision: approve the OPD implementation frame and commit resources
for the following phase
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management. The role of Procurement in different stages
of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development
GATE 2
Objective: to agree that the selected concept is the best alternative for
development and is based on robust design bases
Decision: approve the selected configuration concept and commit resources
for the definition phase
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management. The role of Procurement in different stages
of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development
GATE 3
Objective: to verify that the project plan allow a successful execution
Decision: approve project plans and commit resources for the execution
phase
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development
Hand over
The hand over process identifies the roadmap of the main acceptance
stages that lead to the completion of the project.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development
Close out
The Close out report to be prepared containing key components, such as:
- scope and objectives;
- assumptions at Final Investment Decision;
- final results;
- analysis of deviations, changes;
- execution performance and KPI;
- key lessons learned and feedback.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Role of Procurement
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Summary
 Q&A
 Recap
agip karachaganak b.v. kz branch
Project Management and Project Procurement Management.
The role of Procurement in different stages of project development.
Summary
Recap
How do you define the Project?
Is it possible to run the Project alone?
What is the role of Procurement in Project Management?
agip karachaganak b.v. kz branch