Discuss about the IT Procurement and Vendor Management for Project Procurement.
Project procurement management processes
Various kinds of project procurement processes are there and after analyzing the details of the project requirements and organizational background the companies are needed to choose the most suitable procurement approach. In order to operate the organizational culture the project manager needs to choose the most suitable procurement approach. In order to grab more number of consumers and retain the existing customers the functional and operation management of the businesses are required to be very much accurate (Almorsy, Grundy and Müller 2016). Atleast three to four months should undertake by the procurement managers to design the procurement management plan for any company. Throughout the project development phase, the project managers and the project team members are needed to consider the phases sequentially to gain expected outcomes from the project. The processes those are widely followed for developing the procurement plan are mentioned below:
- Plan procurement
- Closing procurement
Components of enforceable contract
Before the development of the enforceable contract it is necessary for the project or business owners to take legal advice and other essential components accordingly (Fuller et al. 2017). After analyzing the type of the contract the type of the contract should have to be considered such as whether it is written or oral. In the selling, buying and leasing properties and for the dispute settings everyday new person do enter. However if any person fails to enter to the system without proper consideration then the entire process will be a failure. Depending upon the type of project or business all the necessary elements of the contract are needed to be selected by the project manager. In the below section the details of the components are illustrated:
Offers: The requirements or the demand are expanded through the help of offer. Based on certain terms and condition the offers should be given to the project manager. As soon as the offers will be accepted by the project managers will be ready to deliver the contract details in terms of procurement management plan (Gurung and Prater 2017). Different ways such as letter, email are there through which the offers can be given by the project managers and the project heads. The offers provided by the enforceable contract include:
- A perfect statement of work based on the current project intention
- A specified proposal
- For detail process identification a details communication plan
Acceptance: In order to create the enforcement contract the acceptance criteria are the final and expression of the permission which is related to the project offerings. It is necessary for the project manager to accept the given offer before the final implementation of the project plan or the project idea professionally.
Mutual agreements: This kind of agreement is created between the customers and the service provider or the contractors. The contract that will be prepared by the project managers should be agreed by both the contractors and service providers (Molla, Abareshi and Cooper 2014). There should always be a common intention between the project manager and the contractor rather they should always possess a shared project or business goal.
Consideration: Consideration is referred to as another very important term associated to vendor management and application of IT in successful project execution. After analyzing the business and project background the factors or the components should have to be considered. It is expected that with the successful consideration of the components the legal disputes and other issues associated to attorney can be completely avoided (Meehan and Bryde 2015).
Different Components of offer
In order to analyze the complexity of the contract elements the different components of offer are also required to be considered by the project managers before the final project execution. The components of project offers are as follows:
Communicated: It is necessary for the contract developers to contact to the person who is responsible to design the project. Based on communication whether the offer will be accepted or rejected are decided accordingly by the project heads. However, in some of the cases this particular component is ignored as a result serious issues raised those are very much complex to resolve. Through successful communication the contractual offerings will become more transparent to the project managers.
Committed: For both the providers and the contractors the term committed are very much important. In order to ensure that whether the offer will be accepted or rejected is measured through the help of the commitment (Meehan and Bryde 2015). Auction is one of the best rather most suitable ways used to change the content of the contractual offers.
Definite terms: All the terms associated to contract offer should be well defined and absolutely specified in nature. With the help of the defined terms the acceptance and the timings should be stated accordingly. The acceptance offers are measured with the definite terms
Difference between the independent and independent demand
It has been found that most of the time the consumers are familiar with the basic supply laws and demand. As much demand from the consumers end will increase that much increment will take places from the suppliers end. The amount of product to be manufactured is dependent on the consumer demand. One of the various types of demand this is one kind of demand (Rittinghous and Ransome 2016). The demand from the consumers end is also known as the independent demand. The demands of the customers are typically dedicated as the independent demand. On the other hand, the demands of the suppliers are dependent because the developers or the suppliers cannot develop any product without the demand of the customers. For most of the consumers the dependent demand are invisible in nature. In general it has been found that, both the independent and the dependent demands may affect the economic structure of the business organizations. Based on the amount that the consumers wish to invest necessary features should be added to the delivery products.
Hidden cost of outsourcing
The hidden cost outsourcing deals with currency and the fresh hardware and software cost. Due to the excessive amount of fluctuation in currency the feedback of $1 Million has become a $1.4 Million nowadays (Khanam, Siddiqui and Talib 2016). With the help of caps and collars within the contract the risks associated to the project currency can be completely resolved. On the other hand the fresh hardware and software cost can be mitigated with the help of the beyond anticipation updates.
Relations between TQM and IT procurement
It has been found that the IT procurement and the Total quality management technique are completely dependent on each other. In the year of 1950, the usefulness of total quality management is originated and for steady success of any project this approach is very much helpful. The IT procurement should always consider the factors ethics, team work, culture, attitude etc before make sure that the quality of the projects is meeting the requirements of the consumers and the preliminarily set objectives.
Psychological factors that may affect the bargaining
There are different factors that affect the bargaining power of the consumers. Not only the bargaining but also the entire behavior of the consumers changes with the psychological factors. Some of the most important psychological factors include the perception, learning, motivation and attitude. If all of these factors are adopted properly then the bargaining power of the consumers and the selling power of the service providers will increase (Bolandifar, Kouvelis and Zhang 2016). The level of motivation influence can be represented well with the help of the Maslow Motivation theory. The other components those are to be emphasized to esteem the basic needs in terms of social needs, security needs etc. The overall managing and perceptual process include the selected retention, selective attention and selective distortion.
Conflict between pure economics prcatices and IT procurement prcatices
There is a wide difference between the IT procurement practice and the pure economic practice. In order to gain competitive advantages and commercial revenue from the market place it is necessary for the company to adopt best and most suited pure economic prcatices. These are not much different from the general market level practices. On the other hand the IT procurement practice deals with business strategy buildings, specified rules and regulation so that better affordable price can be offered to the consumers. Both the unit cost and the integrated cost of product or the services are always designed in such a way so that it can meet the organizational goal (Hornstein 2015). The IT procurement practice approach is comprises of – involvement of the stakeholders to risk management, strategic relationship building and for process alignment adoption of best possible technology adoption.
Key procurement consideration while accessing Cloud SaaS offering
In this current era of technology the cloud computing technology and the cloud based architectural platform is a very successful one that gives security to the both the consumers and the service providers (Hornstein 2015). The key procurement consideration needed before accessing the cloud platform include security, technical experts and privacy. Encryption is the security approach that will help the users to protect their server from the unwanted access. In addition to this the firewall is another technology that secures the information or the data transmission channel. Besides this the other components considered for the key procurement management system are SLA guidelines, staffing, service management etc.
Explanation on how the Critical Path should be included within any services SOW
With proper input to statement of work the expected project outcomes can be generated accordingly and the inputs are mentioned below:
Enterprise environmental factor: For the successful implementation of the project the workplace or the environmental factor of the existing system is require to be analyzed by the project heads (Bolandifar, Kouvelis and Zhang 2016).
Process asset: There are certain organizational process assets such as procurement standard contracts as well as preliminarily qualified sellers those are needed to be managed properly by the project managers.
Risk register: Risk register is a measurement matrix that is generally used for identifying the risks and their impact. After analyzing the negative impact of the risks their priority and mitigation strategies are needed to be adopted.
Project baseline: With the help of the project schedule the project procurement plan can be eventually determined. The project scope baseline helps the project developers to become clearer about the project requirements and objectives. (Fuller et al. 2017) Additionally, Critical Path Method (CPM) is another important factor needed to be mentioned I the SOW to accomplish any project.
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