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To achieve success in project management, a planner is to take into consideration multiple factors, the most important ones are time, cost, and performance; these factors help a planner to have better control of the corporate resources (Kerzner, 2009). The aspects of time, cost, and performance form a triangle demonstrating the cycle of the development of the project, which is rather challenging to stay within for a planner due to the uniqueness of most projects and the absence of the universal standards and rules related to the planning and organization of different types of projects (Kerzner, 2009; Griffiths & Payab, 2010). The present paper describes the time, cost, and performance factors of the selected course project referring to the purchase of 25 sedans for government use and the issues that may affect their procurement.
The term procurement denotes an acquisition of services or goods that involves two interacting sides with different goals, and that can maximize the profitability of a company due to the optimization of costs, search for the best deals, and the contracts with the most suitable partners (Kerzner, 2009). In the present project, 25 leased sedans for the government use need to be procured. The chosen brand of a sedan is Toyota Camry. Besides, all of the procured vehicles will require insurance, to avoid the loss of income because of unplanned damage of the goods. To ensure the quality of the vehicles and their readiness to be exploited, they will also need preventative maintenance.
One more expenditure item in this project will include fuel for the vehicles, namely, 100 fuel cards/per quarter at 50 KD each. Moreover, to treat the managed vehicles responsibly, the plan will need to include 24-hour towing service and repair service. Time is a crucial factor in this phase of goods and services management. The main problem here is that multiple expenditures need to be managed at the same time, which could be frustrating for a planner and take a significant amount of time to arrange. To avoid this issue, the procurement process could be automated, the problems here may occur because of a lack of standardization and the insufficient development of services or software designed for e-procurement in particular areas (Griffiths & Payab, 2010).
According to Kerzner (2009), the process of contract management can be compared with art and science as they require both creativity and precision. Contact management is performed by both sides included in the contract agreement – the buyer and the seller. At the same time, the phases of contract management differ for the two parties. While the buyer’s management of the contract includes plan and conduct procurements, the seller is to take care of the presales activities, bid or no-bid decision-making, bid or proposal preparation, contract negotiation and formation (Kerzner, 2009). The last two stages of contract management (contract administration and contract closeout) are the same for both the buyer and the seller since the two parties follow the same terms (Kerzner, 2009).
Discussing the time management required for this project, it is important to mention the time frame of the contract procurement will be based on. The duration of the contract will be one year, be more precise – from the 1st of September 2016 to the 31st of August 2017. To be in time with the planning, the purchase order for each item or service will need to be released three months ahead. At this stage, it is vital for both participants of the contract to ensure appropriate contract administration and make sure both sides stick to the obligations and requirements assigned to them by the terms of the contract (Kerzner, 2009).
According to the conditions of the contract, the vendor is obliged to deliver the items and services by 12:01 am on the 1st of September 2016. This is the precise time that will dictate the purchase order planning and release since the implementation of all the necessary measures is planned to take three months. Besides, this is the date that signifies the beginning of the contract closeout that demands the verification that all the requirements of the contract are met. If one or several items outlined by the terms of the contract are missing the contract is considered violated.
To make sure that the conditions of the contract are followed, and all the required services and goods are in place, an inspection upon release is needed. Within the present project, the contract will ensure the performance of monthly dispatch inspections that will be delivered based on a 28-day cycle. This measure will help the vendor and the client make sure that the goods and services outlined in the contract match the requirements and are in perfect condition. Regular inspections are important not only because they ensure the quality of goods and services but because they directly impact the relations between the vendor and the customer. This way, in case, if one of the Toyota Camry vehicles provided by the vendor will be out of order, the vendor is obliged to replace it with an alternate vehicle. The location of the goods and services delivery in Camp Arifjan, Kuwait, “Park and Ride” parking lot.
Payment terms are another necessary aspect of the contract. In the present project, the contract agreement dictates that the requirement will be funded at the commencement of the Period of Performance (also referred at as the POP). Project Planning Estimate (or PPE) will determine the funding conditions for each Period of Performance. This aspect of the procurement relies mainly on the factor of performance which is the determinant of the payment. This is why the payment is broken down into parts each of which requires the payment to be delivered based on the quality of performance – this kind of payment is preferable for the buyer as it minimizes the risk of overpayment. For the seller, the gradual acquisition of the funding is also convenient because it makes the micro procurement easier since each payment and performance period can be managed as a separate sub-project that will simplify the planning through the optimization of the number of operations and processes run within the project.
When it comes to the budget of the services and items outlined in the plan, the requirement is all-inclusive. Besides, the budget for each item/service is specified in the Independent Cost Estimate (or ICE), and all the additional budget information is provided in the Project Planning Estimate (or PPE). Since the additional resources may drive up the cost of the services and goods very fast, the problem may appear is the additional budget is not outlined in the contract before its implementation or if the additional costs exceed those mentioned in the contract (Kerzner, 2009). In such a case, the vendor is to employ cost control management. Besides, the use of additional resources is often directly connected to the need for the additional time that causes a delay in service or goods delivery and equals as negative performance.
As a vital element of planning, time is to be treated with special attention. This is why Brandon-Jones and Carey (2011) discuss e-procurement as a method to optimize the time management of a project that will also help to reduce costs through the minimization of needless operations. At the same time, the authors mention that e-procurement, though profitable and convenient, requires compliance from the side of the user, and this assumes training, coaching, classes designed to teach the users how to employ e-procurement appropriately and use its full capacity.
To conclude, time, cost, and performance are the most significant factors of project management and procuring. All of these factors are the parts of each aspect of a project and are relevant at every stage of its planning and implementation. In the business environment, the failure to deliver each of these factors adequately as outlined in a contract or management plan will lead to loss of income. At the same time, the optimized management of time, cost, and performance will maximize the profit of the selling side as well as their reputation. This is why procurement needs to include multiple aspects of a project and refer to all of its details synchronizing the operations for the achievement of the maximum efficiency.
Reference List
Brandon-Jones, A. & Carey, S. (2011) The impact of userperceived e-procurement quality on system and contract compliance. International Journal of Operations & Production Management, 31(3), 274-296.
Griffiths, G. & Payab, H. (2010). Supply on the heels of demand: Issues of e-procurement. Journal of Global Business Issues, 4(2), 29-35.
Kerzner, H. (2009) Project management: A systems approach to planning, scheduling, and controlling (10th ed.). New York, NY: Wiley.
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