PROCUREMENT DOCUMENTS
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Introduction
In order to understand procurement documents, it is important to understand the term
Procurement Management.
Procurement is the purchase of goods and services at the best possible price to meet a
purchaser's demand in terms of quantity, quality, dimensions and site.
The procurement cycle in businesses work, which follows the below steps:
Information Gathering - A potential customer first researches suppliers, who satisfy
requirements for the product needed.
Supplier Contact - When a prospective supplier has been identified, the customer requests
for quotations, proposals, information and tender. This may be done through advertisements
or through direct contact with the supplier.
Background Review - The customer now examines references for the goods/services
concerned and may also consider samples of the goods/services or undertake trials.
Negotiation - Next the negotiations regarding price, availability and customization options
are undertaken. The contract regarding the purchase of the goods or services is completed.
Fulfilment - Based on the contract signed, the purchased goods or services are shipped and
delivered. Payment is also completed at this stage. Additional training or installation of the
product may also be provided.
Renewal - Once the goods or services are consumed or disposed of and the contract has
expired, the product or service needs to be re-ordered. The customer now decides whether
to continue with the same supplier or look for a new one.
Documents involved in the procurement cycle are called procurement documents. Procurement
documents are an integral part of the early stages of project initiation.
The purpose of procurement documents serves an important aspect of the organizational element
in the project process. It refers to the input and output mechanisms and tools that are put in place
during the process of bidding and submitting project proposals and the facets of work that make
up a project.
In a nutshell, procurement documents are the contractual relationship between the customer and
the supplier of goods or services.
Examples of Procurement Documents
Some examples of what constitutes procurement documents include the buyer's commencement
to bid and the summons by the financially responsible party for concessions.
In addition, requests for information between two parties and requests for quotations, and
proposals and seller's response are also parts of procurement documents.
Basically procurement documents comprise of all documents that serve as invitations to tender,
solicit tender offers and establish the terms and conditions of a contract.
Types of Procurement Documents
A few types of procurement documents are:
RFP - A request for proposal is an early stage in a procurement process issuing an invitation
for suppliers, often through a bidding process, to submit a proposal on a specific commodity
or service.
RFI - A request for information RFI is a proposal requested from a potential seller or a
service provider to determine what products and services are potentially available in the
marketplace to meet a buyer's needs and to know the capability of a seller in terms of
offerings and strengths of the seller.
RFQ - A request for quotation RFQ is used when discussions with bidders are not required
mainlywhenthespecificationsofaproductorservicearealreadyknown and when price is the main or only factor
in selecting the successful bidder.
Solicitations: These are invitations of bids, requests for quotations and proposals. These
may serve as a binding contract.
Offers - This type of procurement documents are bids, proposals and quotes made by
potential suppliers to prospective clients.
Contracts - Contracts refer to the final signed agreements between clients and suppliers.
Amendments/Modifications - This refers to any changes in solicitations, offers and
contracts. Amendments/Modifications have to be in the form of a written document.
Structure of a Procurement Document
Most procurement documents adopt a set structure. This is because it simplifies the
documentation process and also allows it to be computerized.
Computerization allows for efficiency and effectiveness in the procurement process. In general,
procurement documents have the following attributes:
Requires potential bidders to submit all particulars for the employer to evaluate the bidder.
All submissions to be set out in a clear and honest manner to ensure that the short-list
criterion is unambiguous.
Clear definition of the responsibilities, rights and commitments of both parties in the
contract.
Clear definition of the nature and quality of the goods or services to be provided.
Provisions without any prejudice to the interests of either party.
Clear and easy to understand language.
Commonly Encountered Procurement Documents
Engineering and Construction Work
Minor/Low Risk Contracts: In this type of contract, services are required by an
organization for a short period and the work is usually repetitive. Hence, this type of
contract does not require high-end management techniques.
Major/High Risk Contracts: Here, the type of work required is of a more difficult nature
and here the implication of sophisticated management techniques is required.
Services
Professional - This requires more knowledge-based expertise and this requires
managers, who are willing to put more time and effort into seeking research in order to
satisfy the customer's criteria.
Facilities - More often than not, in this type of service the work outsourced is the
maintenance or operation of an existing structure or system.
Supplies
Local/Simple Purchases - Goods are more readily available and hence does not require
management of the buying and delivery process.
International/Complex Purchases: In this case, goods need to be bought from other
countries. A manager's task is more cumbersome and a management process is
required to purchase and delivery. In addition, the manager needs to look into cross-
border formalities.
Conclusion
In most organizations, the procurement department is one of the busiest. Managers need to
purchase goods or services required for the smooth running of their organization.
For example, in a hospital, a procurement manager needs to purchase medicines and surgical
instruments among others. These goods and services need to be purchased at the lowest possible
cost without any deficit in quality.
The documentation that passes between the procurement manager of an organization and a
supplier are the procurement documents.
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